Up 35%, Should You Buy SpaceX Stock Right Now?

Space Exploration Technologies (NASDAQ: SPCX) stock has made a major comeback after it fell earlier this year. The newly public company is up 35% from its August low as investor confidence grows. Is now the right time to buy?

Why SpaceX stock is soaring

SpaceX has been popular from the get-go. Actually, it gained popularity way before it went public, and fans found ways to invest in it even while it was private. The bigger question is why it fell in the first place. Even though it's up 35% since August, it's down almost 10% since its first-day closing price.

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It originally fell due to its high valuation, early investors pocketing quick gains, and general volatility following the largest initial public offering (IPO) ever. However, it started climbing back up after a winning earnings report for the second quarter. Total revenue increased 92% year over year, and net loss was cut almost in half.

There were also plenty of positive business updates. In the Starlink business, subscriptions doubled from last year to 12 million, and it has more than 11,000 satellites in orbit, up from 6,750 in February. The company plans to have 100,000 satellites covering every spot on Earth and to launch 1 million Starmind AI satellites, which it calls the miniature data centers it's developing for deployment in orbit.

It made major strides in the artificial intelligence (AI) business, xAI, where it sees its biggest opportunities. Revenue increased 247% year over year, and it signed important multiyear contracts with Alphabet and Anthropic.

Is now the time to buy?

Let's be clear that it's not exactly cheap at the current price. Although its price-to-sales (P/S) ratio was as high as 116 at some points, it now trades at a multiple of 68. That's quite a difference, but it's still much higher than the average S&P 500 ratio of 3.8 and even higher than that of high-growth tech companies like Nvidia, Micron Technology, and Broadcom. Investors should stop and think about what they're paying that premium for.

There is still a major upcoming lockup period that's ending in December, and SpaceX hasn't turned a profit yet. There are still reasons the price could go down in the short run, as well as other risks.

I don't mean to put a damper on SpaceX, which many investors are eager to get a part of. However, the price doesn't justify the risk right now.

In my opinion, it's not a great time to buy SpaceX stock. However, given its exciting business, I'd consider it at a different time when the price-to-value equation makes more sense.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.