Following its IPO, Space Exploration Technologies (SPCX +15.83%) started hot, setting new all-time highs for a couple of trading days in a row. Then the selling started. It hasn't really stopped, either, as it's down 34% from its all-time high. That may have some investors worried about the future, but should they be? After all, SpaceX is involved in a handful of the biggest growth categories expected to affect the market over the next couple of decades.
If you invested $10,000 today, what would that be worth by the end of next year? Let's take a look.
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SpaceX has a lot of future success priced into the stock already
SpaceX is involved in three primary businesses: space, connectivity, and AI. It's an AI player thanks to its acquisition of xAI, the makers of Grok. AI made SpaceX the second-highest amount of revenue in the second quarter, totaling $2.56 billion. However, SpaceX is investing heavily in this division, too, because it spent $15.8 billion on capital expenditures to build out AI computing capacity.
Probably the most shocking thing about SpaceX is that its space division actually makes the least amount of money -- $962 million in revenue during Q2. It's also not profitable, so this seems more like a future bet than a viable business right now.
NASDAQ: SPCX
Key Data Points
SpaceX's connectivity division, which mainly consists of Starlink internet, is the company's most successful segment. It saw revenue of $4.3 billion and produced a $1.6 billion operating profit.
So, at the end of the day, SpaceX is an internet company that spends heavily on AI and likes to send rockets into space. While that may be an uninspiring assessment of SpaceX's business, it's the reality. That doesn't mean it's not a strong business, as its revenue grew 92% year over year. Any company growing that fast is worth considering, but has too much growth been priced into the stock?
If we annualize SpaceX's $7.8 billion in revenue, it amounts to $31.2 billion. SpaceX is currently a $1.7 trillion company. That values SpaceX at around 56 times sales, not a cheap price tag for any stock. This means there's a ton of growth already priced into the stock, and it could be difficult for it to rise from here.
So, what could a $10,000 investment be worth by the end of next year? If the business continues to grow at its current pace and there's no significant space or AI breakthrough, then I think a $10,000 investment will likely be worth $10,000 or less by the end of next year. There's still a lot of hype priced into SpaceX's stock, and there are plenty of other stocks that look like far better investment options.
