SpaceX Stock Soared 19% on Its Market Debut. Here's Why I'm Not Buying It.
Written by Anthony Di Pizio for The Motley Fool -> SpaceX stock hit the public market on Friday, June 12, and ended the day with a $2.1 trillion market capitalization. The company has three sources of revenue: Space, connectivity, and artificial intelligence (AI). Wall Street
SpaceX stock hit the public market on Friday, June 12, and ended the day with a $2.1 trillion market capitalization.
The company has three sources of revenue: Space, connectivity, and artificial intelligence (AI).
Wall Street is forecasting significant revenue growth for SpaceX, but its sky-high valuation is keeping me on the sidelines.
SpaceX (NASDAQ: SPCX) went public on Friday, June 12, and ended the day with a 19% gain. The company had a market capitalization of $2.1 trillion at the close of trading, making it the world's seventh-most-valuable company.
While SpaceX is best known for developing the world's first reusable rockets, management believes space-related solutions actually represent its smallest financial opportunity in the long run. Instead, the company could make most of its money by selling connectivity and artificial intelligence (AI) solutions, and it's already having commercial success on both fronts.
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That said, SpaceX is still generating very little revenue relative to its enormous market capitalization, which I think creates an uncomfortable risk-versus-reward situation for investors. Here's why I'm not buying the stock.
SpaceX values its addressable market in the space segment at $370 billion, whereas the connectivity business presents a $1.6 trillion opportunity. But the AI business dwarfs both, with a potential market size of $26.5 trillion.
