A Big Shift Just Happened at SpaceX. Is It Time to Buy?

Investors have been observing SpaceX closely for various reasons. The company, known as SpaceX, recently went public, making history by completing the world's biggest initial public offering. SpaceX operates in three high-growth sectors, including artificial intelligence (AI), which has driven the stock market higher recently. SpaceX's founder, Elon Musk, is known for setting ambitious goals.

This combination of factors makes SpaceX an exciting company to watch. However, investors typically aim to buy shares to benefit from the company's successes over time. Some investors, optimistic about SpaceX's potential, have invested in the stock since the IPO or in recent months. Others have been hesitant, considering the stock too risky due to heavy spending and developing technology.

Recently, however, SpaceX experienced a significant shift, and the question arises: is it time to buy now? Let's examine the SpaceX story so far. SpaceX made headlines with its June debut at a valuation exceeding $2 trillion, a remarkable achievement considering other tech giants took years to reach such levels. The company raised $85 billion after exercising an overallotment option, and its stock climbed during its initial trading days.

However, since then, the stock has experienced ups and downs, currently facing a 8% decline. Despite this, SpaceX has impressed many investors with its growth businesses and strong ambitions. The company operates in space, satellite-based connectivity, and AI, with the latter unit called Super Intelligence or SI. SpaceX designs rockets aimed at becoming fully reusable to reduce launch costs.

Recently, SpaceX reached a major milestone, with its fully reusable Starship completing two firsts: an orbital flight and the first delivery of a significant payload, consisting of 26 satellites for the Starlink connectivity business. This achievement highlights how developments in one unit benefit the others, suggesting increased efficiency as SpaceX progresses.

The ability to transport equipment to space independently would offer substantial cost savings and control over launch timing, applicable to both the connectivity and SI businesses. SpaceX's goal of putting data centers in space is crucial to this vision. Now, let's look at the financial picture and the recent shift at SpaceX. While Starlink has been generating most of the company's revenue, SI has recently taken the lead.

In the latest quarter, SI revenue surged 829% to $7.5 billion, compared to Starlink's 69% increase to $5.2 billion. This indicates that SpaceX's substantial investment in SI is beginning to yield results. The company's SI capital spending in this quarter exceeded $16 billion. Thus, SI has become SpaceX's growth driver in terms of sales, although Starlink still leads in operating profit.

Starlink's operating income was $2.3 billion, while SI's was $431 million. However, SI reported a loss from operations more than $1 billion in the previous year's quarter. SpaceX's CEO, Elon Musk, predicted in the earnings call that SpaceX's annual recurring revenue would reach $500 billion to $1 trillion by the end of the next year.

Given this shift in SI sales and Musk's overall optimism, is SpaceX a good buy right now? Aggressive investors might consider purchasing a few shares during the current dip. However, for most investors, it would be wise to monitor additional earnings reports to assess capital expenditure and revenue growth trends before investing in this technology and industrial giant.