Key Points

SpaceX's stock price is below its $150 opening mark.
Despite attractive opportunities, the stock still looks too expensive at current levels.
10 stocks we like better than Space Exploration Technologies

Space Exploration Technologies (NASDAQ: SPCX) completed the largest IPO in history last month, opening at $150 per share and closing the day at $161, with a market value of $2.1 trillion. The stock has shown high volatility since then, climbing to a peak near $225 before dropping below its opening price. SpaceX's shares now stand at $145 each. Should investors purchase the stock at these levels?

When expectations meet reality

IPOs often spark major enthusiasm as they allow early investment in high-potential firms. Picture acquiring shares of Amazon (NASDAQ: AMZN) on its public debut day. Even a modest stake in the e-commerce giant back then would represent substantial value today. Not every firm matches Amazon, yet SpaceX might generate comparable - or superior - gains over time, assuming its bold plans come to fruition.

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SpaceX aims to transform and standardize space travel via its innovative reusable rockets. The firm's next-generation rocket, Starship, offers full reusability and greater payload capacity than prior models. This opens multiple avenues for SpaceX, such as space tourism, by lowering the expense of space journeys. SpaceX could also enhance its key operation, Starlink, which delivers internet access via Low Earth Orbit satellites. Starlink represented SpaceX's sole profitable area last year, and the company has sought regulatory clearance to launch 100,000 Gen3 Starlink satellites.

With just over 10,000 satellites currently in orbit - and plans to place the new ones in very low Earth orbit - this move could boost Starlink speeds and expand reach beyond rural and underserved regions targeted previously. A major opportunity lies ahead for SpaceX, and that excludes the firm's artificial intelligence prospects, viewed as its biggest potential market overall.

Even so, reasons exist to question SpaceX's outlook. Notably, SpaceX invests heavily to realize its goals. This implies the company may not achieve profitability soon, which is acceptable if its vision succeeds. Yet notable hurdles remain, such as rising competition in space and threats to ongoing innovation, execution, and leadership in the sector.

Issues like regulatory setbacks for Starship - vital to its future - and delayed development schedules could pressure the stock. SpaceX will also encounter more rivals in Starlink. These represent some potential obstacles. Meanwhile, SpaceX stands as the sole company valued at $2 trillion or higher without steady profits, indicating its valuation already prices in major achievements. For these reasons, the stock remains unappealing even under its opening price. It may become attractive only after a steeper decline.

Should you buy stock in Space Exploration Technologies right now?

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Prosper Junior Bakiny has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has 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.