The stock is expensive when valued solely by operating profit, but SpaceX is cheaper than Meta and Alphabet when you bring growth into the mix

At a 0.3 times growth-adjusted multiple, SpaceX trades roughly 40% below the Big Tech median of 0.5 times, according to Morgan Stanley.

Shares of SpaceX might be a lot cheaper than they seem, providing investors with a golden opportunity to buy in.

At last week's closing price of $159, the stock trades at roughly 30 times its 2028 expected operating profit, almost double the Big Tech median of 16 times, according to Morgan Stanley analyst Adam Jonas.

But SpaceX shares (SPCX) look to be "unusually cheap" by another metric, Jonas wrote in a Sunday note titled "Cheap and Getting Cheaper." After dividing the stock's valuation multiple by its expected earnings growth rate - a measure of how much investors pay per unit of profit growth - the stock trades at just 0.3 times, significantly lower than the megacap median of 0.5 times.

"Adjusted for growth, SpaceX is one of the cheaper ways to play the strong optionality of the space and intelligence economy," Jonas wrote. Even at his $300 price target, SpaceX shares would trade at 0.6 times on a growth-adjusted basis. That's roughly in line with Amazon (AMZN) and still cheaper than Meta (META) and Alphabet (GOOGL) (GOOG).

Institutional ownership of SpaceX's stock remains low among Morgan Stanley clients, Jonas wrote, in part due to the complex nature of the business. "SpaceX is a conglomeration of many tightly interlinked businesses in sectors where, to fully appreciate any of them, investors have to understand all of them - or at least understand them in concert," he said.

Valuing SpaceX only from an aerospace and defense or artificial-intelligence angle would indeed make the stock seem expensive. But the stock price today fails to fully account for SpaceX's different segments, he argued. At the current $159 price tag, Jonas believes the market values SpaceX's Starlink and rocket-launch business at $127 per share, ascribing just $32 of value to the company's enterprise and consumer AI business.

Morgan Stanley's $300 price target breaks down the company into four key components: $8 per share for external launch operations, $118 for Starlink connectivity, $8 for consumer AI tools like Grok and $165 for enterprise AI services.

Jonas thinks investors should take advantage of the opportunity to buy shares before Starship Flight 15, which could happen as early as the end of the month. The 15th test launch of SpaceX's next-generation rocket system may feature an attempt at a "ship catch," or the mid-air retrieval of the spacecraft's top section. If successful, it would mark a step toward a fully reusable rocket system, which would drastically lower launch costs and speed up the deployment of next-generation infrastructure.

"A ship catch could be the biggest positive catalyst since the IPO," Jonas wrote.

Third-quarter earnings later this month will also offer investors a "first real look" at adoption and monetization of SpaceX's AI services such as Cursor and Grok Bot, which were acquired and launched this quarter.

"At these levels, we think the risks of upside surprises far outweigh those on the downside," Jonas said of the stock.

-Christine Ji