SpaceX Stock Is About to Face Its Biggest Hurdle Yet. Here's What Investors Should Do Next.

Since Space Exploration Technologies (NASDAQ:SPCX), aka SpaceX, conducted its initial public offering (IPO) early last month, shareholders have been on a nonstop thrill ride. The rocket launch, satellite communications, and artificial intelligence (AI) company opened above its offering price, surging 19% on its first day of trading. SpaceX stock gained as much as 50% before falling back to Earth and now trades below its first day closing price of about $161.

History shows that the stock's erratic price movements will likely continue. Next week, that volatility could reach new heights as SpaceX faces its biggest hurdle yet.

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A busy day

Some of Wall Street's biggest analysts have yet to issue a rating on SpaceX, and with good reason. Investment banks that were part of the IPO underwriting process are bound by a "quiet period," in which they refrain from publishing any research, commentary, ratings, or price targets on companies they have underwritten.

SpaceX was an historic IPO in many ways. One of which was that it attracted a syndicate of 23 underwriters for its record-breaking $85.7 billion listing. As a result, many of the investment banks that would have chimed in by now with their opinions have been silent due to the aforementioned quiet period. However, that silence will no doubt be broken on Tuesday, July 7, when the quiet period officially ends, freeing analysts to release their estimates on SpaceX stock.

That's not to say there haven't been any opinions issued. The most bullish comes courtesy of Arete Research analyst Andrew Beale, who issued a buy rating and a Street-high price target of $401, suggesting potential upside for investors of 154% compared to Wednesday's close. The analyst argues that investors don't yet fully appreciate the magnitude of the opportunity represented by the upcoming Starship rocket and StarlinkV3, the company's next-generation satellite. This one-two punch could open the door for SpaceX to compete for suburban broadband -- but neither the rocket nor the next-gen satellite is yet airborne.

On the opposite end of the spectrum is Morningstar analyst Nicolas Owens, who issued a sell rating on SpaceX with a price target of $62, suggesting potential downside of 61% compared to Wednesday's closing price. The analyst argues that much of SpaceX's future growth will likely depend heavily on the company's reusable Starship rockets and its ability to effectively execute and commercialize its plan for orbital data centers -- of which there are simply no guarantees.

Thus far, 13 analysts in all have issued opinions on SpaceX stock, according to The Wall Street Journal: Seven of those, or 63%, have a buy or strong buy rating; four analysts rate the stock a hold; and two have sell ratings. The average analyst price target is roughly $229, suggesting potential upside of 45%. So while Wall Street is largely positive about SpaceX's future, investors can expect an avalanche of new coverage when the quiet period ends on Tuesday.

What should investors do next?

Some investors might be tempted to buy SpaceX ahead of its big reveal. Others might be tempted to sell. I generally stay away from date- and event-driven buying and selling, as that type of short-term thinking is detrimental to maintaining a long-term outlook.

There's no way to know for sure how one analyst -- let alone 23 analysts -- will interpret the same information. As shown in the examples above, two of Wall Street's finest -- with access to the same data -- came to very different conclusions about what the future holds for SpaceX.

I'm watching the stock closely, but I haven't yet put down any of my hard-earned money to buy shares. In my opinion, it's still too early to do so with any degree of certainty. I plan to wait until after SpaceX's first (or even second) financial report before I feel I'll have enough information to make an informed decision. Given what we know and what we don't know, I don’t think SpaceX is a buy -- at least not yet.

As I've pointed out before, at roughly 46 times forward sales, SpaceX is pricey, particularly for a company with a limited public track record. To be clear, next week will be a busy one for the company. Not only is the quiet period over, but SpaceX stock is being added to the Nasdaq-100 and the associated index funds on Tuesday.

When you don’t know what to do, sometimes the best thing to do -- is nothing. That’s exactly what I plan to do.

Danny Vena, CPA 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.