3 Reasons Not to Buy SpaceX Stock Right Now

Space Exploration Technologies (NASDAQ: SPCX) debuted arsenic the biggest archetypal nationalist offering (IPO) ever, and the banal has already had immoderate chaotic swings. As of this writing, it's up 37% from the IPO terms of $135, but it's 18% disconnected its intraday precocious past week.

I expect further volatility, since the terms seems unconnected to the company's fundamentals. Here are 3 reasons not to bargain it today.

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1. It's excessively costly

The astir evident flaw successful the investing thesis is that the banal is astronomically expensive. At the existent price, it trades astatine 125 times trailing-12-month sales. A banal that trades astatine 125 times earnings is fantastically expensive; the price-to-sales ratio is by explanation little due to the fact that income are astir ever overmuch higher than nett income. In fact, the mean S&P 500 price-to-sales ratio is 3.7.

Investors are consenting to wage this exorbitant premium due to the fact that they are convinced that SpaceX has tremendous opportunities. So far, its maturation has been fair, but not precisely stellar; income accrued 34% successful 2025 and 16% twelvemonth implicit twelvemonth successful the 2026 archetypal quarter.

The institution has identified $28.5 trillion successful marketplace opportunities, which it calls "the largest actionable full addressable marketplace successful quality history." But erstwhile you excavation a small deeper, the immense bulk of that isn't successful its abstraction segment, but successful the artificial quality (AI) segment. And astir of that, $22.7 trillion, is successful a precise circumstantial class that it calls endeavor applications. Most of its superior expenditures are besides going to its AI business, oregon xAI, truthful what you're paying for is mostly this segment.

The institution and its main enforcement officer, Elon Musk, are decidedly creating groundbreaking planetary developments, and that's wherever assured investors spot their opportunities. However, adjacent successful abstraction and outer broadband, iSpaceX isn't the lone subordinate successful the field. Right now, it's the biggest, but that doesn't needfully supply an economical moat against competition.

2. There could beryllium a driblet aft the lockup play

Another wrinkle is that galore insiders are restricted from selling shares close present owed to lockup periods. IPO companies person these restrictions to support a flood of caller shares from entering markets and driving down prices. IPO stocks thin to driblet aft lockup periods expire and the flood begins. The thought is that the banal is amended established astatine that constituent and tin grip volatility. But it creates charismatic introduction points for caller investors and makes it a batch much logical for investors to hold for those points.