SpaceX shares surged 10.4% in premarket trading on Wednesday after the company reported a significant increase in third-quarter revenue and hinted at a potential merger with Tesla. The space exploration company, which made a historic debut on the Nasdaq in June, announced a third-quarter revenue of $14.6 billion, marking a 161% increase from the previous year and surpassing LSEG consensus estimates of $12.72 billion.
Elon Musk, the owner of SpaceX, suggested during an earnings call that a merger with Tesla could be on the horizon. He mentioned that both companies have formed specific committees to explore the possibility of consolidation, which would represent the largest merger in history. Musk emphasized the potential benefits of such a merger, citing advancements in superintelligence and the advantages of collaboration.
SpaceX's financial performance was bolstered by an operating income of $2.8 billion and a net income of $4.4 billion, a stark contrast to the net loss of $1.05 billion reported in the same period last year. The company's Chief Financial Officer, Bret Johnson, attributed the robust results to recurring revenue from its satellite internet service, Starlink, and the expansion of its Super Intelligence (SI) infrastructure. The SI segment, which focuses on artificial intelligence, saw its revenue soar ninefold to $7.56 billion from $813 million in the previous year.
In addition to SpaceX, Tesla shares also experienced a 2.1% rise in premarket trading. The electric vehicle manufacturer is scheduled to release its third-quarter earnings after the market closes on Wednesday. The potential merger news had a ripple effect on other space-related stocks, with companies like Rocket Lab, Intuitive Machines, and AST SpaceMobile also seeing gains in premarket trading.
Looking ahead, SpaceX has projected its first-quarter 2027 revenue to be between $33 billion and $37 billion, significantly exceeding the average analyst estimate of $22.2 billion, according to LSEG. Johnson highlighted the continued momentum in Connectivity and the notable growth in the Super Intelligence business as key drivers of the company's success.
Truist Securities analysts noted that SpaceX's earnings call provided a positive outlook for AI cloud providers, despite recent market concerns about financing. They pointed out that SpaceX's ability to rent out its capacity multiple times over indicates strong demand. The analysts also mentioned that companies like Coreweave and Nebius are well-positioned to benefit from this demand, as pricing power is expected to offset higher rates.
Following Musk's comments, shares of cloud providers such as Nebius, Coreweave, Iren, and Applied Digital rose over 3% in premarket trading on Wednesday. The enthusiasm surrounding SpaceX's performance and the potential merger with Tesla has sparked interest across related sectors, highlighting the interconnected nature of these industries.
