Following a blockbuster initial public offering (IPO) that became the largest in stock market history, shares of Space Exploration Technologies (NASDAQ: SPCX) — best known as SpaceX — have cooled off.
There was, to put it lightly, a lot of hype surrounding SpaceX’s IPO, partly because of the promises it had sold to investors and partly because of the usual cult-like following of its CEO, Elon Musk. Once SpaceX began trading on June 12, tons of retail investors poured money into the stock. But now those gains have virtually disappeared for most investors who got in after the IPO.
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Considering the roller-coaster ride the stock has taken investors on so far, is now a time to jump ship until IPO-mania is over, or should investors embrace what many see as inevitable volatility?
Great businesses don’t always make great investments
Any time there’s a blockbuster IPO, high volatility is expected in its early trading days. A lot of it comes from people speculating and trying to make a quick dollar off the IPO pop before cashing out, rather than being left holding the bag. SpaceX has so far followed that trend.
Stock speculation aside, SpaceX’s value proposition remains the same: It has rocket launch and internet satellite businesses that are huge players in their respective industries; it has an artificial intelligence division after acquiring Musk’s xAI (which owns X, formerly known as Twitter); and it’s sitting on lots of cloud computing capacity that it can rent out for another revenue stream.
There’s a lot to be excited about with SpaceX’s business, but that doesn’t always make for a good investment — especially when it’s valued as high as SpaceX. Even after its recent pullback, SpaceX is valued at over $2 trillion (as of market close on June 22) and is the seventh-most-valuable public company in the world.
That’s a huge valuation for a company that lost nearly $5 billion in 2025 and trades at well over 100 times sales. For perspective, the six companies currently valued ahead of SpaceX are trading at between 3.4 and 20.1 times sales and reported net income between $18.1 billion and $62.6 billion in their most recent quarters.
What should investors do now?
SpaceX’s stock will be a test of who’s investing versus speculating. When you speculate, you buy shares simply hoping to profit from price swings, and don’t really care too much about the underlying company. When you invest, you’re buying shares of a company because you want to own a piece of a business that you believe in.