Key Points

SpaceX reached a peak of 225 dollars in mid-June and now trades roughly 30 percent below that level.
Even after the steep decline the shares remain elevated at more than 100 times trailing sales.
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Attention focused on the Space Exploration Technologies IPO which became the largest in market history. For weeks discussion centered on the event and once the initial excitement faded the stock began to retreat.

After touching a record near 225 dollars in mid-June the shares now change hands in the mid-150s to low-160s representing a decline of about 30 percent. Despite the pullback the valuation still appears stretched and does not present an obvious entry point.

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Valuation remains a primary concern. With a market capitalization above 2 trillion dollars SpaceX trades at more than 100 times trailing revenue a level far above peers. Nvidia for example changes hands near 19 times sales Microsoft near 9 times and Amazon near 3.5 times.

Buyers are already pricing in multiple years of rapid expansion yet delivery remains uncertain. SpaceX estimates its addressable market at 28.5 trillion dollars but that figure is internal and should be viewed cautiously.

Image source: Getty Images.

As of early July the consensus price target sits near 188 dollars implying roughly 17.5 percent upside. That average may shift once the quiet period ends on July 7 allowing underwriters to publish fresh research that could move the shares.

Regardless of external forecasts the core view stays consistent: SpaceX operates an intriguing business yet the price-to-sales multiple exceeds comfort levels. Most patient investors would benefit from waiting for greater visibility before committing capital.

Should you buy stock in Space Exploration Technologies right now?

Before purchasing shares consider the following:

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Steven Porrello holds no positions in the securities discussed. The Motley Fool maintains positions in and recommends Amazon Microsoft and Nvidia. 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.