SpaceX Stock Looks Expensive. Here's the Valuation Case for and Against.
Key PointsSpaceX stock will look cheap if it can hit Elon Musk's future revenue targets.
Space Exploration Technologies Corp., also known as SpaceX, has been trading at a high valuation, with some analysts arguing that it is overpriced. However, the company's potential for growth in the coming years could make it a much more affordable investment. CEO Elon Musk has projected that SpaceX could generate $1 trillion in revenue by 2030 and $3.5 trillion by 2033, which is significantly higher than the current revenue forecasts.
The company's biggest growth driver is its AI infrastructure business, which relies on access to AI chips and funding for build-outs. SpaceX has a strong relationship with Nvidia, and its Terafab joint venture could further improve its chip procurement capabilities. Additionally, SpaceX is expected to see growth from its Starlink satellite internet service, launch business, and AI coding following the acquisition of Cursor.
The company's potential involvement in the U.S. mobile market, worth over $350 billion, could also contribute to its future growth. While SpaceX's revenue is currently only $18.7 billion, the company's high valuation could be justified if it can achieve its ambitious revenue targets. However, the company will need to invest heavily in capital expenditures to capture these opportunities, which could put downward pressure on the stock price.
Given these factors, the stock appears to be trading at a premium, with a forward price-to-sales (P/S) multiple of 49 times this year's estimates and 19 times next year's.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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