SpaceX Just Reached Orbit With Starship. Here's What a $1,000 Investment Could Be Worth by 2030

SpaceX (NASDAQ:SPCX) reached a major milestone in its rocket-launching business recently, when the massive Starship reached orbit for the first time and deployed 26 Starlink satellites.

To be sure, it didn't go perfectly. An engine shut down during the ascent, and splashdown occurred three hours into a mission scheduled for 10. Even so, it's quite a milestone.

Image source: Getty Images.

SpaceX stock hasn't reacted much to the news, and still trades for about 30% below its post-IPO peak. But if you invest $1,000 into the space, internet, and AI conglomerate today, what could it be worth by 2030?

Starship is the future

SpaceX has several future catalysts, but the one that is most important to the rocket launch side of the business is Starship. It is a massive, fully reusable rocket that, if successful, would dramatically lower the cost of putting objects into space. Cheaper launches mean more Starlink satellites in orbit, better economics for SpaceX launch customers, and a clearer path toward a successful Artemis III moon landing, which is planned for next summer.

How is SpaceX doing?

Just to quickly recap SpaceX's most recent (second quarter) earnings report, the company's revenue grew 92% year-over-year to $7.8 billion. Starlink was responsible for about $4.3 billion of that and was the most profitable part of the business, with $1.66 billion in operating profit.

The company has a solid balance sheet as well, ending the quarter with about $100 billion in cash, most of which was raised in its IPO, and this should fund the company's growth ambitions for years.

However, while Starlink is highly profitable, the other two main parts of SpaceX are growing rapidly but are losing money. The main culprit is the AI segment, which more than tripled revenue but posted a $1.26 billion operating loss while accounting for more than 85% of the company's total capital spending.

What could a $1,000 investment in SpaceX be worth by 2030?

Let's be clear. SpaceX is not a cheaply valued stock today. At the current price of about $160 per share as of this writing, SpaceX trades for about 70 times revenue. That's a hefty price tag for an unprofitable company, even one that is growing this fast.

Here are three scenarios, each of which I consider to be quite possible:

First, my bear case is that SpaceX's revenue grows at an average rate of about 35% per year through 2030. This is conservative. It would be significantly lower than the recent growth pace and assumes factors such as an eventual slowdown in Starlink's growth rate and the AI infrastructure build-out.

Let's also say that SpaceX commands a more reasonable 12 times sales. In this case, a $1,000 investment would be worth about $570 in 2030.

Next, if the company can grow its revenue at a 55% annualized rate, which would be closer to what I'd consider a "base case," and SpaceX trades for 15 times sales in 2030, a $1,000 investment would be worth about $1,240.

Finally, my bull case would be 75% annualized top-line growth and a valuation of 20 times sales in 2030, which would turn a $1,000 investment into about $2,700.

Again, I consider all three to be realistic possibilities. And keep in mind that the market doesn't exactly have a track record of applying rational valuation metrics to SpaceX – it's entirely possible the stock could still trade at 70 times sales in 2030. I view it as unlikely, but it's possible.

What could go wrong (and right)?

For the bull case to be correct, Starship would need to prove that it can reliably fly and fulfill the company's expectations. The AI segment would need to maintain its momentum and demonstrate to investors a clear path to profitability. Starlink would also need to continue growing rapidly without sacrificing too much of its margin. None of these three things is guaranteed to go as well as management hopes.

There's also quite a bit of valuation risk. At 70 times sales, there's clearly a lot of future growth and profit priced into the stock. Investors seem completely fine paying a premium multiple for now, but if growth even slows modestly, that may not be the case in the years to come.

The bottom line is that Starship's milestone makes the ambitious long-term vision of the rocket launch business more credible. But investors are already paying a lot for the company's future success. SpaceX could still end up being an excellent investment from here if nearly everything goes well, but that's not the only scenario that could play out.

Matt Frankel, CFP® 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.