With a market capitalisation of $2.6trn, Amazon (NASDAQ:AMZN) is one of the biggest stocks in the Dow Jones.
However, Space Exploration Technologies (NASDAQ:SPCX), which debuted on the stock market a week ago (12 June), is already trading at a similar market cap. At one point, it was worth even more than the e-commerce giant, but its value has since pulled back to around $2.4trn.
Is this justified? After all, Amazon is a far larger and more profitable company. Let’s see how much the Dow Jones company could be worth if investors valued it in the same way they do SpaceX.
It would be absolutely huge!
The first thing to note is that SpaceX isn’t actually making any profit yet, so I’ll look at its price-to-sales (P/S) ratio instead. Right now, it’s trading at a P/S of 130.2.
Amazon generated revenue of $742.8bn in the trailing 12 months, so using this P/S values the company at $99.7trn. In this scenario, its shares would be worth $8,197.88. This is a massive difference from its current share price of $245.21.
For perspective, the entire world’s GDP is $123.6trn. Honestly, while I like Amazon and think it’s a great growth company, I don’t think it’s more valuable than three-quarters of the world economy. In fact, it’s nowhere close to this.
Let’s flip the script, though, and see what SpaceX would be worth if it were valued like the e-commerce giant.
A stark contrast to the current valuation
Amazon has a P/S of 3.9. If SpaceX were valued similarly to Amazon, it would only be worth $74.5bn. That’s a tiny fraction of what it’s valued at today.
Moreover, its shares would only be worth $5.30 in this case, a sliver of their current price of $178.80.
Having said all that, I think the space company deserves a higher P/S than Amazon. Its revenue is expected to soar from $18.7bn in 2025 to $62.6bn by the end of 2027. That’s very impressive and fast growth.
Analysts are only estimating Amazon to grow by a much smaller amount of 14.9% in 2026 and 13% in 2027 for comparison.
But is SpaceX’s valuation justified?
Ultimately, when looking at both companies, I think Amazon is much more fairly valued.
There are risks for the e-commerce giant, with the main one being that it’s spending a huge amount on AI infrastructure, which could put pressure on profit. That said, it’s still expected to see strong revenue growth.
SpaceX’s valuation, on the other hand, is quite simply irrational. If I were to apply a P/S of 10, which is almost triple Amazon’s, to account for its superior growth, the space company would still be worth less than 10% of its own current value. And, it’s not even expected to be profitable in the next couple of years.
Amazon’s revenue of $742.8bn dwarfs SpaceX’s $18.7bn. And its profit of $90.8bn in the trailing 12 months is almost 50% higher than the space company’s anticipated revenue in 2027. Therefore, SpaceX having a market cap similar to Amazon makes no sense and is unjustified, in my opinion.
Overall, that’s why I think investors may be better off considering Amazon shares instead.
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Muhammad Cheema does not hold any positions in the companies mentioned.
