Perhaps few stocks can divide a room faster than Space Exploration Technologies (SPCX -1.36%). Many investors love the stock; many absolutely don't. Either way, most eyes have been on the space stock since its blockbuster IPO in June, which raised a record $75 billion and valued SpaceX at about $1.8 trillion.
Following its explosive debut, SpaceX shot up to an all-time closing high of roughly $211. Today it trades at around $152, roughly 28% lower. That sharp pullback begs the question: What will SpaceX be worth in five years?
Image source: Getty Images.
On the one hand, there's potential for substantial growth. Indeed, Morgan Stanley once predicted that SpaceX's revenue will grow from $45 billion in 2026 to $319 billion in 2030.
If Morgan Stanley is even remotely right, SpaceX could grow into a $4 trillion company by 2031 without requiring anything close to today's high sales multiple. Morgan Stanley itself has maintained a $300 price target on SpaceX. That would turn a $10,000 investment today into about $19,700, or nearly double your money.
NASDAQ: SPCX
Key Data Points
On the flip side, SpaceX already has an absurdly high valuation. It trades at about 68 times sales and 200 times forward earnings. If those figures mean nothing to you, let me put it plainly: Investors are paying a lot today for growth that hasn't materialized yet. That means that even if the business continued to grow, the stock might not rise nearly as fast, as fundamentals catch up to the valuation.
For that reason, my prediction is a little more cautious: By 2031, I think SpaceX will be worth $250. At that price, a $10,000 investment would be worth about $16,500. That's still a strong return for a growth stock, even if it's not as spectacular as some of the more bullish forecasts imply.
