SpaceX stock swings after strong earnings and Tesla merger talk

Stock moves after earnings

Note says SpaceX shares rose 7.79% on October 21, the day after earnings were released, and then fell 9.14% the next day. The article says the stock largely erased its post-earnings gain within two trading sessions. It also says the share price closed at $147.49 on October 23, compared with an October 6 closing high of $171.92 and a July 24 closing price of $115.07.

Note describes the stock’s recent path as volatile. It says the shares were up roughly 28% over about three months from July 24 to October 23, but that the recent move lower left the price about 14% below the October 6 high. The article says the stock was still within the broader 52-week trading range that began after the June 2026 listing.

Earnings, valuation, and business mix

According to note, SpaceX went public on the Nasdaq on June 12, 2026. The article says the company is led by Elon Musk and has three main revenue sources: AI-related services, satellite communications through Starlink, and rocket launches.

For the July-September 2026 quarter, note says revenue reached $14.6 billion, up 161% from $5.6 billion a year earlier. It says net income was $4.4 billion, compared with a loss of about $1.05 billion in the same period last year, and operating profit was $2.8 billion. The article says revenue and profit both exceeded market expectations.

Note says the AI business generated $7.56 billion in the quarter, about half of total revenue, and became the largest segment for the first time, overtaking satellite communications. The article says this business includes leasing computing infrastructure to AI companies, Grok, and Cursor, which SpaceX acquired in August. It also says $608 million of the AI revenue came from Cursor.

The article lists a market capitalization of about $2.0 trillion, an IPO price of $135, and a price-to-sales ratio of about 62 times based on trailing 12-month revenue of about $32 billion. It says cash and securities were about $100 billion at the end of June 2026, while liabilities were $36.1 billion at the end of September 2026. Note says analysts’ average target price was $222.71.

Why the stock rose and then fell

Note says the first reason for the initial rise was that earnings beat expectations by a wide margin. The article says revenue was above the roughly $12.7 billion forecast, and net profit was more than double the expected $1.88 billion. It adds that adjusted earnings per share were $0.45, while GAAP earnings per share were $0.35.

The second reason note gives is the sharp growth in the AI business. It says AI revenue rose 830% from a year earlier, or about 9.3 times. The article says reports indicated SpaceX was providing computing infrastructure to companies such as Anthropic and Alphabet.

The third reason for the rise was Musk’s disclosure on the earnings call that Tesla and SpaceX had each formed special committees of independent directors to consider a merger. Note says JPMorgan raised its target price from $240 to $500 after that development. Musk also said, according to the article, that it was an overstatement to treat a merger as certain.

Note says the next day’s decline did not have one single cause. It attributes the drop to a broader sell-off in technology shares, with the Nasdaq Composite Index falling 2.6% that day. It also says investor concern about large AI spending increased after Meta’s earnings and amid Middle East tensions. In addition, note says the number of shares that could be sold rose sharply as lock-up restrictions expired, including as much as approximately 1.3 billion shares on that day. The article also points to SpaceX’s plan for capital expenditure of $35 billion to $40 billion in the October-December quarter, almost double the $19.6 billion spent in the July-September quarter.

Risks, comparisons, and what to watch next

Note says the market is focused on whether SpaceX can generate sales that justify its heavy investment. The article says that if AI demand slows, data centers may not produce enough profit to cover the spending. It also says shareholder dilution could become an issue if a merger is done through a stock swap, depending on the exchange ratio. The article adds that the 180-day lock-up period from the IPO expires on December 8, and that more shares may be sold when the stock rises.

The article also says Starlink subscriber growth did not meet the market’s expectation of 14.2 million, even though individual subscribers reached 13.6 million. It says Starlink remains important to the company’s profit base, so weaker subscriber growth could pressure the valuation.

Note compares SpaceX with Rocket Lab, CoreWeave, and large U.S. mobile carriers. It says Rocket Lab posted about $200 million in revenue for the January-March 2026 quarter, up 63.5% year over year, but remained unprofitable. It says CoreWeave’s April-June 2026 revenue rose 112% year over year, while debt at the end of June was $51.6 billion, or about 6.8 times revenue. The article also says SpaceX discussions about mobile base stations were reported on October 23, which helped push telecom stocks lower.

The article says the bullish case depends on new AI contracts, another Starlink beat, and merger terms that favor SpaceX shareholders. The bearish case includes doubts about returns on AI investment, more debt or share issuance, unfavorable merger terms, and slower subscriber growth. Note says the stock was trading below both its 20-day moving average of about $155 and 50-day moving average of about $149 as of October 23, and that the RSI was about 46. It also says the next important dates include October 26, October 27-28, late October earnings from Alphabet, Microsoft, and Amazon, November 3, December 3, December 8, and the first half of 2027, when reports say a merger announcement could occur, although that timing is unconfirmed.