In the days since Elon Musk’s SpaceX listed on the Nasdaq, there has been a lot of talk about the company, its valuation, and its place in the burgeoning tech sector.
The company’s stratospheric IPO made founder Elon Musk the world’s first billionaire, but if opening day price action is any indication, investors remain extremely optimistic. space x The closing price was $161, a 19% increase from the public offering price of $135 per share.
Steve Westley, founder and managing partner of Westley Group and a former board member of Mr. Musk’s Tesla, appeared on CNBC’s “Squawk Box Asia” and noted that the company is attracting many retail investors, but added that it must deliver results quickly.
“Retail investors bought $100 billion of stock, and you have to wonder if some people would panic if SpaceX failed for a few quarters, because this is not an easy thing to do.”
In a now-deleted post about X, Musk said SpaceX “may be able to hit” revenue of about $1 trillion by 2030, adding that he would be “surprised” if revenue didn’t exceed that number by 2031.
“SpaceX investors are going to be pretty unhappy in three or four quarters if he doesn’t meet some of the growth projections he made in S1,” Westley added, referring to the SEC filings used by companies planning to go public.
Before SpaceX’s debut, some thought the $1 trillion IPO was overvalued.
Matthew Maley, chief market strategist at asset management firm Miller Tabak, said: “I would just say that I agree that[the IPO]went very well, but I also think it’s way overvalued,” he said.
Although there is no formal price-to-earnings ratio for the company’s stock, Musk’s $1.75 trillion valuation currently reflects a P/E ratio of nearly 100 times.
In comparison, Nvidiais probably the most valuable company in the world, trading at just over 31x P/E. apple It trades at around 35x.
This overvalued view was echoed by Morningstar equity analyst Nicholas Owens, who said last week that the stock is “significantly overvalued.”
The company estimates SpaceX’s fair value at $63 per share, and on June 11 said there was only a 7% chance the company would achieve its “moonshot” scenario of $154 per share.
Nevertheless, this stock could be a good buy if investors are willing to hang on.
“We believe very long-term investors are in good hands,” Maley said, adding that Westley was optimistic about the company’s future path.
“Nobody’s going to hand this over to them. Him and the team there, I think Gwynne Shotwell is an extraordinary guy, but there are some mountains that are tough to climb, but if anyone can do it, it might be the combination of Gwynne and Elon,” Westley said, referring to SpaceX’s president and chief operating officer.
