Prediction: SpaceX Stock Will Fall After Aug. 4

Space Exploration Technologies (NASDAQ: SPCX) has been volatile since it pulled off the largest IPO in history last month. The stock reached a high of about $225 -- well above its IPO price of $135 -- but has now declined slightly below $112, as of writing. Has the space company bottomed out? Hardly. SpaceX will release its second-quarter update on Aug. 4, and there is a good chance the stock will fall even further.

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Capex may spook investors

IPOs often trigger significant excitement from investors looking to get in on promising companies early in their public lives. That can send their share prices soaring. There are other factors at play, too. For instance, IPOs often surge because only a small fraction of shares are initially available, so strong investor demand can quickly drive the stock price higher. However, unless a newly public company impresses the market with its financial performance, it may not maintain its early momentum for long.

In my view, that's what will happen on Aug. 4. SpaceX may post solid revenue growth, but one aspect of the company's results could spook investors: Capex in its artificial intelligence (AI) segment. The market has been punishing companies for this. Tesla (NASDAQ: TSLA) reported strong revenue growth but saw earnings per share decline, partly due to runaway AI-related spending, leading to a post-earnings dip. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) posted blowout financial results but announced increased capex, and the stock dropped significantly as a result.

SpaceX may suffer the same fate, especially as the company has been ramping up investments in AI. In the first quarter, it spent $7.7 billion in capex in this segment, representing a $30.8 billion annual run rate -- much higher than the $12.7 billion it recorded in 2025. Meanwhile, SpaceX's revenue growth hasn't been that impressive. Sales in the first quarter were $4.7 billion, 15% higher than the year-ago period, and it isn't consistently profitable. Given all these factors, it seems somewhat likely that SpaceX's shares will drop off a cliff once it releases its Q2 update. Will the stock be a buy then? That depends on how much it falls.

There is no question that SpaceX's prospects look promising. It dominates the orbital launch market, has made significant breakthroughs in space travel, leads the satellite connectivity business, and could tap into massive opportunities in AI. Further, the company arguably boasts a moat. It is a vertically integrated company that has achieved economies of scale. However, given its financial results, the stock's $1.5 trillion valuation is far too high. Even at a $1 trillion valuation, I wouldn't buy it. Perhaps if SpaceX falls much further than that, it will be worth considering.

Prosper Junior Bakiny has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.