The Motley Fool says SpaceX stock looks risky below $140

Recent stock performance

According to The Motley Fool, SpaceX shares fell 11% in October as investor sentiment turned more negative toward artificial intelligence stocks. The article says the stock has been sliding with other AI names and is now below $140, trading near its initial public offering price of $135. Although the move may make the shares look more appealing, the piece argues that the decline alone does not make them a good purchase.

Why the valuation matters

The Motley Fool says the company is trading more on its growth narrative than on current financial results, which it describes as a risk. The article points to Elon Musk’s plans for SpaceX, including sending people to Mars, building data centers in space, and making the company a leader in AI. It says these are ambitious goals, but they are not certain to happen. The piece also cites a New York Times review earlier this year that examined more than 600 claims Musk had made about his companies and found that, in most cases, the goals were difficult to verify as achieved or were reached late, sometimes by years.

Current financial picture

The article says investors have been willing to overlook fundamentals and valuation because of the company’s long-term promise, even at a market capitalization of about $2 trillion. It notes that SpaceX did post an operating profit in its most recent quarter, which ended Sept. 30, but says that profit mostly came from the connectivity business, including Starlink. By contrast, the space segment was still unprofitable, and the company’s Super Intelligence segment was only modestly profitable.

Spending, competition, and outlook

The Motley Fool reports that capex spending for the Super Intelligence segment reached $16.4 billion in the latest quarter, which was more than the company’s total quarterly revenue of $14.6 billion. The article says SpaceX is investing heavily in AI, but that the payoff is uncertain. It adds that the stock is not cheap, given the premium investors are paying for a business that may be valued on what it could become in 10 or more years rather than on present results. The piece also says there is substantial competition in AI and that slower demand, possibly tied to rising interest rates, could weigh on the company’s high-growth areas and hurt top-line results in the short term.

Volatility for investors

The Motley Fool says anyone willing to buy SpaceX should be prepared for continued volatility. The article states that, because of the company’s valuation and the expectations built into the stock, the path for investors is unlikely to be smooth, regardless of how the business ultimately performs.