To The Moon

One month ago, $SpaceX(SPCX)$ looked unstoppable.

Its IPO priced at $135.

It surged to $176 on its first trading day and briefly touched $225.

The market wasn't just buying a space company.

It was buying the AI story.

Today, that narrative is beginning to face its first real test.

The stock has fallen for a second consecutive session and is now trading close to its IPO price.

The question is no longer whether SpaceX is an extraordinary company.

The question is what investors are actually paying for.

The Rally Was Never About Rockets

If you examine SpaceX's current valuation, one thing becomes obvious.

The market isn't valuing the launch business.

Nor is it primarily valuing Starlink.

It is valuing AI.

Following the merger with xAI, AI became the dominant narrative surrounding the company.

Launch services became the foundation.

Starlink became the cash-generating business.

But AI became the multiple.

That distinction matters.

Because narratives can expand valuations much faster than fundamentals.

They can also compress much faster.

Buffett Would Probably Put It in the "Too Hard" Pile

Warren Buffett often says there is a large group of businesses that simply cannot be valued with confidence.

Not because they're bad businesses.

Because the future depends on assumptions nobody can reasonably forecast.

SpaceX increasingly falls into that category.

Today, investors are attempting to value:

Future AI platforms.

Future autonomous systems.

Future robotics.

Future data-center economics.

Future Starlink expansion.

Future space infrastructure.

Each one carries enormous uncertainty.

When most of a company's valuation depends on businesses that haven't fully matured, traditional valuation methods become much less useful.

At that point, valuation becomes a function of belief.

Cash Flow Still Matters

One reason the stock has begun to cool is that investors are slowly returning to a more basic question:

Where does today's cash actually come from?

Starlink is generating meaningful cash flow.

Launch services continue to grow steadily.

But many of the AI assumptions embedded in today's valuation remain years away from full commercialization.

That doesn't mean they won't happen.

It simply means investors are paying today for profits that may not arrive for a long time.

The further cash flows move into the future, the more sensitive valuations become to expectations.

The Market Is Repricing the Story

The recent decline doesn't necessarily mean investors have turned bearish on AI.

It may simply mean expectations had moved too far ahead of fundamentals.

History shows that many high-profile IPOs experience significant corrections after their initial excitement fades.

Price discovery rarely ends on the first day.

It usually begins there.

As lock-up expirations approach, financial results become public, and analysts build more detailed models, the market gradually replaces excitement with evidence.

SpaceX is entering that phase now.

August Could Be the Next Major Test

The company's first quarterly earnings report as a public company is expected in early August.

Around the same period, employee share lock-ups will begin expiring.

Those two events could significantly reshape investor expectations.

For the first time, the market will have both:

• Real operating data.

• Increased public float.

That combination often produces much higher volatility than an IPO itself.

The Bigger Picture

SpaceX may ultimately justify today's valuation.

Or it may grow into an even larger company over the next decade.

But those are long-term questions.

The short-term debate is different.

It's about how much investors should pay today for businesses whose economics are still developing.

The AI era has rewarded stories.

Eventually, every story reaches the same destination:

• Cash flow.

• Revenue.

• Margins.

• Returns on capital.

• Narratives create excitement.

• Fundamentals determine value.

That's the transition SpaceX is beginning to experience.

And it may not be the last AI company to go through it.