I Still Think SpaceX Stock Is Too Expensive. Its New Forecast Makes It a Much Closer Call.
Measured against the new outlook, the stock's sales multiple falls to the mid-teens. Is it cheap enough?
SpaceX announced higher-than-expected third-quarter results on October 20, with revenue surging 161% year-over-year to $14.6 billion. Management now projects revenue to more than double by early 2027, with total company revenues ranging between $33 billion and $37 billion. CFO Bret Johnsen disclosed these forecasts on the earnings call.
Despite the initial $148 closing price on October 20, the stock climbed around 8% in after-hours trading to approximately $160. Even at this lower price, the stock is still 24% below its June record of $211.39.
Comparing SpaceX's growth trajectory, revenue reached $4.7 billion in Q1 2026, $7.8 billion in Q2, and $14.6 billion in Q3. Growth accelerated from 66% to 87% over the span, with the super intelligence segment—SpaceX's AI unit—accounting for nearly half of the company's sales. Revenue from this segment nearly tripled, growing from $2.6 billion in Q2 to $7.6 billion, including $608 million from Cursor, the coding software company acquired by SpaceX in August.
Operating income expanded significantly to $2.8 billion, up from a $273 million loss the previous year and a $143 million loss in Q2. Net income improved to $4.4 billion, reversing the $1.1 billion loss in the year-ago quarter. However, SpaceX's profit from other sources and a $390 million tax benefit contributed to this turnaround.
Prior to the report, the stock traded at over 80 times trailing 12-month sales, around $23 billion. After the quarter, the trailing revenue estimate jumped to about $32 billion. Even at $160 a share, the stock would be valued at approximately 68 times sales, but at around $2.2 trillion, it appears to reflect a reasonable sales multiple.
The guidance appears ambitious but not entirely unrealistic. Achieving $33 billion in revenue within two quarters after a $14.6 billion quarter would require 50% to 60% sequential growth, which is slower than SpaceX's current 87% pace. Expected fourth-quarter capital spending of $35 billion to $40 billion, nearly double the third quarter's $19.6 billion, adds to the financial pressure.
SpaceX's cash reserves declined to around $90 billion from $100 billion on June 30, with fourth-quarter spending projected to consume around 40% to 45% of this amount. Additionally, only about $42 billion of the $63 billion backlog is expected to convert to revenue in the next year. While compute pricing remains a concern, a run rate near the spot market might decline as quickly as it accelerated.
Given these factors, the stock may no longer be overpriced. At 15 to 16 times the projected sales run rate, the valuation appears more justified. However, investors should await confirmation of a quarter aligning with management's expectations, along with sustainable compute pricing and significant capital spending, before considering an investment at the current price.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
