INSIGHTS

June 22, 2026

Q & Amy

Edition 21

Angus: The SpaceX initial public offering created great market excitement. Is it a story stock?

Amy: It certainly appears to be. The stock is, in many ways, a referendum on Elon Musk and his ability to continue delivering ambitious results across multiple industries.

Space Exploration Technologies, known as SpaceX (SPCX), includes several high-profile businesses and ambitions, including Starlink, rocket launches, artificial intelligence, orbital infrastructure, and the long-term vision of colonizing Mars. Starlink has already achieved significant commercial traction by providing global, high-speed internet coverage through a constellation of satellites in low Earth orbit.

Amy Bush, CFA

Chief Investment Officer

C. Angus Schaal, CFP^®

Senior Managing Director

However, much of the broader investment case depends on future expectations rather than current earnings alone. Investors are not simply buying today’s profits. They are buying the possibility that Musk can build a much larger enterprise over time, potentially combining communications, space transportation, artificial intelligence, and data infrastructure into one platform.

That is what makes SpaceX a classic story stock.

Angus: Can you define “story stock”?

Amy: In finance, a “story stock” refers to a company whose share price is driven more by future expectations, innovation, and investor enthusiasm than by current financial fundamentals. In other words, near-term revenues and earnings may matter less than the belief that the company can dominate a large future market.

An exciting technology, a bold vision, and a dynamic entrepreneur can create powerful investor sentiment and lift a stock to extraordinary levels.

Angus: What can investors expect from story stocks?

Amy: Story stocks are often not profitable, only marginally profitable, or still proving that their business model can scale. Expectations can swing sharply, so these stocks are often volatile until hype and speculation are replaced by durable revenues, earnings, and cash flow.

Investor patience is required, but so is discipline.

Angus: How does an investor analyze this type of stock?

Amy: Not with traditional valuation methods alone. Many Wall Street forecasts for story stocks are based on a perceived total addressable market, or TAM, rather than near-term earnings. The analysis often depends on how large the future market could become and whether the company can capture a meaningful share of it.

Buying a story stock is not necessarily wrong, but it requires humility. The investor may be overpaying or underpaying, and only time will tell. For that reason, these holdings should generally be limited within a well-diversified portfolio. One or two carefully sized positions may be appropriate, but they should not dominate the overall investment plan.

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