SpaceX Stock Is Down 38% From Its High. Here's Where It Will Be by 2028.

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, has been a volatile stock since going public over two months ago. As of Wednesday afternoon, it was down by more than 38% from the all-time high of $225.64 per share it set a few days after its debut. However, investors aren't buying SpaceX stock for where it will be in a few months; they're buying it for where it will be by 2028 and beyond.

SpaceX has grand plans to create a space economy that could be worth trillions of dollars. But how much will all of that develop by 2028?

Image source: The Motley Fool.

SpaceX's current business isn't space-focused

If you asked the average person how much of SpaceX's revenue comes from launching payloads into space, they'd probably assume a significant chunk, but they'd be wrong. If you look at the revenue split, SpaceX looks like a telecom company with an artificial intelligence (AI) side bet that launches rockets into space for fun.

SpaceX is building an incredible internet business that could help fuel and fund its space-related aspirations. During Q2, the revenue split from its divisions looked like this:

Data source: SpaceX.

Of those three divisions, only connectivity (which is mostly made up of its Starlink satellite internet service) generated an operating profit, producing $1.6 billion in operating income. That was nearly enough for the company to break even, as the other divisions' losses dragged it into the red.

By 2028, those other divisions could be profitable, but they'll still be chasing Starlink. During the quarter, the connectivity division's revenue rose by an impressive 32%. AI was the fastest-growing segment, with revenue skyrocketing 350% year over year. Meanwhile, its space division rose 29%.

Based on the current growth rates, SpaceX looks as if it will turn into an AI company over the next few years, and that's exactly where it's putting its dollars. SpaceX spent $18.4 billion on capital expenditures during Q2, with $15.8 billion going to AI compute infrastructure. That's a major increase in spending and shows where SpaceX believes its revenue growth will come from over the next few years.

This could transform SpaceX into more of an AI company, but it's all in pursuit of its space exploration aspirations. Those ambitions will take a lot of money to pursue, and SpaceX is looking at generating those funds in any way possible.

But where will that lead the stock by 2028?

SpaceX is an expensive stock

The odds that SpaceX can achieve its space goals by 2028 are fairly slim. It's more likely that its AI and connectivity business will continue expanding at a healthy rate. But even if SpaceX sustains its 92% growth rate over the next two years, the stock at its current levels will still be pricey.

SpaceX currently has a market cap of about $1.8 trillion, but its valuation is incredibly high. SpaceX isn't profitable, so we can only measure it based on sales. We don't have a full year's worth of results yet, so I'll value the company based on projected 2026 sales. Wall Street analysts estimate that SpaceX will generate $44.6 billion in revenue this year at the $1.8 trillion valuation, which values the stock at about 41 times sales. That's a very high price, and if SpaceX could snap its fingers and deliver a 50% profit margin, that would value the stock at 82 times forward earnings.

As a result, SpaceX has a huge valuation to grow into over the next few years. While it may disappoint some investors, I think SpaceX's stock will still be trading right around where it is now in 2028, due to the market letting the company grow into its lofty valuation. As a result, it's probably best to avoid it. There are far better stocks to invest in right now.

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.