SpaceX Stock Is Up. Here Are 4 Reasons I'm Still Not Buying.

When Space Exploration Technologies (NASDAQ: SPCX) made its public debut on June 12, it was already the largest stock market debut in history by a mile. Within days, its valuation had surpassed Amazon and was briefly on the heels of Microsoft. There's definitely a lot of excitement over SpaceX (as it's better known).

But while I love rockets and all things space, I'm not buying. I could begin and end with its valuation -- its price-to-sales ratio is nearly 30 times that of Amazon and 15 times that of Microsoft -- but that's been talked about ad nauseam, so here are four reasons that you might not have considered.

1. The $28.5 trillion total addressable market claim

I think messaging from a company matters. It tells you a lot about the attitudes of those who run it and what they think of their investors. In its S-1 IPO filing, SpaceX says it's chasing a $28.5 trillion total addressable market (TAM) -- 93% of this is supposed to come not from its rockets and not from Starlink, but from its AI division.

That's more than 50% larger than the combined revenues of the entire S&P 500. Now, companies obviously have an incentive to push the bounds a bit, and most do, but this is on a whole different level.

2. The space business is smaller than you think

The launch and satellite business -- the thing you picture when you hear the company's name -- is the smallest slice of the pie, at $370 billion. While that figure is certainly more reasonable than the TAM, I still think it's important for investors to think critically about it.

The global space launch market, while very cool and very shiny, is not all that big -- at least when you're trying to justify a valuation of more than $2.5 trillion. It's worth roughly $22 billion today and expected to grow to $100 billion by 2036. While that means there's plenty of room to grow, you have to ask what portion of that SpaceX can capture.

The true opportunity is a fraction of this, not purely because it has to share it with the competition (yes, even if it continues to dominate), but because it's a global figure and American companies will likely be barred from China, India, and other key markets. There is certainly an opportunity here; it's just not on the scale the company envisions.

3. xAI is burning cash and losing ground

Look, xAI is a bit of a mess. The company's flagship model, Grok, has been pretty much left in the dust by its competition. While OpenAI and Anthropic are reporting incredible revenue growth and consistently reaching new technical frontiers, Grok has struggled. In 2026, its subscriber count has actually declined.

Of note, the company reports the sales growth as "X and Grok subscription revenue," meaning you can't tell what came from Grok itself and what came from packaged access through a premium X account.

The company has decided, post-IPO, to buy its way back into the horse race, purchasing the AI coding start-up Cursor for $60 billion in stock. This will help xAI get back in the game -- at least somewhat. The start-up has let its market share slip, falling by nearly half over the past year.

Now, cash is king, as they say, and xAI has been a cash incinerator for some time now, burning roughly $1 billion a month last year. Cursor will likely make that worse: There were solvency concerns there due to cash burn before the acquisition.

That looks like it will change with new deals from Anthropic and Alphabet that will see it rent compute to both companies for nearly $2.5 billion a month combined. Obviously, this is great news financially and should substantially change the picture.

Image source: Getty Images.

Unfortunately, these are odd deals in that both parties can opt out with just a 90-day notice. This is not a durable lease deal. And it makes me wonder what the situation will look like just a few months from now, let alone years.

4. Governance: Musk holds all the cards

And finally, we have a truly unprecedented governance situation. The shares that you and I can access are outvoted 10-to-1 by Musk's shares. It leaves him with about 85% of the voting power and, therefore, essentially total control.

And because Musk reincorporated in Texas after a Delaware judge ruled against his trillion-dollar Tesla pay package, the board is not required to be independent.

You also have the fact that shareholders are barred from class action suits against the company or its officers, and have no access to a jury trial. You agree to mandatory arbitration when you buy shares. And if you would like to make a proposal and bring it to a vote, you're probably out of luck -- unless, that is, you have $1 million or more in stock.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool has a disclosure policy.