Space Exploration Technologies Corp. (NASDAQ:SPCX)’s post IPO performance has seen the shares dip by 14.9% since their first closing price of $160. Cramer has discussed the firm frequently since it listed the shares for trading. He believes in Space Exploration Technologies Corp. (NASDAQ:SPCX)’s long-term potential and has advised subscribers and viewers to buy the shares for their children. One catalyst that has driven the narrative for the firm is the share lockup expiration that frees additional stock for trading. Cramer discussed the lockups and how Space Exploration Technologies Corp. (NASDAQ:SPCX) stock was being traded around it:
“We’re getting used to it. And it seems like what you do is obviously you short it. And then you buy it on the deal. Buy it on the stock that gets free. And it works. I mean that the fact that it works is a testament to how ill-advised so many people are. They worry and they worry and they worry.”
The lockup has been quite important for the shares. For instance, Space Exploration Technologies Corp. (NASDAQ:SPCX)’s stock closed a whopping 15.8% higher on August 7th, after the first lockup expiration on the 6th. As for the broader narrative, it concerns with whether the firm’s $1.9 trillion valuation is justified based on its shift towards being an AI company. Space Exploration Technologies Corp. (NASDAQ:SPCX) owns Elon Musk’s Grok AI platform and the Colossus data center, which makes it one of the most important AI companies in the world.
Space Exploration Technologies Corp. (NASDAQ:SPCX)’s revenue growth is impressive. In the second quarter, the firm posted $7.8 billion in revenue which beat analyst estimates of $6.8 billion and marked a 92% annual growth. Additionally, the firm substantially cut down its net loss to $541 million and its Starlink satellite internet revenue jumped by 66% annually. Ever the optimist, Elon Musk also recently remarked that Space Exploration Technologies Corp. (NASDAQ:SPCX)’s multiple businesses have shifted internal projections to project $1 trillion in revenue in 2030.
Yet, on the bearish side, Space Exploration Technologies Corp. (NASDAQ:SPCX)’s Q2 capital expenditure of $18.4 billion overshot analyst estimates of $13 billion and were more than twice its revenue. Additionally, the vast majority of the capital expenditure is for AI, which creates concerns about AI profitability and its impact on operations. Space Exploration Technologies Corp. (NASDAQ:SPCX)’s price to sales ratio of 66 still commands quite a bit of a premium. As for Starlink, while revenue did jump, the impact on free cash flow depends on how well the firm was able to control its costs and expenditures.
While Insider Monkey is yet to compile complete second quarter hedge fund data, the filings so far show several notable stakes in Space Exploration Technologies Corp. (NASDAQ:SPCX). Among the notable investors that have surfaced so far include VY Capital through a $46 billion stake and Ron Baron’s BAMCO Inc. through its 24.9 billion stake.
While Insider Monkey acknowledges the risk and potential of SPCX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SPCX that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out.
Disclosure: None.
