At this point, if you had invested in Space Exploration Technologies (NASDAQ: SPCX) on its opening day, when the stock ended its first day on the market at about $160 a share, your investment would be in the red.
SpaceX has fallen over 13% since June 12
And under a modest set of assumptions, the next 10 years could push the stock even lower. The uncomfortable truth is that SpaceX’s starting valuation was so high that even impressive revenue growth over the next 10 years might not automatically lead to impressive returns. Here’s just one scenario: Suppose, for the sake of example, that SpaceX grew its revenue 20% annually for the next 10 years.
That would lift annual revenue to roughly $116 billion by 2036 — a remarkable achievement. Now, suppose we valued this hypothetical business at about 6 times its annual sales. That would imply that SpaceX is carrying a market cap of around $700 billion — less than half the company’s current market valuation of $1.8 trillion.