If you've been reading Motley Fool articles on Elon Musk's company, Space Exploration Technologies (SPCX +2.21%), or SpaceX, you've probably seen more than a few of my colleagues deem the stock overvalued. Stock analysts at Morningstar see the stock similarly.
In fact, Morningstar estimates that the stock is trading at a 152% premium. It placed a fair value of $62 on the stock as of June 16, which is well above the $154 closing price as of June 24. That price gives the company a market capitalization of $2.05 trillion. If the price were $62, the corresponding market cap would be around $800 billion -- still a hefty sum. The difference between the two valuations is a whopping $1.2 trillion.
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So who's right? See what you think.
Valuing SpaceX
You might want to check SpaceX's price-to-earnings (P/E) ratio, but you can't -- because there are no earnings. The company is currently losing money, and a lot of it. In such situations, though, you can check out the price-to-sales ratio, which uses the business's revenue instead of earnings. In SpaceX's case, its recent price-to-sales ratio was 78 (as of June 24). That's a steep number.
NASDAQ: SPCX
Key Data Points
To appreciate the magnitude of SpaceX's price-to-sales ratio, think of one of the most high-flying stocks in recent years -- semiconductor giant Nvidia. It has averaged annual gains of 67% over the past decade and is up nearly 40% over the past year. Yet its price-to-sales ratio is just 19. Even more striking is memory giant Micron, whose shares have soared 762% over the past year. Its price-to-sales ratio is 20.5 (again, as of June 24). You can see how much more investors are willing to pay for a dollar of SpaceX's sales, versus other highly regarded tech companies.
Who's right?
No one can say for sure which valuation is correct -- or closer to correct. Every analyst's valuation is always based on various assumptions about growth rates and other factors. But it's hard to not see SpaceX's shares as richly valued, and a closer look at the stock will reveal multiple reasons why you might want to steer clear.
After all, it's still not turning a profit. In 2025, it lost nearly $5 billion. While its Starlink business, featuring satellite-based internet, is profitable, its growth appears to be slowing, with shrinking revenue per user.
Anyone investing now is expecting the stock to go up, but it's been going down lately -- down 22.6% over the past week, as of June 23. Remember that should there be a market pullback, growth stocks and overvalued stocks tend to fall harder than average. So there's clearly risk in this investment.
The $62-per-share valuation seems more appropriate to me than a $155 one. If you don't agree with me, wait for the company's upcoming earnings report, expected in a month or so, to see how it's doing.
