Should You Buy SpaceX Stock 11% Below Its IPO Price?

Space Exploration Technologies (SPCX 3.34%) had a hugely successful IPO in June. The company's shares opened at $150, well above its $135 IPO price. The stock kept rising for a couple of weeks, reaching a high of about $225. Alas, since then, it's been a straight southbound trajectory for the space company, and as of writing, the stock has dropped 11% below its IPO price. Is SpaceX worth investing in at current levels? Image source: The Motley Fool. A recent delay raises questions Many of SpaceX's grand ambitions rest on its ability to continue innovating within its space segment. The company is working on Starship, a rocket that could help it further cut space travel costs. Starship is fully reusable -- unlike its Falcon 9, which is only partly so -- and has a much larger payload capacity. Starship is still in testing, and on July 16, it was supposed to take off for its thirteenth flight test. Unfortunately, that didn't happen as the flight was aborted due to multiple engine failures. Considering how central Starship is to SpaceX's future, some investors may see this setback as a red flag. But it isn't that big a deal. Delays of this kind are quite common in the industry, and, at any rate, the company plans to try again on July 23. The setback certainly doesn't help SpaceX's short-term performance, but for investors focused on the long game, it is nothing to be too concerned about. Today's Change(-3.34%) $-4.14Current Price$119.85 More serious problems There are other reasons to be skeptical of SpaceX's ability to perform well over the long run, especially for investors considering buying the stock at current levels. True, it is down significantly from its all-time highs, but it is still worth $1.6 trillion, even though it isn't consistently profitable yet. The company's losses could get even worse as it continues to invest small fortunes within its artificial intelligence (AI) segment, where it sees a massive $26.5 trillion opportunity. During the first three months of the year, SpaceX spent $7.7 billion in capex for its AI business, representing an annual run rate of $30.8 billion. That's significantly higher than the $12.7 billion in capex it spent in this segment last year. The worst part is that SpaceX is likely still years away from tapping into many of the opportunities it thinks it can capitalize on in the AI industry. In the meantime, net losses could expand, and it could face significantly more competition within its two other business units, space and connectivity. So, my view is that SpaceX's medium outlook isn't great, and the stock isn't a buy at current levels. SpaceX has significant potential and is worth keeping on investors' watchlists, but it's best to wait for a steeper decline before initiating a position.