What a $1,000 Investment in SpaceX Could Return by 2030

Space Exploration Technologies (NASDAQ: SPCX) was one of the hottest stocks to own during the brief period right after it went public in June. In its first few days on the market, it surged from its first-day opening price of $150 per share to just over $225 per share before coming crashing back down to earth, and entering an extended slide that took it below $105. Then, it gradually rose back to around that opening trading price of $150 again, and remained around that level for a while, with a bit of a climb in recent days that took it to about $174 as of Tuesday morning. But what happened in the past is irrelevant; investors want to know where SpaceX is heading.

Let's take a look at the trajectory of SpaceX as a business to get an indication of what a $1,000 investment in it made today could be worth in a few years.

Image source: The Motley Fool.

Space won't be what lifts the stock in the near term

SpaceX divides its business into three primary segments: space, AI, and connectivity. Space is exactly what it sounds like: a space exploration business that develops rockets and uses them to launch payloads into space. While this is what SpaceX is known for, it's not the biggest part right now. During Q2, the space segment generated $962 million in revenue, behind connectivity's $4.3 billion and AI's $2.6 billion. The reality is that while the rocket launch part of the business may be the segment that leads the stock higher over the next two decades, it doesn't have the demand that the others have right now.

Instead, connectivity, which is primarily its Starlink satellite broadband service, is the main driver of the company. It's the only profitable segment, and with massive demand for Starlink's service, this growth should keep pushing SpaceX's revenues higher over the next few years.

However, I'm most excited for the AI segment: xAI, which makes the Grok family of models. This segment saw explosive 213% growth in Q2, and that may be just the beginning. Demand for AI platforms is huge, and if Grok can win a strong following for its models, then it could create a strong and rapidly growing recurring-revenue business. But is that enough to make SpaceX a viable investment?

The reality is that there is a lot of anticipated future growth already baked into SpaceX's stock price today. Its market cap on Tuesday was around $2.25 trillion. Wall Street analysts estimate SpaceX will generate about $47 billion in revenue this year, meaning the stock trades for a very expensive 48 times sales. SpaceX is still not profitable, so metrics that value it relative to sales are the best tools investors have. If over time its valuation moderates to 15 times sales (a far more reasonable price tag) and the company simultaneously grows its revenue at a 40% compound annual rate through 2030, that would give it a market cap of $2.7 trillion. That's only about a 20% upside in the next four years, turning a $1,000 investment into $1,200. There are far better investments out there than that, and it just goes to show how much expected growth is already baked into SpaceX's stock.

As a result, I think investors should look for other investments; if SpaceX grows in line with those projections, it may underperform the market.

Keithen Drury 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.