SpaceX Is Worth More Than Most S&P 500 Companies. Is That Valuation Rational?

In June, Elon Musk's Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, enjoyed the biggest Wall Street IPO in history. The highly anticipated public debut was so successful that SpaceX instantly became one of the most valuable companies in the world -- bigger than most of the other businesses in the S&P 500 (SNPINDEX: ^GSPC) by market capitalization.

That startling achievement speaks volumes about the investor's eagerness to own a piece of SpaceX and its exciting vision for humanity's future. But since its initial public offering, shares have steadily declined, sinking below their IPO price of $135 per share.

Does this price drop signal a buy opportunity? SpaceX continues to sport a massive market cap of $1.5 trillion, so, understandably, investors wonder if the company's valuation is reasonable.

Image source: Getty Images.

A look at SpaceX's valuation

Despite its post-IPO decline, SpaceX is among the top 10 largest companies by market cap. Looking at its valuation, its price-to-sales ratio is 78 as of the week ending July 24. Nvidia, the most valuable company in the world, sports a sales multiple of 20, a bargain by comparison. This suggests SpaceX shares are still pricey.

The lofty valuation is based in part on its vision for the future. SpaceX strives to unlock humanity's potential to become a space-faring civilization, with an eventual lunar base as a stepping stone to a colony on Mars. It describes itself as "the only company that has cracked the code on accessing space at scale."

Cathie Wood's Ark Invest predicts the company will achieve an enterprise value of $2.5 trillion by 2030. That assumes its biggest revenue driver, its Starlink satellites delivering internet service to underserved areas of the planet, will achieve $300 billion in annual revenue by 2035.

Starlink generated sales of $11.4 billion in 2025, an impressive 50% year-over-year increase. Even so, to sustain that level of expansion over a decade will be difficult. SpaceX admitted growth requires consumers to accept Starlink as an alternative to existing internet providers and for mobile device manufacturers to implement hardware and software modifications.

Analyzing SpaceX's financials

Looking beyond Starlink, the company's 2025 revenue totaled $18.7 billion, a 33% increase over 2024. However, in the first quarter, sales growth dropped to 15% year over year to $4.7 billion, as its rocket business fell 28% from 2025 to $619 million due to fewer launches. This demonstrates SpaceX's income generation will fluctuate, and if it cannot meet the sky-high expectations driving its elevated valuation, its share price can fall further.

While the company's goals are enviable, achieving them will be a long, winding path over many years. In the meantime, SpaceX is burning cash at an accelerating rate. Its 2025 capital expenditures totaled $20.7 billion, nearly double the $11.2 billion spent in 2024. Its Q1 2026 operating loss of $1.9 billion is a substantial reversal of 2025's operating income of $27 million and illustrates the concerning rise in costs relative to its sales growth.

For these reasons, SpaceX's valuation still looks questionable despite the recent share price decline. The stock could drop further if upcoming financial results fail to meet Wall Street's expectations. As a result, SpaceX stock is only a buy for investors with a high risk tolerance.

Robert Izquierdo has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.