Where Will SpaceX's Price Be in September? Here's What the Options Market Says.

Space Exploration Technologies (NASDAQ: SPCX), led by innovative founder Elon Musk, has wowed investors with its position in the exciting spaces of rocket launches, connectivity, and artificial intelligence (AI). And thanks to SpaceX's recent initial public offering, investors have the opportunity to get in on this growth story.

The industrial and tech giant launched a record operation earlier this month, raising more than $85 billion after an overallotment option in what is now the world's biggest IPO. And the stock has climbed in the double digits from its IPO price of $135. Musk says the company has reached an important growth phase -- and he even completed a $25 billion bond sale in recent days to raise additional funds.

Now, whether you're a SpaceX shareholder or considering a position in the stock, you might be wondering what's next for the stock price after the recent positive debut. Where will SpaceX's price be in September? Let's check out what the options market says.

Image source: Getty Images.

Three game-changing growth areas

First, let's catch up quickly on the SpaceX story so far and the details of the recent IPO. As mentioned, the company operates in three game-changing growth areas. And what's compelling is that SpaceX's advancements in one area may boost its other businesses. For example, its reusable rocket technology will make it cheaper for the satellite-based internet business to send satellites into space.

SpaceX has made important progress in certain areas, such as bringing down the cost of rocket launches by using its reusable technologies and bringing internet services to customers anywhere through its connectivity business. But many of SpaceX's goals are yet to be accomplished and still require significant investment. The AI business is particularly spending-intensive, with capital spending reaching $12 billion last year -- that drove the entire company to a loss of $4.9 billion.

Since SpaceX is so innovative and must develop its technology to realize many of its dreams -- like putting data centers into orbit -- this spending may be far from over. And this means lasting profitability probably isn't right around the corner. So, though SpaceX is an interesting and exciting company, it involves a certain amount of risk.

SpaceX's record IPO

Many growth investors, however, accepted this risk and rushed to get in on the stock -- during the IPO and after. The IPO, with about 20% of shares earmarked for retail investors, was heavily oversubscribed, and as mentioned above, the stock soared right out of the gate. Underwriters also exercised an overallotment option in the days following the operation, and that increased the funds raised from the initial IPO level of $75 billion.

So it's clear that there's been a lot of interest in this operation and in the stock in its early days on the market. Still, some analysts and investors have questioned the stock's valuation considering its current financial picture. Morningstar, for example, in a note right before the IPO, gave SpaceX a fair value estimate of $63, less than half the offer price.

And today, SpaceX trades for more than 100x sales, which seems considerably high.

SPCX PS Ratio (Annual) data by YCharts

Will SpaceX stock continue to rise?

So, it's reasonable to wonder whether the stock's explosive gains will continue. Now, let's consider what the options market is showing. This is where investors buy contracts that allow them to bet on whether a particular stock will rise or fall during a given time frame. A call option, considered bullish, offers the holder the right to buy a certain stock at a set price, while a put option, considered bearish, offers the holder the right to sell at a set price.

Options activity shows a 40% probability of SpaceX stock falling below $130 by the middle of September, Reuters reported this week, citing Susquehanna Financial Group strategist Christopher Jacobson. If this happens, IPO investors may see a loss of at least 3.7%.

Though options still are leaning in a bullish direction, the 40% I mentioned above is high enough to suggest investors might want to proceed with caution. SpaceX is a fascinating company and may eventually reach its goals, but today, valuation and risk are both high -- and these elements could weigh on stock performance in the months to come.

Adria Cimino 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.