I fully expect to be asked a lot about SpaceX (SPCX) stock in the coming days and weeks, given that the shares are now trading 50% below the peak ($225) set on the third trading day post-IPO last month. Trading under both the issue price ($135) and the first trade ($150) must present a great buying opportunity, right? Honestly, who knows?
As someone who tries to quantitively value the companies he invests in, I don’t see much “value” even now. After all, the market cap is still sky-high at $1.5 trillion. For comparison, SpaceX completed multiple fundraising rounds in the last year at far lower prices ($400 billion in July 2025, $800 billion in December 2025, and $1.25 trillion in February 2026). So while $1.5 trillion looks low compared with the peak of $3.0 trillion, is it obvious that the company is worth materially more than 2x the December 2025 or 4x the July 2025 figures? Or is it more likely that people were just tripping over themselves to get a piece of the action at each successive opportunity?
We often hear that Musk’s companies (especially the public ones) have cult followings, and I think that is true, even to the extent that the public market valuations never quite make sense. Of course, that does not mean the stocks won’t perform far better than the underlying fundamentals (Tesla’s has, enormously), it just means that there is more long-term risk involved. I think Tesla is a helpful example, as the company has been public since 2010, and I expect SpaceX to see similar shareholder loyalty.
Tesla’s public market history is truly remarkable. Adjusted for two stock splits, the company first sold shares in mid 2010 at $1.13 each (the first day closing price was $1.59). Since then the stock has rocketed 288-fold to the current $325 price. Annual revenue during that time has ballooned from $117 million in 2010 to $94.8 billion in 2025 (an 810-fold increase).
So you might be thinking, “what’s the issue?” For equity investors, profits are what tend to matter most long-term, and on that metric, Tesla’s history is less impressive relative to its current market cap. Between 2010 and 2025, cumulative free cash flow is roughly $21.5 billion. Cumulative stock-based compensation is roughly $15.0 billion, leaving about $6.5 billion of cumulative profits available for equity holders over a 16-year period. We can really only judge that figure relative to the current market cap, which is $1.15 trillion. Simply put, today Tesla stock trades for a stunning 177 times trailing cumulative 16-year adjusted free cash flow.
Okay, fine, but what about current performance? Surely cumulative 16-year profitability is less relevant going forward, right? I would agree. However, in 2025 Tesla earned adjusted free cash flow of just $3.4 billion. That puts the current valuation at 338 times annual free cash flow. Even if we take the company’s best year ever ($6.0 billion earned in 2022), the multiple is still a whopping 191x.
Similar trends seem to happening with SpaceX now that it is a public company. At the average analyst estimate for 2027 revenue of $73 billion (profits are years away), even after a 50% decline, SPCX trades for 20x revenue. Let’s imagine that overnight the company becomes profitable, with margins equal to Tesla’s best year ever (15%). The stock would still fetch over 130 times next year’s earnings.
Let me be clear, extreme valuation does not (in and of itself) mean that SpaceX stock will keep falling from here. In fact, short-term sentiment is quite extreme and could be due to reverse on any good news. However, when a company goes public with a market value of up to $3 trillion, the bar is set immensely high for buyers at that price to earn superior returns in the future.
Comparisons will always be made to Tesla’s stunning post-IPO performance, but keep in mind that Tesla’s first day closing valuation was less than $1 billion. There was a lot of upside potential at that level. SpaceX has a harder hill to climb being valued 2,000 times higher today.
Lastly, you may be wondering if there a price that I would buy SpaceX stock? Honestly, I’m not sure, simply because there are a lot of businesses contained in it that I don’t find particularly exciting (Twitter, data centers in space, etc). But for those true believers in the underlying business long-term, sure, there is a price where the risk is vastly reduced. Personally, 15x revenues would probably be the most I would consider reasonable if I was in that camp. The current projections for 2027 revenue are very wide, as nobody really has a clue what the number will be. But here is the breakdown; at the $73 billion mean estimate (15x sales = $84 per share), and at the $85 billion high end estimate (15x sales = $98 per share). Who knows, if it drops below $100 maybe I will buy some just for fun. :)
Full Disclosure: I have no personal position in either Tesla or SpaceX, long or short, at the time of writing but that could always change in the future without further notice.