The initial surge in Space Exploration Technologies (SPCX -3.15%) shares when the company went public had some people wondering whether SpaceX stock would continue to climb higher. Instead, its share price is hovering around $140, below its opening price of $150 when it first began trading.
Some investors are no doubt wondering whether now is a good time to buy. If so, could buying $5,000 of SpaceX stock make one a millionaire over the coming years? Here's what you should know.
Image source: The Motley Fool.
SpaceX is making some huge bets
SpaceX has a lot of ambitious projects. The company just completed the 13th test of its reusable Starship rocket, the largest rocket ever flown, which is key to reducing launch costs and boosting selling prices for SpaceX's rocket business. Once Starships are used for commercial launches, SpaceX estimates that it will reduce the cost of reaching orbit by 99% compared to historical launch costs.
The company also has a frontier AI model, Grok, and is in the process of building data centers for its own use and to sell AI compute power to other companies. SpaceX is also exploring the possibility of building orbital data centers, which it says could eventually be run more efficiently than those on Earth.
Doing all of this costs a considerable amount of money. SpaceX's capital expenditures (capex) accelerated in its second quarter (which ended June 30) to $18.4 billion. That was a significant increase of 550% in capex spending from the year-ago quarter, and it could go higher as SpaceX builds 10 gigawatts of AI data center capacity by the end of next year.
Despite generating $7.8 billion in revenue -- mostly from the company's Starlink satellite internet business -- SpaceX reported a loss of $541 million in the quarter due to high spending.
NASDAQ: SPCX
Key Data Points
Why $5,000 put toward SpaceX stock won't make you a millionaire
While SpaceX has a lot of potential for future growth from its big bets, the math just doesn't add up for you to become a millionaire with just a $5,000 investment. With that amount, SpaceX's shares would have to increase by nearly 20,000%. This would be an impossible feat considering that SpaceX's market cap is already $1.8 trillion.
This doesn't mean that SpaceX stock can't make significant gains or that its big bets on AI and rockets won't pay off, but investors should temper their expectations. SpaceX is spending heavily on its businesses at a time when many investors are questioning whether the return on investment for AI will pan out.
That could result in investors reacting strongly to any negative developments for the company, adding significant instability to SpaceX's short-term share price growth.
