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Should You Invest $10,000 in SpaceX Stock Before Its First Earnings Release?
Key Points
SpaceX's first-ever quarterly report as a publicly traded company will be in early August.
Although down from its post-IPO peak, that alone doesn't mean SPCX stock is ready to bounce back, even if the upcoming report is a positive one.
Statistics suggest SpaceX stock isn't likely to find its ultimate bottom for at least a few months, or maybe even much longer.
Sure, buying shares of Space Exploration Technologies (NASDAQ: SPCX) -- you know it better as SpaceX -- before the Aug. 4 release of its second-quarter earnings could prove to be a brilliant trade. Analysts are only looking for a loss of $0.28 per share on revenue of $6.87 billion, after all. Anything even remotely better than that outlook could prompt a reversal of the 33% pullback from its post-IPO peak.
The odds are still stacked against that outcome, however, for a few reasons.
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One of them is just that the echoes of this company's pre-IPO euphoria are still ringing while the crowd comes to grips with the fact that this unprofitable $1.5 trillion company is only expected to do on the order of $40 billion worth of business this year, en route to a top line of $73 billion next year. That should push it out of the red and into the black, but just barely.
Then there are the 911.5 million SPCX shares that are currently locked up (versus 7.6 billion outstanding) but will be unlocked and available to sell beginning Aug. 6, with many more that could be freed up for sale over the course of the coming year. Many of them can't be sold yet simply because the stock hasn't met minimum performance requirements. The better it performs, though, the greater the selling pressure from this unlocking becomes.
Image source: Getty Images.
Or, this might hit home: Brokerage firm Edward Jones says that during the bull market spanning 2011 to 2020, the average technology stock that went public during that time frame was down 14% from its IPO price six months after its public offering. Things don't necessarily get better down the road, either. Number crunching from Nasdaq Economic Research indicates that about two-thirds of these tickers were still in the red three years later.
So if you want to play the odds, stay on the sidelines a while longer. Counting on exceptions to long-term trends usually isn't worth the risk, even with companies like SpaceX generating as much excitement as it does.
James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.