Is SpaceX Under $160 a Bargain or a Trap?

Space Exploration Technologies (NASDAQ: SPCX), or SpaceX, had its initial public offering (IPO) on June 12 and set a record for the largest-ever public debut, raising $85.7 billion in cash for the company from the sale of an initial batch of stock priced at $135 per share that valued the company at $1.77 trillion. While the stock's price has seen significant volatility since then, it also trades well above its initial listing price but roughly where it stood at the market close on the day of its public debut.

As of this writing, SpaceX stock is up 16.7% from its listing price but down 2.1% from market close on its first day of trading. With the stock trading at $157.54 per share as of market close on July 1, it also carries a market capitalization of roughly $2.07 trillion as of this writing.

Is SpaceX a great buy trading under $160 per share, or should investors wait for a substantial pullback?

Image source: Getty Images.

Can SpaceX keep soaring?

While SpaceX stock has seen big gains since its initial public offering, its share price is still down roughly 30% from its lifetime high of $225.64 reached in the middle of June. Given the stock's high volatility and the likelihood that shares are still relatively early in their price-discovery phase, it wouldn't be surprising to see SpaceX set a new valuation high sometime in the near future. On the other hand, I don't think that the stock is necessarily a great buy right now.

SpaceX grew revenue 33% year over year to $18.7 billion last year, and there's a good chance its sales growth will accelerate this year. With the company's $920 million-per-month artificial intelligence (AI) contract with Alphabet starting in October, the AI segment already looks poised for big growth, given the roughly $3.2 billion in sales it recorded in 2025. It's also likely that SpaceX's Starlink and rocket-launching businesses will post big growth this year, helping to push this year's sales far above 2025's revenue.

Even so, SpaceX is still currently valued at roughly 110 times last year's sales -- and the business recorded a net loss of roughly $4.9 billion last year. With the company still investing to build out its AI infrastructure footprint, I also think it's likely the business will post a substantially larger net loss this year.

While I don't think that the company's net losses look particularly concerning in the context of its broader financial profile, the stock comes with a lot of risk right now. While insider shares connected to the IPO are still in their lockup period, it appears that roughly $800 billion in insider holdings are on track to become eligible for sale between now and October. With many insiders potentially on track to lock in massive gains by selling shares and concerns about volatility tied to the broader macroeconomic picture, I think SpaceX stock looks closer to a trap than a bargain right now.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.