There was plenty of buzz leading into the highly anticipated Space Exploration Technologies Corp (NASDAQ: SPCX).
SpaceX shares were US$135 apiece at last Friday's IPO, and have already soared past $200 at the time of writing.
That's a 25% rise in just a few days of trading.
Image source: Getty Images
Is the hype justified?
Australians have long looked to US equities to build wealth.
Many Aussies investors would have exposure to S&P 500 companies in their portfolio.
The new SpaceX listing has generated plenty of headlines, but is it really a strong investment?
For investors looking for reasons to buy, SpaceX isn't hype built on nothing..
Starlink – its satellite internet division, generates substantial operating income of $4.4 billion at 39% margins. That's a real, profitable business inside the rocket company.
SpaceX also controls the majority of orbital launches globally and has a multi-year head start on competitors in reusable rockets.
Starlink is already the world's largest satellite internet provider with millions of subscribers, including in regional Australia.
On the flip side, at a ~$2 trillion valuation against approximately $18.6 billion in 2025 revenue, SpaceX trades at almost 100 times trailing revenue.
This dramatically exceeds the worlds largest companies like Nvidia Inc (NASDAQ: NVDA).
This means there is almost no margin for error and SpaceX investors are paying a premium.
What are experts saying?
Experts seem cautious on the first 12 months of trading for the company.
As my colleague Bronwyn Allen reported yesterday, the current share price already sits well above many price targets from brokers.
Some of these targets are as low as $115 per share.
The honest truth is that both things can be true at the same time:
- Analysts are probably right that the stock is fundamentally overvalued today
- The stock could still double from here before it ever corrects.
How can investors gain exposure?
Many brokers and platforms now allow Australians to buy and sell US stocks.
However there are some other options to hedge against some risk.
For example, SpaceX is likely soon to be included in the Betashares Space Industry ETF (ASX: RCKT) thanks to the fast-track feature.
This could allow investors to have more diversified exposure to the sector, while including some allocation to SpaceX.
Another space themed ETF that just became available is the Global X Space Tech ETF (ASX: MOON), which is also could include SpaceX at some stage.
