A Big Shift Just Happened at SpaceX. Is It Time to Buy?

Investors have been closely watching Space Exploration Technologies (NASDAQ:SPCX) -- for a few reasons. The company, more commonly known as SpaceX, just recently went public, completing the world's biggest initial public offering. SpaceX operates in three high-growth businesses, including artificial intelligence (AI), which is an area that's driven the stock market higher in recent years. Finally, SpaceX chief Elon Musk is known for going after goals that were previously thought unreachable.

All of these elements make SpaceX an exciting company to observe. But investors generally aim to do more than that: They look to buy shares, with the idea of benefiting from the particular company's successes over time.

Some investors, optimistic about the points I mentioned above, piled into the SpaceX story during the IPO or in recent months. Others have hesitated, considering the stock too risky as it relies on heavy spending and technology that requires further development.

Just recently, though, a big shift happened at SpaceX. Is it time to buy right now? Let's find out.

SpaceX's record IPO

We'll start by catching up on the SpaceX story so far. As mentioned, SpaceX soared into the market spotlight with its June debut at a valuation of more than $2 trillion. To put this into perspective, other well-known tech giants took years to reach such levels. The company raised $85 billion after the exercise of an overallotment option, and the stock climbed in its initial days of trading. Since, however, it's had its ups and downs and today is heading for a decline of 8%.

SpaceX has delighted a good portion of the investment community with its growth businesses and strong ambitions. The company operates in the areas of space, satellite-based connectivity, and AI. It now calls its AI unit "Super Intelligence" or SI. SpaceX develops rockets with the goal of making them fully reusable to lower launch costs. The company recently reached a major milestone, with its Starship fully reusable rocket completing two firsts: It was the first orbital flight and the first to deliver a significant payload, in the form of 26 satellites for the Starlink connectivity business.

This points to an important part of the SpaceX business: The developments of one unit benefit the other businesses, suggesting that as SpaceX progresses, we may see increasing efficiency. The ability to transport equipment to space rather than relying on others would offer huge cost savings and control over the timing of launches. And this could be applied to both the connectivity and SI businesses -- it's important to remember that SpaceX has a goal of putting data centers in space.

Starlink's contribution to revenue

Now let's consider the financial picture and the recent big shift at SpaceX. The company has been generating most of its revenue from Starlink, but a change happened in the recent quarter. SI slipped ahead. In the period, SI revenue jumped 829% to $7.5 billion, while Starlink revenue advanced 69% to $5.2 billion. This is positive news for SpaceX, showing that its massive investment in SI is at least starting to bear fruit. For reference, the company's SI capital spending in the quarter topped $16 billion.

So SI is now the company's growth driver when it comes to sales -- but Starlink is still the winner when it comes to operating profit. Starlink's income from operations came in at $2.3 billion, while SI's was $431 million. Still, SI has progressed as it reported a loss from operations of more than $1 billion in the year-earlier quarter. And Elon Musk, in the earnings call, predicted that SpaceX's annual recurring revenue by the end of next year would reach $500 billion to $1 trillion.

With this shift in the SI sales picture, and Musk's overall optimism, is SpaceX a buy now? Aggressive investors may consider picking up a few shares on the dip. But for most investors, it's a good idea to consider a few more earnings reports to see how capex and revenue growth evolve before buying shares of this technology and industrial giant.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.