SpaceX Stock Is Slumping: Is Now the Time to Buy or Hold Off?

Space Exploration Technologies (NASDAQ: SPCX) , which most people know as SpaceX, received a lot of attention from the press and investors when it sold shares to the public for the first time in June. The stock price certainly has been on a wild ride since the initial public offering (IPO) .

The company priced the IPO at $135, with the closing price peaking at above $211 on June 16. It has dropped dramatically since then, closing at $114.92 on Aug. 6, 46% below the high price.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Does this represent a buying opportunity? Or is it a warning to avoid SpaceX shares?

SpaceX operates three business divisions: connectivity, space, and artificial intelligence (AI). Under these segments, the company builds and launches rockets, operates a broadband data network, an artificial intelligence business, and a social media site.

While SpaceX has been growing revenue at a nice clip, the businesses as a whole have been losing money. In the company's first quarterly earnings release since its IPO, it posted an eye-popping 92% year-over-year growth in second-quarter revenue to $7.8 billion. While its bottom line improved, SpaceX still lost $541 million versus a $1 billion loss under generally accepted accounting principles (GAAP).

Among its three segments, connectivity is the only one that's currently profitable. While AI experienced a jump in revenue from $737 million to $2.6 billion due to new contracts, the business still lost $1.3 billion.

While the stock price drop has created a better valuation, it's hardly a value stock . Investors can't use the traditional price-to-earnings (P/E) ratio since SpaceX isn't profitable.