SpaceX Stock Is Down 45% From Its Peak. Should Investors Buy the Dip or Run for the Hills?

Elon Musk's space transportation, satellite internet connectivity, and artificial intelligence (AI) infrastructure company, Space Exploration Technologies (NASDAQ: SPCX), went public on June 12 with an opening price of $150 that day. In the days that followed, stock quickly rallied to an all-time high of $225.64, resulting in a market capitalization of almost $3 trillion.

However, as of the market close on Thursday, July 16, SpaceX stock was down 45% to just $125 as of mid-afternoon Friday. Although Wall Street is forecasting significant revenue growth for the company, its stock continues to trade at a sky-high valuation, which could lead to further volatility from here.

Should retail investors take this opportunity to buy the dip, or would they be better advised to steer clear?

Image source: The Motley Fool.

SpaceX is chasing $28.5 trillion worth of opportunities

Elon Musk founded SpaceX in 2002 with a clear mission to make the human race interplanetary, but in the years since, it has expanded its focus. The company went on to develop the world's first reusable rocket, which dramatically lowered the cost of launching humans and commercial payloads into orbit, and also reduced the downtime between launches.

The Falcon 9 rocket is responsible for most of SpaceX's successful launches to date, but its Falcon Heavy and Starship rockets have much higher payload capacities. This means they can carry more satellites (and eventually humans) into space per trip, further reducing costs. Starship is expected to enter regular service in a couple of years with a payload capacity of 100 tons, whereas Falcon 9 can carry a maximum of 23 tons.

However, launching astronauts and commercial payloads into space is actually SpaceX's least valuable business, with an addressable market of around $370 billion. The company's satellite internet connectivity segment is capturing a slice of a much larger opportunity worth $1.6 trillion. So far, SpaceX has sent over 9,600 of its Starlink satellites into orbit, where they provide wireless broadband internet access to 10.3 million paying customers here on Earth.

The company will start launching its new V3 satellites later this year, which will offer 10 times the bandwidth of its current V2 satellites. This is where Starship will become especially valuable, because it can deploy 60 satellites at a time, whereas Falcon 9 has a maximum capacity of just 27.

But over the long term, SpaceX actually thinks AI infrastructure will be its most valuable opportunity. The company only entered this business in February when it acquired one of Elon Musk's other companies, xAI, which came with data centers like Colossus and Colossus II. Since then, it has signed agreements to rent billions of dollars' worth of its spare computing capacity to AI developers such as Anthropic, Alphabet, and Reflection AI.

In the future, SpaceX wants to launch clusters of satellites containing AI computing servers into space, where they can run on solar energy and won't need complicated cooling systems. This infrastructure would use Starlink for its data transmission needs, so the company already has a massive advantage over any other competitors aiming to operate orbital data centers. Overall, SpaceX values its total addressable market opportunity in AI at $26.5 trillion.

Investors are still paying a huge premium for SpaceX stock

SpaceX generated $18.7 billion in total revenue during 2025, which was up 33% from 2024. The internet connectivity business brought in $11.4 billion, while the space segment generated $4.1 billion, and AI infrastructure delivered $3.2 billion. But that order looks set to change in 2026 and beyond, because of the value of its recent cloud computing deals.

SpaceX has agreed to lease up to $1.25 billion worth of data center capacity per month to Anthropic, plus another $920 million worth of capacity per month to Alphabet, and $150 million per month to Reflection AI. These deals could amount to tens of billions of dollars in annual revenue over the next few years.

As a result, Wall Street analysts think SpaceX could more than double its total revenue to $39.2 billion in 2026, and then grow it to $72.7 billion in 2027.

That growth potential explains why some investors are willing to pay a hefty premium for SpaceX stock, which currently trades at a price-to-sales (P/S) ratio of 88. That is 14 times the 6.3 P/S ratio of the tech-heavy Nasdaq-100 index, suggesting SpaceX is heavily overvalued compared to its big-tech peers.

Even if we value SpaceX based on its potential 2027 revenue, its forward P/S ratio is still 23.4, which is nearly 4 times higher than where the Nasdaq-100 trades today. And the company is not yet profitable.

Therefore, even after its 45% decline from its peak and its 17% drop from its first-day opening price, SpaceX stock is far from cheap. In fact, I think its lofty valuation leaves it exposed to even more downside potential, so I personally won't be buying this dip.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.