Key Points

SpaceX produces notably less revenue than most of its industry peers.
The firm holds significant growth potential, yet it could take years for any investment to deliver returns.
10 stocks we prefer over Space Exploration Technologies

Space Exploration Technologies (NASDAQ: SPCX), widely recognized as SpaceX, generated widespread excitement upon entering the public markets. After the opening days of trading, the company reached a valuation near $2.5 trillion, essentially matching Amazon as the fifth-largest enterprise globally. This represents a notable accomplishment for a recently listed business, but the question remains whether such a valuation is warranted.

Reviewing SpaceX helps determine if purchasing shares now makes sense or if investors should wait for a possible pullback.

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Image source: Getty Images.

SpaceX financial results do not align with its valuation - and that may be acceptable

Many investors point to the disconnect between the company's financial performance and its market value. In 2025, revenue reached $18.7 billion, reflecting 33% growth compared to the prior year. While these results appear respectable, they raise questions for a business valued at $2.5 trillion.

Breaking down revenue sources shows the company operates more like a telecom provider than a pure space or AI play. Connectivity operations, centered on Starlink internet, grew 50% and accounted for over half of total revenue. The space division posted 8% growth, while the AI segment, including xAI and its Grok model, advanced 22%. On an adjusted EBITDA basis, connectivity drives most profits, space contributes modestly, and AI operates at a loss.

These outcomes remain reasonable yet fall short of expectations for a $2.5 trillion valuation.

The fourth, fifth, seventh, and eighth largest companies include Microsoft, Amazon, Taiwan Semiconductor, and Broadcom. Relative to these peers, SpaceX revenue of $18.7 billion appears modest. Shares trade at 130 times trailing revenue, making even high-growth names like Palantir seem reasonable at 59 times sales.

MSFT Revenue (TTM) data by YCharts; TTM = trailing twelve months.

This valuation largely reflects future expectations, much like CEO Elon Musk's other public company, Tesla, where traditional metrics also fall short. Both firms tie much of their worth to upcoming technologies under development.

Investors can reasonably allocate to high-upside names like these while remaining cautious about overall exposure, given traditional overvaluation signals.

I am not purchasing SpaceX shares currently due to excessive optimism priced in, with stronger opportunities elsewhere. Those confident in long-term objectives may consider a modest position, though volatility remains likely.

Should you purchase shares in Space Exploration Technologies now?

Before acquiring shares in Space Exploration Technologies, review this:

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Keithen Drury holds positions in Amazon, Broadcom, Microsoft, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool holds positions in and recommends Amazon, Broadcom, Microsoft, Palantir Technologies, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.