SpaceX Stock Surges 10% on Record Revenue, Musk Eyes Tesla Merger
Elon Musk's rocket company reported a 161% year-over-year revenue increase, driven by its AI division, and confirmed discussions about a potential tie-up with Tesla.
Shares of SpaceX experienced a significant surge of 10% on Wednesday, following the company's announcement of record-breaking third-quarter revenue and indications of a potential merger with Elon Musk's electric vehicle manufacturer, Tesla. The rally in SpaceX stock also contributed to gains in Tesla shares and the broader Nasdaq index.
SpaceX reported third-quarter revenue of $14.6 billion, marking a substantial 161% increase compared to the same period last year. A significant portion of this revenue, approximately $7.6 billion, originated from its Artificial Intelligence division, now referred to as SI. This marks a notable shift in the company's revenue streams, which previously relied heavily on its Starlink satellite internet service.
During an earnings call Tuesday, Musk, who leads both SpaceX and Tesla, revealed that he is exploring a merger between the two companies. He stated that the boards of both entities have established committees to deliberate on a potential union. "I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity, and there’s a lot to be gained from cooperating," Musk commented.
Tesla's stock saw a rise of 3.3% on Wednesday morning, ahead of its own third-quarter earnings report. Analyst Dan Ives of Yorkville Ives & Co. estimated an 80% to 90% probability of a SpaceX-Tesla merger occurring by the end of 2027, citing strategic AI and data-driven motivations.
The positive news from SpaceX propelled the Nasdaq index up by 0.4% on Wednesday. Other space-related stocks also saw gains, with RocketLab, Intuitive Machines, and AST SpaceMobile rising by 4.1%, 6.4%, and 1.1% respectively.
SpaceX's impressive financial results follow its record-breaking initial public offering in June, which valued the company at approximately $1.75 trillion and raised over $85 billion. The company's current valuation exceeds $2 trillion.
A merger between SpaceX and Tesla could represent one of the largest business consolidations in history, given Tesla's market capitalization of $1.5 trillion, despite recent challenges in global electric vehicle sales. Tesla recently generated excitement with the unveiling of a prototype 'flying' car, demonstrated in a video where the vehicle appeared to use jet propulsion to launch and land.
Musk has been increasingly integrating his ventures. In February, SpaceX acquired xAI, subsequently integrating its Grok chatbot, the X social media platform, and cloud services under the SpaceXAI banner. The company's revenue growth is significantly influenced by its capacity to lease AI computing power.
Last year, SpaceX purchased approximately $100 million worth of Tesla Cybertrucks, signaling a strategic alignment between the two companies. SpaceX Chief Financial Officer Bret Johnson highlighted the strong performance, stating, "We delivered another strong quarter in Q3. Revenue grew an impressive 161% year-over-year, fueled by continued momentum in Connectivity and a clear inflection in our Super Intelligence business."
The company reported an operating income of $2.8 billion and a net income of $4.4 billion for the quarter, a substantial improvement from a net loss of $1.05 billion in the prior-year period. SpaceX projects first-quarter 2027 revenue to be between $33 billion and $37 billion, surpassing analyst expectations of $22.2 billion.