Lloyds (LSE: LLOY) shares might be the less exciting story this month, but I’m thinking about investing in them over SpaceX (NASDAQ: SPCX) right now.
One is a 300-year-old institution generating reliable cash from a business model that doesn’t need to be reinvented.
The other just went public at a valuation that prices in some phenomenal earnings growth. So why would I rather choose boring over brilliant right now?
How the numbers compare
SpaceX listed on 12 June at $135 (£102) a share and surged to over $200 (£151) a share last week. As I write on Tuesday (23 June), the stock has plummeted 16.4% to $154.6 (£116.6) a share, giving the company a market cap of $2trn (£1.51trn).
Monday had marked the third straight trading day of share price declines, as outlined below:
- Wednesday 17 June: $191.82 a share, down 4.9%
- Thursday 18 June: $185 a share, down 3.6%
- Monday 22 June: $154.6 a share, down 16.4%
At that level, the stock was on a price-to-sales (P/S) ratio of around 108 times. That’s among the most expensive valuations ever assigned to a newly listed company
A P/S ratio that high assumes years of uninterrupted growth with zero room for disappointment.
I think SpaceX’s Q1 2026 results already showed some cracks, with revenue growth slowing to 15.4% and an operating loss of $1.94bn as R&D spend on Starship and its xAI integration more than doubled.
Lloyds, by contrast, trades on a price-to-earnings (P/E) ratio of 13.5. Of course, this measures the market cap against profits rather than sales — and even there it has a much smaller multiple compared to SpaceX.
Perhaps today’s SpaceX share price correction is a sign of investor concerns?
Why I’d rather buy the bank
Lloyds has been generating cash through recessions, rate cycles, and crises for centuries. The business is currently returning capital to shareholders via a £1.75bn buyback alongside a steadily growing dividend, underpinned by genuine, current earnings rather than a story about the future.
We have delivered a robust financial performance and we are committed to delivering attractive and sustainable returns for our shareholders.
Charlie Nunn, Chief Executive, Lloyds
To be fair to SpaceX, the investment case may have some merit.
If the company dominates both space launch and AI-linked satellite infrastructure over the next decade, today’s price could look cheap in hindsight.
It’s speculative, but the appeal for investors is that the company is a true pioneer at the forefront of a fundamental shift in the global economy.
That’s a real, if speculative, possibility. Investing in a company like Lloyds requires no such leap of faith, albeit with less tantilising growth prospects.
The risk that worries me most
The bit that concerns me isn’t just the multiple but rather what happens if growth slows further.
A business burning billions on R&D and Starship development, at this valuation, can’t afford to miss on performance.
Any hiccups could force it back to equity markets for fresh capital. That could dilute existing shareholders just to keep funding the ambitious growth plans.
Clearly, Lloyds isn’t without risks of its own. Falling interest rates could squeeze the company’s net interest income, and the health of the banking sector is closely tied to that of the broader economy.
My verdict
In my view, the bank offers something SpaceX simply can’t right now: a business that’s already proven, priced reasonably, and paying a healthy cash dividend.
SpaceX might be the better business in 10 years’ time. But I’m not willing to pay today’s price to find out.
But while I’m considering Lloyds shares, I think there are other stocks that are less sensitive to the potential UK political changes in the near future.
Should you invest £5,000 in Lloyds Banking Group Plc right now?
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Ken Hall does not hold any positions in the companies mentioned.
