SpaceX Isn't Profitable Yet. Does That Make It a Buy, a Hold, or a Pass?

SpaceX, the aerospace and AI company founded by Elon Musk, is set to go public on June 12. It aims to raise up to $75 billion, valuing it at about $2 trillion, making it the largest IPO in history.

But at that market cap, it would be valued at 107 times its 2025 sales. It's also deeply unprofitable. So should you buy SpaceX's red-hot IPO, or should you ignore its volatile debut?

Image source: Getty Images.

The key facts about SpaceX

In 2025, SpaceX generated 61% of its revenue from Starlink, its satellite internet service. It was its only profitable business. However, those profits couldn't offset the steep losses at its space division, which sells its reusable orbital rockets, and its AI division.

The AI division, which houses its X social media platform and xAI generative AI services, will remain a dead weight on SpaceX's bottom line. The division posted an operating loss of $6.4 billion in 2025 and plans to ramp up AI and infrastructure spending. X's higher-margin advertising revenues are also drying up and forcing it to expand its paid subscriptions.

Before SpaceX integrated xAI into its core business in May, it actually generated a net profit of $791 million in 2025 as Starlink's profits offset its space division's losses. But with the inclusion of xAI, it posted a staggering net loss of $4.3 billion in the first quarter of 2026, while generating only $4.7 billion in revenue. That's probably why SpaceX is so eager to raise fresh cash.

SpaceX has some clear strengths. Its space division, which builds its Falcon rockets, is much larger than comparable rocket makers such as Rocket Lab (NASDAQ: RKLB). Starlink also hosts more satellites than its competitors, such as AST SpaceMobile (NASDAQ: ASTS).

Starlink's subscriber base reached 10.3 million in the first quarter, up from 8.9 million at the end of 2025 and 4.4 million at the end of 2024. As it expands, economies of scale are kicking in and reducing the manufacturing costs of its terminals. That's why its operating profits are rising even as its average monthly revenue per user declines.

Is it smart to chase SpaceX's IPO?

SpaceX's revenue rose 33% in 2025, and it should continue to grow over the next few years. But its AI investments will prevent it from breaking even, and its target valuation suggests it will be a meme stock rather than a regular growth stock. Therefore, I'd steer clear of SpaceX's explosive market debut, invest in smaller competitors like Rocket Lab and AST SpaceMobile in the meantime, and wait for its valuations to cool off before revisiting its stock.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile and Rocket Lab. The Motley Fool has a disclosure policy.