If history is any helpful guide, then SpaceX (SPCX) shares haven't bottomed yet.
Looking at major IPOs over the past 15 years, 19 of the 31 (61%) saw a maximum drawdown of more than 50% in their first year of trading, per Truist chief markets strategist Keith Lerner. The largest first-year drop belongs to Robinhood (HOOD), with a decline of 90%.
SpaceX is already worse relative to the averages.
The stock finished its first week down 4% and its first month off by 16%, both severe underperformance versus the average for each period. The max drawdown on the stock so far this year has amounted to 46%, better than the average decline of 55%.
SpaceX did its part in sparking this debate today.
The stock is down 10% in Wednesday. It's now trading around $116, light-years removed from the record high of about $225. Investors were rattled by SpaceX's planned capital expenditures in its first earnings report late Tuesday.
The harsh reaction is similar to the one incurred by Alphabet (GOOG, GOOGL), whose stock plunged after reporting that big-time money will be spent on advancing AI initiatives.
Total capital expenditures for SpaceX in the second quarter were $18.4 billion, well above analyst estimates of around $6 billion. Commentary by executives indicated that third and fourth quarter capex could each remain at similar levels, implying full-year capex of about $65 billion. Wall Street was modeling for $50 billion capex this year.
Execs did share several long-term targets, however, including a $100 billion revenue run rate by the end of 2026. It also projected $1 trillion in revenue in 2030.
"Prior to the IPO, the financial projections we had were reaching $1 trillion in revenue in 2031. We now expect that to be in 2030. There's a non-zero chance of that being in 2029," SpaceX and Tesla CEO Elon Musk said on the earnings call.
The aggressive capex and lack of guidance overshadowed SpaceX beating estimates out of the box.
Second quarter revenue of $7.8 billion came in above the Street's $6.8 billion estimate. EBITDA of $3.5 billion also exceeded the Street's $2.1 billion estimate. The beats were driven primarily by AI segment revenue, as SpaceX contracted about $14 billion of cloud services agreements in the quarter.
"I think it's pretty difficult to call something a generational opportunity that's trading at 77 times sales right now. Starship had 12 or 13 test flights. And that seems to be moving at pace. But it's a money burner," said B. Riley chief markets strategist Art Hogan on Yahoo Finance's Opening Bid.
"Starlink obviously had better subscriber growth than had been anticipated, but not enough to move the needle. And their only real revenue source right now is actually leasing out excess compute. So this may well be a generational opportunity, but it might be the next generation before it actually comes to fruition."
Brian Sozzi is Yahoo Finance's Executive Editor, host of the 'Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [email protected].
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