SpaceX Stock: High Valuation and Lockup Expiries Create Downward Pressure

Space Exploration Technologies (SpaceX), Elon Musk's space exploration and artificial intelligence company, remains under investor scrutiny following its massive Nasdaq (SPCX) initial public offering (IPO) in recent months. Despite the stock falling below its IPO price, market experts suggest that its current valuation remains exceedingly high. With a market capitalization of approximately $1.847 trillion, making it the world's eighth most valuable company, SpaceX's IPO price started at $135 per share, surging to $150 during its opening trading session.

In the company's first financial report post-IPO, second-quarter revenues soared by 92% to $7.8 billion, while its net loss narrowed to $541 million. However, despite this robust revenue growth, SpaceX's colossal investments in artificial intelligence (AI) are noteworthy. AI business segment capital expenditures in the second quarter reached $15.8 billion, more than doubling quarter-over-quarter. While company management indicates a continued aggressive investment in AI in the coming quarters, this raises concerns about its near-term performance.

Market observers believe SpaceX's current valuation is unsustainable, particularly with its price-to-sales (P/S) ratio hovering at a record high of 73.4. For comparison, most other publicly traded companies with market capitalizations of $1.5 trillion or more boast significantly higher sales figures and consistent profitability than SpaceX. Furthermore, the phased expiration of post-IPO lockup periods is increasing the supply of shares in the market, intensifying selling pressure. The release of an additional 911.5 million shares in August more than doubled the publicly available float, contributing to a downward impact on the stock price.

SpaceX's business model is understood to comprise three main components: space launch services, Starlink satellite internet, and AI investments. However, analysts emphasize that the company's future valuation largely hinges on the success of its AI and Starship projects. Historically, the vast majority of IPOs priced above 40 times sales have underperformed the broader market in the first three years following their public debut.

Analyst and market expectations suggest that volatility in SpaceX shares may persist until mid-2027, when all lockup periods are fully lifted. While Morgan Stanley analysts project a 'bull case' where SpaceX stock could reach $600, valuing the company at $8 trillion, this scenario relies on ambitious assumptions such as the deployment of AI data centers in orbit and Starlink serving hundreds of millions of AI-powered robots by 2040. Other institutions, such as Morningstar, hold a much more skeptical view, assigning only a 7% probability to their most optimistic scenario of $154 per share. This indicates that investors should exercise caution given the current high valuation and potential selling pressures in the upcoming period.