Continuing to build out his fantasy stock lineup on the September 8 episode of Mad Money, Jim Cramer turned his attention to Space Exploration Technologies Corp. (NASDAQ:SPCX) to fill the flex position. He stated:
Next, the final offensive spot on the roster is typically the flex position. This is a concept that’s unique to fantasy football. The flex spot can be filled with a running back, a wide receiver, or a tight end. Basically, just want points from that player, as many as you can, any way you can. For me, I want to play SpaceX for the flex spot. This new IPO is a stock that we want growth from, no matter how we get it. The flex term even feels appropriate for SpaceX, doesn’t it? I mean, because this is a company that’s hard to put in one box. Their oldest and most advanced division is rockets, the launch for hire business.
Their most lucrative division, at least for now, is the Starlink satellite internet business. But if you’re a long-term bull, then you’re probably most interested and excited about the company’s AI business. At the end of the day though, the shareholders just want to see the stock put some points on the board… Although I acknowledge this one might take a little longer to pay off, especially given that a bunch of restricted SpaceX stock is unlocking as early as tomorrow. So, who’s the SpaceX equivalent of the NFL? Well, I’m being real charitable here. I think it’s Atlanta Falcons running back Bijan Robinson making the most sense.
Like SpaceX, Robinson is multifaceted. In addition to nearly 1,500 yards rushing, seven rushing touchdowns last year, he had over 800 yards receiving and four touchdown catches. Hard to bring down. He’s even dabbled a bit in acting… Robinson is truly a jack of all trades. Of course, both SpaceX and Robinson are expensive in their own way. SpaceX is expensive because the company’s currently losing money and the stock’s trading at basically 50 times this year’s… sales estimates. Robinson is expensive because he’ll probably cost you a top five pick in your fantasy draft. But both are about as exciting as it gets in their respective fields.
Multi-Faceted Growth and Revenue Expansion
Space Exploration Technologies Corp.’s growth pillars translated directly to the ledger in the second quarter, where total revenue surged to $7.8 billion, up over 90% year-over-year and beating Wall Street estimates by nearly $1 billion. The company’s Q2 GAAP EPS of -$0.09 outperformed estimates.
The connectivity segment, supported by Starlink, reached 12 million subscribers, while enterprise and government demand pushed segment revenue higher. Supported by these catalysts and a market capitalization hovering near $2 trillion, the stock trades at roughly 50x to 68x forward sales estimates, according to data from different sources, underscoring the massive growth expectations embedded in its valuation.
Capital Expenditure Pressures
Even with fast revenue growth, Space Exploration Technologies Corp. faces significant financial hurdles driven by heavy capital spending. The company reported a net loss of $541 million for the quarter, along with quarterly capital expenditures running at nearly $18.4 billion to fund Starship manufacturing and orbital compute infrastructure alongside Connectivity and Space operations. The high level of capital spending leaves little room for execution missteps, exposing the company to earnings volatility if market conditions shift.
SpaceX’s Massive Institutional Backing Post IPO
Insider Monkey’s database of over 1000 hedge funds shows that 119 hedge funds held SpaceX during Q2, though there’s no Q1 data available since the company only recently went public. Among those hedge funds, VY Capital held the most prominent position with 271.8 million shares, followed by BAMCO Inc. with nearly 145.8 million shares.
Space Exploration Technologies Corp. captures the high-risk, high-reward profile of a portfolio flex player. While heavy capital intensity and high valuation multiples require patience, its unmatched technological footprint keeps it at the center of modern growth investing.
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