SpaceX stock has dropped recently, erasing some of the gains made earlier this month when it jumped to $176.55. It dropped to a low of $146, its lowest level since September 15 this year. This retreat will be put to the test when it releases its earnings report on Tuesday, with the options market predicting a muted response.
SpaceX stock to react to its quarterly results
SPCX stock has slumped in the past few days, moving from a high of $176.5 to the current $146. The company’s earnings report will allow Elon Musk and the team to demonstrate its revenue growth.
Analysts are optimistic that SpaceX’s revenue continued growing in the third quarter, driven by its space, Starlink, and AI businesses. Its last results showed that the company’s revenue jumped by 92% in Q2 to $7.8 billion. Its space business made $962 million, while its connectivity and AI revenues rose to $4.29 billion and $2.56 billion, respectively.
The company’s upcoming earnings report is expected to show that its revenue jumped to betweenm $13 billion and $15.1 billion. This growth will mostly be driven by its artificial intelligence business, which has received large orders from companies like Google, Anthropic, and Reflection AI. In its last quarterly result, it had contracted sales of over $14 billion, and this figure likely increased in Q3.
SpaceX’s earnings report will provide more color on its other key metrics like its free cash flow and capital spending. In its last report, the management said that the company’s capex jumped to $18.3 billion from $10 billion a year earlier.
Its capex will likely continue growing as its data center rollout continues. At the same time, investors will want to know more about the planned $40 billion capital raise that it intends to use in buying Nvidia chips.
READ MORE: SpaceX stock has 38% upside on Wall Street, so why are investors still selling?
Analysts are highly bullish on SPCX stock
Top analysts are highly bullish on SpaceX. For example, the average target among analysts is $224, up by 51% from the current level. Kutgun Maral, an Evercore ISI analyst, has placed a target of $275, while Pivotal Research’s Jeffrey Wlodarczak has a target of $230. William Blair has reiterated its outperform rating, while Oppenheimer has a target of $280.
The bullish case for SpaceX is that its revenue growth will continue in the next few years. Goldman Sachs analysts believe that the company’s revenue will jump to $474 billion by 2030. Morgan Stanley sees the figure rising to over $3.3 trillion by 2040. As such, if these forecasts are correct, it means that the ongoing capex spending will pay off.
Analysts also believe that the company has catalysts to keep growing. Grok, its AI chatbot, has the potential to challenge companies like Anthropic and OpenAI. Its AI data center business will disrupt its top peers like CoreWeave and Nebius, while its space launch business will benefit as the number of satellite launches are expected to soar.
Will SpaceX stock rise or fall after earnings?
SpaceX shares had a muted response when the company published its quarterly report in August. It rose by less than 3%, a mild response for one of the most watched companies in the stock market.
The upcoming results come at a time when the stock is under pressure after falling by over 16% from its peak in October. This retreat is likely because investors expect its business to face headwinds.
The options market is expecting a muted response, with the implied volatility of $48% being lower than the historical volatility of 49%. Most of the calls are concentrated at the strike price of $150, slightly higher than where it is today. On the other hand, most of the puts are concentrated at $140.
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