Speculative SpaceX Price Target as Tesla Rumor Boosts Stock
Elon Musk’s space firm topped Wall Street expectations.
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On Tuesday evening, Elon Musk’s SpaceX (SPCX) went to the tape with the firm’s third quarter financial results. For the period ended September 30, SpaceX posted a GAAP EPS of $0.35 on revenue of $14.575 billion. Not only did these top- and bottom-line numbers both absolutely smash expectations, but that sales print was good for year-over-year growth of 161%.
The astounding growth was fueled by the firm’s “Super Intelligence” or SI segment (also known as artificial intelligence and AI) and in Connectivity. On that note, SpaceX added $6.7 billion of incremental SI solutions and infrastructure revenue year over year, driven by cloud services agreements, the acquisition of Cursor, and growing SI models and software applications, including the Grok Bot.
CFO Bret Johnson commented in the press release:
“The combination of our launch leadership, recurring Starlink revenue, and the significant expansion of our SI infrastructure continues to drive meaningful operating leverage. We are building the infrastructure of the future with discipline — focused on capital efficiency, strong returns on invested capital, and maintaining a robust, investment-grade balance sheet — while moving with the velocity to capture the opportunity in front of us.”
Stock Is Trading Higher
Because of the blowout earnings and incredible growth? Yes, but also because of what Musk said during the conference call. Answering an analyst question concerning a potential merger of SpaceX with Musk’s other large company, Tesla (TSLA) during that call, the founder, chairman and CEO of the firm first joked, “This is definitely kind of a question where I feel like I’m tap dancing through a minefield.”
Then he got serious:
“I think both SpaceX and Tesla have formed special committees to discuss this idea. At the request of shareholders… and these special committees … consist of independent directors. And because I’m a conflicted party, I can’t actually be in the discussions of the special committees.”
While that answer was somewhat disjointed in real time, the fact that independent directors are involved implies that such talk is serious.
Musk then opined:
“I don’t think we should necessarily assume that… I think some people out there assume that a SpaceX and Tesla merger is a certainty. And I think that would be overstating it. Do I think it would be a good idea? Yes.”
That was enough. the share price was off to the races.
Segment Performance
Space: generated revenue of $1.767 billion (+6.1%), producing an operating income of -$7 million (down from $259 million).
Connectivity generated revenue of $5.248 billion (+69.5%), producing an operating income of $2.367 billion (+98.9%)
SI (Super Intelligence) generated revenue of $7.56 billion (+829.9%), producing an operating income of $431 million (up from -$1.722 billion).
Guidance
The firm did not provide current quarter guidance or an earnings outlook on Tuesday night. During the call, Johnsen formally guided first quarter 2027 revenues to land in a range spanning from $33 billion to $37 billion. Wall Street was down around $22 billion for that quarter. This is a monster beat. That said, the firm also guided capex spending towards $35 billion to $40 billion in capital expenditures for the fourth quarter of 2026.
Going out long term, Musk added that SpaceX remains on track to hit a $100 billion run rate by the end of 2026. Furthermore, he projected that annual recurring revenue (ARR) could skyrocket to between $500 billion and $1 trillion by the end of 2027, driven aggressively by the firm’s “Super Intelligence” (AI) compute division.
Fundamentals
For the first nine months of the fiscal year, SpaceX has generated operating cash flow of $13.097 billion. Out of that number has come $48.069 billion in capex spending. This leaves “free” cash flow of -$34.972 billion. Don’t forget that the IPO did generate proceeds of $85.675 billion.
As of the end of the period, SpaceX ran with a cash position of $89.855 billion and inventories of $2.891 billion. This puts current assets at $100.975 billion. Current liabilities add up to $32.738 billion, of which only a small amount is in debt. The firm’s current and quick ratios stand at a muscular 3.08 and 2.99, respectively.
Total assets amount to $254.045 billion, of which 21.6% is labeled as either goodwill or other intangibles. I’m OK with that. Total liabilities less equity comes to $77.277 billion. Of that, $36.146 billion is in long-term debt, which would be easily covered by the cash position. This is a very strong balance sheet.
Opinion
What a quarter! What a rumor! OK, more than a rumor, given that it came from the CEO of both firms. What guidance! I mean capex spending is going to remain robust and that makes for wonky cash flows, but revenues are going to remain red-hot too. I wasn’t crazy about SPCX, and I have not traded a single share to date. That said, Musk has my attention.
Readers will see that, due to the lack of available data, given how short a time SPCX has traded publicly, I have applied an inside-pitchfork model to the chart using the IPO data and price as my anchor. The shares had recently lost the bottom trendline of the model but have regained that line as well as its 21-day EMA and 50-day SMA.
This implies a rush by professional managers to rebuild long-side exposure while swing traders take advantage of the situation. Were I long the stock, based on the technical information that is available, I could conservatively put a $186 target price on this stock. That said, I suspect that the shares will ultimately trade considerably higher than that and I need to initiate this stock to the Sarge-folio.
At the time of publication, Guilfoyle had no positions in any securities mentioned.
