Key Points
A sizable up-front investment is likely needed for Space Exploration Technologies stock to turn it into $1 million or more.
SpaceX already carries a massive valuation.
SpaceX could be a solid long-term investment, but it's likely not the next Tesla.
We are now several months into the record-breaking IPO of Space Exploration Technologies (NASDAQ: SPCX), and the stock has been as volatile as expected. Investors who bought during the stock's first few days of trading have lost a significant amount, while those who bought near SpaceX's low of about $104 are likely sitting on gains.
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But whether SpaceX can make you a millionaire over the next decade depends largely on one thing: how much money you are willing to invest up front.
That's because SpaceX today isn't, say, Tesla (NASDAQ: TSLA) at its IPO. If you invested a small amount in Tesla at its opening price on June 29, 2010, you would have a sizable investment right now. For instance, a $10,000 investment at Tesla's opening price of $19 would be worth $3 million today.
SpaceX already carries an enormous valuation, and its next 10 years will likely look nothing like Tesla's 16-year return. Even if SpaceX grew into a $10 trillion company in 10 years, implying a 5.5-fold gain, you would still need to invest about $180,000 today for it to grow into $1 million, assuming no substantial dilution.
Even if you do have $180,000 to invest, that's a sizable amount to put into one stock. SpaceX might be an extraordinary company, but given today's extraordinary expectations, even the most flawless performance could still produce disappointing returns.
All in all, SpaceX could still be a solid long-term investment. But if the potential for explosive gains is what you're after, you might want to consider other growth stocks instead.
Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.