SpaceX (SPCX) Faces Valuation Test as Argus Initiates Coverage With Hold

Space Exploration Technologies Corp. (NASDAQ:SPCX) is one of the 14 AI Stocks Making Moves on Wall Street: Nvidia, Micron, and More.

On June 26, Argus initiated SpaceX as “Hold,” citing concerns over valuation and volatility.

We are initiating coverage of Space Exploration Technologies Corp. (Nasdaq: SPCX) with a HOLD rating.

The firm noted how SpaceX’s IPO valuation implies a high price-to-sales multiple of an estimated 95 times 2025 revenues. Even though the company is growing, it is not yet profitable. It believes that SPCX may take years before its multiple achieves normal levels.

While growing at the top-line level, the company is not yet consistently profitable, as its operating plan combines characteristics of both a mature infrastructure business and a venture-style growth investment. Thus, we think it will likely be years before SPCX’s multiples land at more normal levels.

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The firm also said that the shares have been volatile and are likely to remain so for some time. This is due to a tight share supply and early inclusion in many major equity indices.

We may look to upgrade the stock if it falls sharply on nonfundamental factors or if revenues and earnings accelerate at a faster-than-expected pace.

Space Exploration Technologies Corp. primarily provides satellite-based broadband services. However, its businesses also span rocket launch services, satellite internet and connectivity, artificial intelligence (AI), and cloud computing.

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