SpaceX Shares Fail to Launch Despite Soaring Revenue. Is the Stock a Buy on the Dip?

Space Exploration Technologies (NASDAQ: SPCX) reported solid Q2 results, but aggressive capex plans and a looming share lock-up expiration sent its shares spiraling. After a strong debut in its June IPO, SpaceX stock has since struggled to find its footing, falling below its IPO price. Let's take a closer look at its results and prospects and why I think the stock could have further to fall. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue " Image source: The Motley Fool. Starlink shines while big promises are made In Q2, SpaceX saw its revenue soar 92% to $7.81 billion, while its net income improved from a loss of $1 billion to $541 million, or $0.09 per share. That easily outpaced analyst expectations for a $0.26 loss on $6.93 billion in revenue. Starlink, the company's satellite internet service, was a standout in the quarter. Revenue in its Connectivity segment climbed 66%, while its operating income surged 79%. Starlink subscribers doubled year over year and were up 17% sequentially. The company, meanwhile, said it planned to take on wireless carriers in the U.S. as soon as next year using the spectrum it acquired from EchoStar. However, there appear to be major flaws in this plan. First, it only acquired 65 megahertz of wireless spectrum from EchoStar, which is a fraction of what the big U.S. providers have. Meanwhile, since satellite signals struggle to penetrate thick concrete, brick, metal, and low-emissivity glass in modern buildings, satellite doesn't work well in urban and dense suburban areas. This would mean the company would need to target massive capex on terrestrial infrastructure, chasing an industry that commands very low P/E multiples. Revenue from artificial intelligence, meanwhile, surged from $737 million to $2.561 billion, while its operating loss improved from $1.52 billion to $1.26 billion. SpaceX's AI capex in the quarter soared from $749 million a year ago to $15.8 billion. However, the company claimed that on the AI compute side, it's seeing a payback period of less than one year on its capex. This is likely due to the high-priced deals it signed with cloud computing companies for overflow business, as these companies appeared willing to make unfavorable short-term deals to keep customers. As such, these economics may not be sustainable long term, especially since the company pledged to use only high-priced Nvidia systems. Its space segment, home to its reusable rocket and launch service business, saw revenue jump 29% to $962 million. However, the segment's operating loss increased from $369 million to $542 million. After the largely successful 13th test flight of Starship, SpaceX plans to catch the ship with the tower pending regulatory approval. Musk said he expects the pace of flights to increase rapidly in the coming year to the point where it will be doing at least one a day, possibly more. He also claimed the company would start building factories on the moon. Meanwhile, the company is teaming up with Nvidia to meet its space computing needs and build a new fleet of AI satellites called Starmind AI1. The question remains, though, if the companies can build chips that can withstand cosmic radiation and solve the major technical hurdle of cooling systems in the vacuum of space. Whether this is feasible or not, Nvidia is happy to become the sole supplier of chips. Given its big ambitions, SpaceX has burned through a massive amount of cash so far this year. Over the first six months of the year, the company generated operating cash flow of $3.5 billion, while it had negative free cash flow of $25 billion after $28.5 billion in capex. It ended the quarter with $100 billion in cash after raising $85.7 billion in net proceeds from its IPO. Looking ahead, SpaceX projected it would reach $100 billion in annual recurring revenue (ARR) by year-end, including its acquisition of AI coding platform Cursor. It said it has $6.7 billion in additional cloud service revenue that will be ramping up starting in October. More potential downside ahead While SpaceX turned in solid results, it is still a company trading at a forward price-to-sales (P/S) multiple of nearly 40 times whose ambitions will require a ton of future capex. It could easily have a decade of cash outflows ahead, requiring significant debt and equity raises with no guarantee that its ambitious plans will ever bear fruit. Meanwhile, in the near term, the stock will see a continued wave of new share supply hitting the market as lock-ups expire throughout the year. As such, SpaceX is a stock I'd avoid. Should you buy stock in Space Exploration Technologies right now? Before you buy stock in Space Exploration Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Space Exploration Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $400,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,345,502!* Now, it's worth noting Stock Advisor's total average return is 955% -- a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks " *Stock Advisor returns as of August 7, 2026. Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

SpaceX Shares Fail to Launch Despite Soaring Revenue. Is the Stock a Buy on the Dip?

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