SpaceX (NASDAQ:SPCX) shares have experienced a sharp pullback since their debut, declining approximately 32% from the intraday high of $225.64 reached on June 16. The stock now trades near $153, still above the $135 IPO price from June 12. Investors are questioning whether this decline represents a buying opportunity or if the valuation remains stretched.
Valuation Still Elevated Despite Drop
Even after the sell-off, SpaceX commands a price-to-sales multiple of roughly 107 times 2025 revenue. For context, Nvidia—a high-growth AI leader—trades at about 21 times sales. This extreme multiple suggests the market is pricing in years of exceptional execution, despite the company's current lack of profitability.
SpaceX reported a net loss of $4.9 billion in 2025 on revenue of $18.7 billion. While the top line is expanding rapidly, driven by Starlink and launch services, the bottom line remains deeply in the red. This disconnect between growth and earnings is a central concern for bears.
Analyst Caution: Morningstar Says Wait
Morningstar analyst Nicolas Owens has issued a cautious view, acknowledging SpaceX's launch cost advantages and Starlink's scale but concluding the stock appears "overvalued in almost any scenario, at least in the near term." The firm suggests long-term investors may find a better entry point later this year when lockup periods expire, increasing the float and potentially reducing price volatility.
SpaceX currently has a small public float, which has amplified price swings. As insider and employee shares become eligible for sale, the market will gain a clearer picture of natural demand. Related coverage on SpaceX stock returning to $150 highlights the ongoing debate between bulls and bears.
Bull Case Remains Intact
Despite valuation concerns, SpaceX's fundamental strengths are undeniable. The company launched 83% of all mass sent to orbit from Earth in 2025, nearly ten times more than its nearest competitor. Starlink, its satellite broadband division, is emerging as a primary cash-flow engine, benefiting from in-house launch capabilities that keep costs low.
Index inclusion is also providing near-term support. SpaceX is being added to Russell indexes and will join the Nasdaq 100 on July 7, forcing passive funds to purchase shares. This could create a temporary demand boost, as noted in our article on SpaceX joining the Nasdaq-100 and $4.3B inflows.
Key Risks to Consider
- Valuation risk: At 107x sales, the stock leaves little room for error. Any execution misstep could trigger further declines.
- Profitability timeline: SpaceX's path to group-level profitability remains uncertain, with heavy investment in Starship and Starlink expansion.
- Lockup expiration: Increased share supply later this year may pressure the stock if demand does not keep pace.
Some prominent investors remain bullish. Cathie Wood has increased her SpaceX position, as covered in Cathie Wood dumping Alibaba and betting on SpaceX. However, the stock's post-IPO volatility underscores the challenge of pricing a company with such high growth and high losses.
In summary, while the 32% drop from the peak may appear attractive, the underlying valuation and financial losses suggest caution. Investors should weigh SpaceX's market dominance and index-driven demand against the risk of overpaying for future potential.
This article is for informational purposes only and does not constitute financial advice.
