This Is the Biggest Risk With SpaceX Stock (Hint: It's Not Valuation)

Space Exploration Technologies (NASDAQ: SPCX) isn't a cheap stock by any means. At over $2 trillion in market cap, it's among the most valuable companies in the world. But many people who buy the stock, which also goes by just SpaceX, buy it for its long-term goals and the opportunities in space and artificial intelligence.

SpaceX stock has a lot of promise and long-term potential. And as long as investors are optimistic about the company's growth and its path forward, it can continue rising higher, despite its valuation. That's why I don't think the biggest risk with owning the stock is necessarily its price, but the company falling short of expectations.

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Elon Musk has a concerning track record

SpaceX CEO Elon Musk is no stranger to making bold and ambitious claims. The problem, however, is that they can be far too optimistic. Investors, meanwhile, may become frustrated with a stock, especially one that has as much hype as SpaceX. For the stock to keep rising and trade at a valuation higher than might be warranted by fundamentals, investors need to remain bullish on its growth story.

According to a recent analysis by The New York Times, of the 600-plus claims Musk has made over the past 15 years, he came through just 19% of the time, and on time. And in 35% of cases, he either didn't deliver or was late. Another one-third of claims were considered to be too vague, and it hasn't been clear if he met them, while 13% of claims are based on future dates and thus remain to-be-determined.

This can be particularly problematic when talking about grand visions such as going to Mars and putting data centers into space. They would be amazing goals to reach, but given how ambitious they are, it may not be surprising to see them drag out over a very long time frame.

Investing based on a long-term vision is dangerous and risky

All CEOs have visions for future growth, but few are going to be as bold as Musk's. And that's why many growth-oriented investors love to invest in Musk's companies, knowing that if he meets those sky-high expectations, the stocks could soar as well.

But the danger is that such grand visions as Musk's can prove too complicated, costly, and time-consuming to be realized. In the meantime, the underlying business may continue to incur heavy losses, leading to significant declines in share price.

The most successful investors in the world have focused not on optimistic growth targets and visions but on solid facts and figures. While betting on Musk may have worked out tremendously well for early Tesla investors, that doesn't mean that SpaceX stock will go on a similar trajectory.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.