It’s Not Too Late to Buy In)

Space Exploration Technologies (NASDAQ: SPCX) has taken investors on a rough ride since its initial public offering (IPO) in June. After reaching an all-time intraday high of $225.64 on June 16, the stock later fell below its $135 IPO price, sinking at one point to a low of $104.83. The stock has this month recovered back to around the IPO price, but it still sits well below $150, the price at which it opened its first day of public trading.

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That said, the company’s financial performance is improving. In the second quarter, SpaceX’s revenue surged 92% year over year to $7.8 billion, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 191% to $3.5 billion.

Analysts have also been sharply raising their expectations for the company’s future revenue and now expect SpaceX to generate roughly $102 billion in revenue in 2027, up from about $72 billion at the end of July 2026.

Here’s why SpaceX stock can reach roughly $220 by June 2027, representing about 50.5% upside from its Aug. 12 closing price.

Starlink is the profit engine, but AI is growing faster

The connectivity segment, which includes the Starlink satellite internet business, remains SpaceX’s profit engine. That segment generated $4.3 billion in revenue and $1.7 billion in operating income in the second quarter. Starlink’s subscribers doubled year over year to 12 million.

SpaceX’s artificial intelligence (AI) business is growing even faster, with revenue rising almost 247% year over year to $2.6 billion in the quarter. While AI accounted for nearly one-third of SpaceX’s total sales, the segment reported a $1.3 billion operating loss. SpaceX also spent $15.8 billion on AI capital expenditures in the second quarter.

The company’s massive investments in infrastructure could pay off if analyst forecasts prove accurate. Analysts at Goldman Sachs and Morgan Stanley have projected that SpaceX could generate around $160 billion in revenue and $110 billion in adjusted EBITDA in 2028.

How SpaceX stock could reach $220

By June 2027, SpaceX’s share price will most likely reflect investors’ expectations for the company’s 2028 growth.

Following its IPO, SpaceX had roughly 13.2 billion shares outstanding. The company’s pending $60 billion all-stock acquisition of Cursor AI’s parent company Anysphere could add close to 410 million shares based on the Aug. 12 closing share price. However, the actual share issuance will depend on where they are priced at the time the transaction is finalized.

SpaceX also has hundreds of millions of shares underlying outstanding employee stock options and restricted stock units, which will create additional dilution over time. In light of that, assuming that it will have 13.7 billion shares outstanding at the end of June 2027 provides a reasonable adjustment to anticipate additional dilution.

SpaceX was trading at about 18.9 times expected 2027 sales as of Aug. 12. If the company generates the roughly $160 billion in 2028 revenue projected by Goldman Sachs and Morgan Stanley and continues trading at that multiple, its market value would reach about $3 trillion. Dividing the market capitalization by the assumed 13.7 billion shares implies a stock price of roughly $220.

However, the biggest risk is SpaceX’s enormous capital spending. The company’s capital expenditures reached $18.4 billion in the second quarter, more than twice its revenue in the period. If investments in AI infrastructure and the next-generation reusable rocket system Starship fail to generate strong returns, investors could become less willing to give SpaceX stock the premium valuation it currently carries.

But if SpaceX delivers results near Wall Street’s 2028 forecasts while maintaining a valuation close to current levels, the stock could generate significant returns for shareholders by the end of June 2027.

Should you buy stock in Space Exploration Technologies right now?

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Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.

SpaceX Is Poised to Hit $220 by June 2027 (Hint: It’s Not Too Late to Buy In) was originally published by The Motley Fool