Shares of Space Exploration Technologies (SPCX Quick QuoteSPCX - Free Report) fell 6.8% yesterday on their first day as part of the Nasdaq-100 Index, closing at $149.47. The stock is now trading at its lowest level since its June 12 IPO and well below its closing high of $211.39.

SpaceX became one of the fastest companies to join the Nasdaq-100, but the milestone failed to provide the boost many investors had expected. Instead, the stock came under pressure as a broad technology selloff weighed on the sector.

The weakness was due to growing concerns over heavy AI-related spending, rising U.S. bond yields, higher oil prices and escalating tensions in the Middle East. Several technology stocks, including Marvell Technology (MRVL Quick QuoteMRVL - Free Report) , Micron Technology (MU Quick QuoteMU - Free Report) and Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) , also declined sharply yesterday.

Yesterday’s Price Decline 

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With SpaceX now trading near its post-IPO lows, the key question is whether the recent pullback offers a compelling buying opportunity or signals further downside ahead.

Multiple Growth Engines Support SPCX’s Long-Term Story

SpaceX's long-term growth story remains compelling, supported by multiple high-growth businesses.

The biggest growth driver is Starlink, SpaceX’s satellite Internet arm. It is benefiting from rising demand for broadband connectivity in underserved regions and is positioned to offer text, voice and data services directly to standard smartphones. The business generated more than $11.4 billion in revenues and $4.4 billion in operating income in fiscal 2025, highlighting its ability to generate meaningful profits while expanding globally.

Another major catalyst is Starship. Following its 12th successful test flight in May 2026, the next-generation launch vehicle is expected to carry much heavier payloads than Falcon 9. This would enable the deployment of larger Starlink satellites while significantly reducing the cost of delivering satellite bandwidth, improving the economics of the Starlink business over time.

SpaceX is also transforming into an AI infrastructure company following the acquisitions of xAI and X earlier this year. By combining AI models, large-scale computing infrastructure and satellite connectivity, the company is building an integrated platform that few competitors can match. It plans to launch AI compute satellites by 2028, paving the way for space-based data centers.

The company's growing presence in AI is already attracting major customers. Multi-billion-dollar computing agreements with Alphabet's Google and Anthropic provide long-term revenue visibility, while the planned acquisition of Anysphere, the company behind the AI coding assistant Cursor, strengthens its position in the fast-growing enterprise AI software market.

But Can We Look Past the Valuation Concerns?

While SpaceX's long-term opportunities are significant, its valuation leaves little room for disappointment.

The company is currently valued at around $2 trillion despite generating just $4.69 billion in first-quarter revenues and incurring a net loss of $4.28 billion. On a forward 12-month basis, the stock trades at roughly 36 times sales, a rich premium even among high-growth technology companies.

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Investors are paying for what SpaceX could become rather than what it is today. That optimism rests on Starlink's continued expansion, AI infrastructure, space-based data centers and Elon Musk's vision of building a company capable of generating $100 billion in annual revenues by 2028.

However, reaching that milestone will require flawless execution across multiple capital-intensive businesses. Also, history suggests that investors should treat Musk's timelines with caution. We know that many of Tesla's ambitious projects, including robotaxis and humanoid robots, have taken longer than initially projected. Likewise, many of SpaceX's biggest growth initiatives are still years away from making a meaningful financial contribution and will require huge investment before they begin generating attractive returns.

Is SpaceX Stock a Buy?

SpaceX remains one of the most compelling long-term growth stories in the market. Few companies have leadership positions across commercial space, satellite connectivity and AI infrastructure, giving SPCX multiple avenues for expansion over the coming decade.

That said, much of this optimism already appears reflected in the stock's premium valuation. Even after the recent pullback, investors are still paying a steep price for future growth that will take years to materialize.

Having said that, for existing shareholders, the recent decline does not change the long-term investment thesis, making the stock worth holding through near-term volatility. Wall Street's average price target still implies roughly 35% upside from current levels.

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However, new investors may be better served by waiting for a more attractive entry point. While SpaceX's long-term prospects remain attractive, the current valuation still offers a limited margin of safety, leaving little room for execution missteps or broader market weakness.

SPCX stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.