Could SpaceX Be More Valuable Than Amazon and Microsoft? Here's What Price Its Stock Would Need to Hit for That to Happen
Key Points
SpaceX's stock has been soaring in its first couple of days on the open market.
It's already among the most valuable companies in the world and is within striking distance of tech giants Amazon and Microsoft.
Its sky-high valuation, however, isn't backed by strong fundamentals.
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At over $2.5 trillion in market cap, SpaceX (NASDAQ: SPCX) is already one of the most valuable companies in the world right now. It's more highly valued than blue chip companies such as Coca-Cola, JPMorgan, and McDonald's, which, unlike SpaceX, are highly profitable businesses.
Given the excitement around the stock and its already high valuation, it may be entirely possible that in the very near future it eclipses tech giants Amazon and Microsoft as well. Here's how high it might need to rise to get to that level.
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Image source: Getty Images.
SpaceX could soon be the fourth-largest company on the U.S. markets
On its first day of trading, SpaceX stock jumped more than 19% on Friday. On Monday, it was up by nearly 20%, pushing its market cap to more than $2.5 trillion.
It's an astonishing valuation when you consider that it's not far from Amazon and Microsoft, massive tech companies, whose market caps are $2.6 trillion and $3 trillion, respectively. They are beasts in the tech sector and are highly profitable. SpaceX isn't anywhere close to them in terms of revenue, and it is incurring billions in losses.
Despite being a much riskier stock to own, investors haven't flinched at paying an obscene premium for SpaceX stock. If it reaches a value of approximately $203, it'll be worth more than Amazon. And if it climbs to around $230, it'll be worth more than Microsoft, assuming, of course, that the software stock doesn't rise much higher than where it is now. At that point, the only stocks that would be more valuable than SpaceX on the major exchanges would be Apple, Alphabet, and Nvidia.
SpaceX may be the hot stock to own right now, but it could be due for a big correction
Although SpaceX stock has been rallying out of the gate, investors are pricing it at well over 100 times revenue. Its growth rate was just 15% last quarter, and the business could take years to realize growth opportunities in space and AI. Last quarter, the rocket company also incurred more than $4 billion in losses, and its spending has ramped up significantly due to investments in AI. The company faces a long, challenging road ahead. Its success is by no means guaranteed, and it could be a long time before it turns a profit.
SpaceX stock has already become a highly speculative buy at its current levels, and it offers no margin of safety. There's plenty of downside risk for anyone who buys the stock today. Ignoring valuations and fundamentals can lead to significant losses later on. Buyer beware.
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JPMorgan Chase is an advertising partner of Motley Fool Money. David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, JPMorgan Chase, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.
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