SpaceX Is Skyrocketing on Its IPO Day -- Is the Stock a Buy Right Now?
Key Points
SpaceX stock is seeing very strong gains on its IPO day.
The company is now valued at well over $2 trillion.
SpaceX has leading positions in exciting tech categories, but its valuation is hugely growth dependent.
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SpaceX (NASDAQ: spcx) stock has had its hotly anticipated initial public offering (IPO), and the company's share price is seeing strong bullish momentum out of the gate. The stock was up 23% from the fixed IPO price set by the company as of 3:10 p.m. ET on Friday. At the same point in the daily session, the S&P 500 was up 0.6%, and the Nasdaq Composite was up 0.8%. The stock had been up as much as 30.8% earlier in today's trading.
SpaceX's fixed IPO pricing valued the company at roughly $1.77 trillion, and its subsequent stock gains have sent its market capitalization far above that level. With today's gains, the space tech leader now has a market capitalization of approximately $2.17 trillion.
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Is SpaceX stock a buy following its hot IPO?
SpaceX is now trading at roughly 116 times the $18.7 billion in sales recorded by the company last year. While the company managed to grow sales 33% annually last year and will likely record strong sales growth this year, some very strong sales and earnings expansion is priced into the stock at current levels -- and shares look risky.
While I think that SpaceX has the potential to see strong growth over the long term, I think the stock's highly growth-dependent valuation profile sets the stage for volatility in the near term. With that in mind, I think that investors who are interested in building a long-term position in the stock will have better entry points if they are willing to wait.
Should you buy stock in Space Exploration Technologies right now?
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Keith Noonan 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.
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