SpaceX Stock: 3 Reasons I Am Not Buying the Dip
Perhaps you shouldn't either, unless you have a large tolerance for risk and volatility.
Overview
Space Exploration Technologies (NASDAQ: SPCX) reported its first financial update as a publicly traded company (for the second quarter) on Aug. 4 amid high expectations. The company's shares rose before it released its earnings report. Unfortunately, the space company's results disappointed the market, sending the stock sharply lower and extending the losses from recent weeks. SpaceX stock is down 20% from its IPO price and 52% from its all-time high. However, even at current levels, the company's shares aren't attractive, in my view. Here are three reasons why I am not buying the dip yet.
Image source: The Motley Fool.
SpaceX's second-quarter results weren't bad. The company's revenue soared 92% year over year to $7.8 billion, while it cut its net loss nearly in half, landing at $541 million for the period, versus the $1 billion reported in the prior-year quarter. However, there are some worrying signs. Notably, SpaceX is spending a small fortune to capitalize on what it perceives as a massive opportunity in artificial intelligence (AI). During the second quarter, SpaceX's capex within its AI business was $15.8 billion, more than doubling quarter over quarter. It was also more than six times the capex in its two other operating segments combined.
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Originally published at www.fool.com.