After going public on 12 June at $135, Space Exploration Technologies (NASDAQ:SPCX) stock rallied to over $200 last Tuesday (16 June). However, the SpaceX share price has since started to move lower and, in my view, is already showing some warning signs. Here’s what’s going on.
Thin air so high up
The excitement around the largest IPO ever was incredible to see, but now that initial buzz has cooled, the stock faces a reality test. When a company attracts huge demand before going public, investors often focus on the dream rather than the details. But now I think people are starting to think more clearly about whether the valuation based on the current share price is really justified.
For example, after the initial surge, the market-cap is $2.5trn. This puts it in the same area as Microsoft and Amazon. In 2025, SpaceX generated roughly $18.7bn in revenue and posted a net loss, whereas Amazon generated over $716bn in revenue.
Further, SpaceX trades at a steep premium (over 100 times trailing sales). Of course, some of the optimism reflects high investor expectations for its Starlink broadband service and broader AI and digital ecosystem ambitions. But I think the current share price is too high given what the business has proved so far.
I’m pretty sure I’m not the only one with this view, and so that broader worry could create selling pressure. Shareholders may start comparing the company’s price tag with its actual financial performance.
If expectations are already extremely high, even strong results or bold forward-looking ambitions may not be enough. The company may need to deliver years of rapid growth to justify investor optimism.
The present versus the future
What I think the problem boils down to is that SpaceX’s valuation has been built around its potential. The company has major opportunities, including satellite internet through Starlink and reusable rocket technology.
However, investors may become impatient if growth slows or profitability takes longer than expected. Given how high the current share price is, it’s almost the case that it’s already priced for perfection. As a result, it can fall sharply if the story becomes merely good instead of exceptional.
Of course, SpaceX does have huge potential, and we shouldn’t ignore this. The company has achieved something incredible already in that it’s turned space technology into a scalable commercial business. Its reusable rockets have transformed the economics of launches, and Starlink could become a major recurring revenue platform.
It can tap into large government demand for space services and even defence contracts, which is a great source of revenue. However, the size and scale of future deals remains to be seen.
On that basis, even though I do think the company can do very well going forward, I’m waiting for the stock to trade at a more reasonable valuation before buying, and think investors with the same view as me can do the same.
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Jon Smith has no positions in the shares mentioned.
