SpaceX Stock Jumps 9% as Tesla Merger Talks Lift Earnings Rally

SpaceX stock surged 9.18% to $161.35 in early October 21 premarket trading. The rally followed strong earnings and Elon Musk’s confirmation of Tesla merger discussions.

SpaceX reported $14.58 billion in third-quarter revenue, marking 161% annual growth. Net income reached $4.40 billion, reversing a $1.05 billion loss a year earlier.

The Nasdaq-listed company closed October 20 at $147.79 before the earnings announcement. Investors subsequently assessed the financial results alongside a possible combination with Tesla.

Elon Musk Confirms SpaceX and Tesla Merger Discussions

One of the key aspects of SpaceX’s earnings report was Elon Musk’s confirmation of the Tesla merger rumors. He said that the two firms were talking and that the respective boards would make a final determination soon.

Musk said that a deal would be a good idea in that it would help the two firms create an AI singularity. Still, he said that a final decision was not yet made and that the two companies and advisors would continue talking.

Odds of a deal happening by December 2027 have jumped to 70% on Polymarket, the giant predictions company. Some traders expect the deal to happen sooner, with odds of the announcement coming before June 30 rising to 55%.

A merger of Tesla and SpaceX would create a large company with tentacles that spread far and wide. Tesla is the market leader in the electric vehicle industry, while its energy business is seeing strong demand as the cost of utilities jump. Tesla is also working on other areas like robotics and robotaxis.

SpaceX, on the other hand, is a leading player in the satellite launching industry. It is also a top player in the artificial intelligence (AI) and satellite communications segment through Starlink.

The two companies are also collaborating on Terafab, a Texas semiconductor manufacturing company that will cost over $100 billion to complete.

Still, combining the two companies would create a conglomerate at a time when the market is rewarding simple firms. Indeed, many companies, such as General Electric and Corteva, have simplified their businesses by creating spinoffs.

SpaceX’s Business is Growing

The SPCX stock price is soaring as the recent earnings report show that its business is thriving. Its second earningfs report as a publicly-traded company showed that its revenue jumped by 161% to $14.6 billion, with its net income hitting $4.4 billion. It had made a $1.1 billion net loss in the same period las year.

All of SpaceX’s segments saw strong growth. Its space revenue jumped to $1.7 billion, while connectivity made over $5.2 billion. Most notably, its super intelligence (SI) segment generated over $7.5 billion in revenue.

The company continued boosting its capital expenditure, especially in its AI business. It spent over $16.4 billion during the quarter, up from $18.34 billion in the June quarter. Its capex in the fiest nine months of the year jumped to over $48 billion.

SpaceX’s management expects that its revenue growth will accelerate in the near term. This growth will be driven by its data center business and the potential entry into the telecommunications industry.

SpaceX Stock Price Technical Analysis

The four-hour chart shows that the SPCX stock has been falling in the past few days. It fell from a high of $176 to a low of $140 after reports showed that it was raising $40 billion to buy Nvidia chips.

The stock then rebounded after forming an island reversal pattern, which often leads to a strong rebound. It has remained above the 50-period Exponential Moving Average (EMA).

Therefore, the stock will likely continue rising as bulls target the key resistance level of $176. A move above that level will point to more gains over time.

This article is for informational purposes only and does not constitute financial advice. Stock investments involve market volatility and potential capital losses. Readers should conduct independent research before making investment decisions.