SpaceX Is Outperforming Everything. Is It Still the Smartest Buy Right Now?

Space Exploration Technologies (NASDAQ: SPCX) has gone where no public company has gone before. After debuting with a $1.5 trillion valuation, the stock surged nearly 20% over its first two trading days, lifting its market capitalization to roughly $2.5 trillion. Only five companies in the world are worth that much: Amazon, Microsoft, Apple, Alphabet, and Nvidia -- and SpaceX could possibly surpass at least two of them soon.

In early July, SpaceX will likely be added to the Nasdaq-100, which could set off a chain reaction of exchange-traded funds (ETFs) adding the space stock to their holdings. However you slice it, SpaceX's near-term market days -- barring unforeseen events -- are shaping up to be more in the green than red.

Too much green, though, has a funny effect on vision: It makes everything around it seem brighter, more euphoric. Guards are lowered, caution thrown to the wind. Everyone knows an upward trend can't continue forever. Like it or not, a trillion-dollar company that reported less than $20 billion in total revenue last year is in bubble territory.

SpaceX could be one of the most important companies of the century, but is it a smart stock to buy right now?

Image source: Getty Images.

The Elon Musk effect

SpaceX is a trifecta of innovation -- rockets, connectivity, artificial intelligence (AI) -- emblazoned with the face of one of the most famous entrepreneurs of the 21st century. Elon Musk now leads two companies worth a combined $2 trillion. His track record at Tesla, which made it the most valuable carmaker in the world, has wrapped SpaceX in the same aura of possibilities that once surrounded the nascent electric vehicle (EV) manufacturer.

There's a lot more to SpaceX than just Elon Musk's name. About 15,000 satellites are in orbit around Earth, and about 10,000 belong to SpaceX. Over 10 million users are already subscribed to Starlink, the company's space-based internet, including customers from airlines to governments to everyday consumers. Roughly 650 total launches have been recorded since 2002, with SpaceX accounting for about 80% of global mass-to-orbit since 2023.

And Grok may not be your favorite AI, but one day SpaceX's orbital data centers could be where the brain of your preferred chatbot lives.

Over the next 10 years, how much could all of this be worth? Recently, Musk made a Musk-sized claim: He would be surprised, he wrote on X, if SpaceX revenue was under $1 trillion in 2031. That would amount to roughly 94% annual revenue growth for the next six years. Not even Amazon makes $1 trillion in revenue -- and no company currently makes more than Amazon.

At this point, I'm not recommending SpaceX as a long-term buy to my friends and family. It's not that I'm skeptical of its business; it has the potential to become one of the most important companies in the world. The mismatch, though, between its trillion-dollar valuation and fundamentals makes me uncomfortable. Until that narrows, I'm fine watching this space stock orbit from the sidelines for now.

Steven Porrello has positions in Microsoft and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.