Is SpaceX Stock a Buy Before Its First Earnings Report as a Public Company?

Now that Space Exploration Technologies (NASDAQ: SPCX), or SpaceX for short, has arrived on Wall Street, investors can begin looking ahead to its first earnings report as a public company. It might be the most anticipated event of the earnings season, expected sometime in early August.

Not only will CEO Elon Musk deliver updates on SpaceX's business, but a ton has happened over the past few weeks. The company is acquiring Cursor, an artificial intelligence (AI) start-up, for $60 billion in stock. Additionally, SpaceX now has just over $100 billion in cash to put to work toward its ambitious goals, including putting AI data centers in space.

Despite all the buzz, I'm not a buyer heading into SpaceX's first earnings report. Here's why.

Image source: The Motley Fool.

SpaceX will need time to deliver on its immense potential

The company's S-1 filing turned heads, pegging SpaceX's total addressable market at $28.5 trillion. Although most people know SpaceX for Starlink and its rocket launches, the company attributes the vast majority of its addressable market to AI.

SpaceX is certainly a unique company, with a tantalizing mix of growth opportunities across AI and space. However, achieving its ambitious goals, including those orbital data centers, won't happen overnight. Elon Musk is known for setting a high bar, even if it takes years to deliver results.

For as much growth potential SpaceX has in AI, it's also currently the company's least profitable business unit and faces steep competition from OpenAI and others. Starlink is SpaceX's most profitable business, but its revenue growth slowed dramatically from 96.4% in 2024 to 49.8% last year.

SpaceX's IPO is a game changer, and it wouldn't be surprising to see growth accelerate across the company as Elon Musk deploys billions of dollars of fresh capital. That said, SpaceX's appeal is far more rooted in its long-term opportunities than what the company will likely deliver by its first earnings report.

That valuation could spell trouble in the meantime

It's not a bad thing to look ahead. After all, Wall Street typically trades stocks based on what it believes will happen, not the past. But it gets tricky with SpaceX, a stock with a market cap of $2.2 trillion. That's roughly 118 times the company's total revenue last year.

Stocks rarely sustain such high valuations, let alone reach them. There's a high risk that the stock will sell off if SpaceX doesn't deliver strong results or some other catalyst to keep investors willing to pay so much to own shares. At the very least, it's difficult to see how SpaceX can continue to push much higher in the short term. Shares quickly retreated from their highs once the initial IPO excitement wore off.

There's little harm in holding off on buying SpaceX stock until investors see that first earnings report and the tone Elon Musk sets for the company moving forward.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.