Can SpaceX Deliver Tesla-Level Returns? The Bull and the Bear Case

Tesla (NASDAQ: TSLA) went public in 2010. One of the company's missions (though by no means the only one) was to revolutionize the auto industry. The electric vehicle (EV) maker has had tremendous success in that department. It has helped make EVs more mainstream, pioneered a vertically integrated model that some competitors in the industry are now looking to replicate, and sells cars directly to customers, something legacy automakers generally still can't legally do in the U.S.

Tesla and its shareholders have been rewarded: The company has posted amazing returns over the past 16 years. Now, Tesla's CEO, Elon Musk, is on the path to revolutionizing space travel. The company through which it is doing so, Space Exploration Technologies (NASDAQ: SPCX), recently went public in the largest IPO ever. If SpaceX can deliver returns similar to Tesla's, it is a great idea to buy the stock today. Let's discuss some arguments in favor and against investing in SpaceX.

Image source: The Motley Fool.

The bull case: Innovation can drive returns

SpaceX wants to make humans "multiplanetary." Think: people constantly traveling to, perhaps even living, on other planets. That's obviously not possible yet, not least because space travel is incredibly expensive. Building rockets is costly, and for the most part, they aren't reusable. Enter SpaceX. Its highly vertically integrated approach allows it to manufacture its rockets in-house more cost-effectively, and the company's famous rockets, Falcon 9 and Falcon Heavy, are partially reusable.

SpaceX goes beyond space travel, though. Through Starlink, a large network of Low Earth Orbit (LEO) satellites, it offers internet services, especially in rural and other underserved regions. Further, SpaceX's xAI provides artificial intelligence (AI) services and owns Grok, a competitor to ChatGPT. SpaceX has found tremendous success so far. The company currently dominates the launch market, grabbing an impressive 51% of total orbital launches in 2025, according to some data.

The company's Starlink also accounts for 54% of all operational satellites in orbit, giving it a solid lead in that market; it had 10.3 million active Starlink subscribers as of March 31. Further, SpaceX should continue innovating. The company is working on Starship, a next-gen, fully reusable rocket that could be yet another revolution in the field. SpaceX sees a huge addressable market ahead, the largest ever identified, according to the company. It estimates it at $28.5 trillion (that's not a typo).

Provided the company can get close to capturing even a fraction of this opportunity, SpaceX could eventually make Tesla's otherwise impressive returns look average.

The bear case: Competition, valuation, and the Musk factor

SpaceX looks promising, but several factors should give investors pause. First, while it is true that it is far ahead of the competition so far, that could change in the future. Several companies -- public and private -- are increasingly looking to eat SpaceX's lunch. A first-mover advantage counts for something, but now that many companies are hot on its tail, SpaceX will have to continue innovating, or it may eventually lose its lead. Investors should keep that in mind. Another potential issue is valuation. SpaceX is worth $2.4 trillion. That's almost as much as Amazon's (NASDAQ: AMZN) $2.6 trillion.

It's hard to justify this valuation given SpaceX's financial results. During the fiscal year 2025, SpaceX's revenue increased by 33% year over year to $18.7 billion, while the company reported a net loss per share of $1.69 after posting a modest net income the year before. Meanwhile, Amazon's first-quarter net sales of $181.5 billion grew 17% year over year and were almost 10 times SpaceX's entire 2025 revenue.

Amazon is also consistently profitable and posted net earnings per share of $2.78 during the period, up 75% year over year. The market is forward-looking, and right now it is valuing SpaceX as though the company will find at least some success in its future endeavors, whether in space travel or elsewhere in its business. The flip side: Any perceived issue could send the stock price off a cliff. Lastly, investors should consider that Elon Musk is now the CEO of two major publicly traded corporations and remains a polarizing figure.

That could be good for the business: Investors might flock to SpaceX and bid up its share price because of Musk's impressive track record of leading innovative companies. On the flip side, Musk's tendency to overstate timelimes and business projections -- and his active social media presence -- can sometimes be a problem. So, what's the verdict? SpaceX is likely to be a highly volatile stock no matter what, but I'd advise investors to wait for a major pullback before initiating a position. The company's vision is aggressive, and it could deliver strong returns over the long run, but the stock is far too expensive at current levels.

Prosper Junior Bakiny has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool has a disclosure policy.