As investors debate whether Space Exploration Technologies Corp’s (NASDAQ:SPCX) blockbuster valuation can be justified, one space economy expert says they may be focusing on the wrong metric.
The bigger story isn’t that SpaceX isn’t profitable. It’s that the company may be choosing not to be.
“It’s the Amazon play,” Micah Walter-Range, co-developer of the VettaFi Space Index tracked by the Procure Space ETF Procure Space ETF (NASDAQ:UFO), told Benzinga in exclusive email interview.
Profitability Vs. Growth
SpaceX’s lack of profits has become a key talking point following its public debut. But Walter-Range argues the company could potentially improve its bottom line today if it were willing to slow some of its most ambitious projects.
“Considering the recently announced revenue streams from data center capacity leases to Anthropic and Google, the AI side of the business could be profitable if it brings capex down to a level below revenue,” he said.
The same logic applies to the company’s launch business. “Similarly, the launch side could be profitable today by reducing capex on Starship.”
In other words, profitability may be less of a capability issue and more of a strategic decision.
The Starship Investment
The catch is that profitability may not be what investors are paying for.
Walter-Range says the massive spending tied to Starship and AI infrastructure is also a major reason investors are willing to assign SpaceX a premium valuation.
“However, the ambition of those two lines of business is part of what drives investor excitement and a higher multiple,” he said.
That creates a familiar trade-off. Management can maximize current earnings or invest aggressively in future opportunities, but doing both simultaneously is often difficult.
The Amazon Comparison
That’s where the Amazon.com, Inc. (NASDAQ:AMZN) analogy comes in.
For years, Amazon prioritized reinvesting cash flows into fulfillment networks, cloud infrastructure and new businesses rather than maximizing short-term profits. Investors largely accepted that approach because they believed those investments would create larger profits down the road.
Walter-Range sees a similar dynamic at work with SpaceX.
“I don’t see the company focusing on profitability at the expense of innovation anytime soon,” he said.
Instead, he believes investors are embracing a strategy built around near-term losses and long-term opportunity.
“It’s the Amazon play — get investors to accept near-term losses as long as there is a convincing story as to how the money is being deployed to build future profitability.”
For SpaceX bulls, that future includes Starship, AI infrastructure, satellite connectivity and potentially entirely new markets that have yet to emerge.
Photo Courtesy Company PR
