SpaceX (NASDAQ: spcx) stock has had its hotly anticipated initial public offering (IPO), and the company’s share price is seeing strong bullish momentum out of the gate. The stock was up 23% from the fixed IPO price set by the company as of 3:10 p.m. ET on Friday. At the same point in the daily session, the S&P 500 was up 0.6%, and the Nasdaq Composite was up 0.8%. The stock had been up as much as 30.8% earlier in today’s trading.
SpaceX’s fixed IPO pricing valued the company at roughly $1.77 trillion, and its subsequent stock gains have sent its market capitalization far above that level. With today’s gains, the space tech leader now has a market capitalization of approximately $2.17 trillion.
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Is SpaceX stock a buy following its hot IPO?
SpaceX is now trading at roughly 116 times the $18.7 billion in sales recorded by the company last year. While the company managed to grow sales 33% annually last year and will likely record strong sales growth this year, some very strong sales and earnings expansion is priced into the stock at current levels — and shares look risky.
While I think that SpaceX has the potential to see strong growth over the long term, I think the stock’s highly growth-dependent valuation profile sets the stage for volatility in the near term. With that in mind, I think that investors who are interested in building a long-term position in the stock will have better entry points if they are willing to wait.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
