SpaceX Just Reported Earnings. Here's What History Says Happens Next.

The public debut of Space Exploration Technologies (NASDAQ: SPCX) in early June marked one of the most ambitious market entries in history. While SpaceX stock surged during its opening sessions, shares have retreated sharply over the last month -- trading well below the post-IPO peak.

SpaceX's first earnings report as a public company offers a clear window into whether the pullback has created an attractive entry point or whether further proof is still required.

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How were SpaceX's earnings?

SpaceX's second-quarter numbers show a business accelerating across all three core segments while still incurring significant investment costs. Total revenue surged 92% year over year to $7.8 billion. The space segment generated $962 million, a 29% increase from the prior-year period. However, operating losses widened to $542 million compared to negative $369 million a year earlier.

Connectivity, driven by the Starlink broadband network, remained SpaceX's largest and most profitable engine. Revenue reached $4.3 billion, up 66% year over year. Meanwhile, operating income expanded 79% to $1.6 billion, underscoring improving scale as the subscriber base doubled to 12 million. Average revenue per user (ARPU) held steady at $66, while new enterprise and government contracts provided additional lift to the segment's consumer base.

The artificial intelligence (AI) infrastructure division delivered the most dramatic growth for SpaceX. Revenue soared 247% year over year to $2.6 billion, with the bulk coming from cloud and compute services as well as additional subscriptions to Grok and X. Operating losses stood at $1.3 billion, a modest improvement from the prior quarter, though still substantial.

What should investors watch next?

Perceptions of SpaceX will hinge on two interlocking variables: the scale and efficiency of capital expenditure (capex) and the trajectory of AI-driven revenue. Capex during the second quarter was dominated by the AI segment at nearly $16 billion, far exceeding the combined outlays across launch and connectivity.

Investors will demand evidence that this spending translates into durable utilization rates and expanding profit margins, rather than an open-ended infrastructure build. In the upcoming quarters, SpaceX will need to show whether AI revenue can sustain its current trajectory as new cloud agreements ramp up and as additional capacity comes online. Equally important will be any deceleration in connectivity growth or further narrowing of losses in the launch segment, both of which will determine how quickly overall profitability can emerge.

History offers a cautionary tale for what typically follows mega-IPO stocks. Over the past several decades, the median first-year maximum drawdown has run between 42% and 55%, with median 12-month returns often negative relative to the broader market. The five largest IPOs by capital raised delivered one-year returns ranging from single-digit gains to declines of 37%. Notably, most of the stocks in this cohort compounded strongly in the years ahead.

Staggered lockup releases usually coincide with elevated selling pressure and add an extra layer of volatility in the months that follow early earnings reports. Unless SpaceX posts sustained outsize growth that repeatedly exceeds expectations, the combination of ongoing share supply and the historical post-IPO digestion period points toward further choppiness and the risk of additional downside over the next year.

Is SpaceX stock a buy right now?

While SpaceX's connectivity business is already profitable and growing solidly, and the launch franchise retains competitive advantages over peers in the space exploration industry, the AI contribution remains in its early stages.

SpaceX trades at a price-to-sales (P/S) ratio of 73, a frothy multiple relative to current run rate revenue. Even after the post-IPO correction, the company's $1.4 trillion market cap clearly embeds lofty assumptions about the AI segment's ability to scale as big tech accelerates infrastructure spend.

Until successive earnings reports illustrate that capital intensity is moderating and that AI revenue is converting into sustainable operating leverage, the stock is at risk of continuing to price in a best-case scenario. Smart investors should exercise caution rather than aggressively buying the dip right now. In my view, SpaceX still has several meaningful milestones to prove before the valuation can be fully justified.

Adam Spatacco 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.