Key Insights
- SpaceX stock has moved into a local correction after falling from $175 to $146 today.
- The company will publish its financial results on Tuesday.
- These results will provide more information about its growth.
SpaceX stock fell 17.2% from its October high ahead of the company’s third-quarter earnings announcement. Shares closed at $146.03 on Oct. 16, extending a correction that began after the Oct. 6 peak.
The retreat occurred as investors reassessed SpaceX’s rapidly expanding artificial intelligence infrastructure spending. The company also faces rising scrutiny over borrowing requirements and returns on new computing capacity.
However, its latest financial statements showed substantial revenue growth across connectivity and AI operations. The Oct. 20 earnings report will test whether that expansion is translating into improved financial performance.
SpaceX to Publish its Q3 Earnings Report
The next important catalyst for SpaceX stock is its upcoming earnings report, which will provide more insights about its business.
The last earnings report revealed that its revenue surged by 92% in the second quarter to $7.8 billion. This revenue was mostly driven by its Starlink service, whose revenue soared to $4.29 billion as its active users hit over 12 million.
Starlink was then followed by its AI business, which made $2.5 billion and its space launch service, which made $962 million. SpaceX made a net loss of $143 million, with its AI and space businesses losing $1.25 billion and $542 million.
Analysts are optimistic the company’s business will keep thriving in the third quarter, driven by its AI segment. In total, analysts expect the upcoming results to show that revenue jumped to $13 billion. The most optimistic analyst predicts that it will hit $15.19 billion.
This growth will come from SpaceX receiving substantial funding from top companies in the AI space. It is receiving over $925 million a month from Google, $125 million from Reflection AI, and $1.2 billion from Anthropic.
Results Come as SpaceX is Making Big Moves
The upcoming results come at a time when SpaceX is making major moves. Recently, it reportedly spent $8 billion acquiring spectrum in the US. This buying means that it will now become a big name in the telecommunications industry, competing with companies like AT&T, T-Mobile, and Verizon.
Analysts believe that the move can add billions of dollars in revenue to the company. However, it will take many years to build the required infrastructure in urban areas. Spending these funds may affect its free cash flow issues.
SpaceX is also raising $40 billion to buy Nvidia chips as it seeks to become a major player in the data center industry. It is raising $10 billion in bank debt and the rest in investment-grade bonds. As a result, investors have continued to demand a higher interest for its existing bonds.
SpaceX has also made major efforts in its Starship trial. This is a big move as it will help the company to deploy the most advanced models of its Starlink satellites that will have faster download and upload speeds.
Meanwhile, the results come at a time when the company is facing headwinds of the ongoing AI bubble fears. In a recent report, Gartner predicted that neocloud and other data center companies will need to report billions of dollars in impairments. SpaceX would be affected if this happens.
SpaceX Stock Price Technical Analysis
The four-hour chart shows that the SpaceX stock formed a small shooting star candlestick pattern on October 6 and then started moving downwards. It has now dropped below the 38.2% Fibonacci Retracement level. Also, the Relative Strength Index has continued falling and is nearing the oversold level.
The stock has also dropped below the 25-period Exponential Moving Average (EMA). Therefore, the most likely outlook is that the stock drops further towards the 61.8% retracement level of $132 and then bounces back. This retreat will give it a chance of the RSI falling to the oversold level of 30. Eventually, the stock may rebound to the October high of $175.
This article is for informational purposes only and does not constitute financial or investment advice. Stocks can experience substantial volatility and capital losses. Investors should conduct independent research and consult a qualified financial adviser before making investment decisions.
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