SpaceX shares rose after Elon Musk predicted annual recurring revenue of between $500 billion and $1 trillion in 2027. Q3 revenue beat analyst consensus, but Musk acknowledged that meeting all his 2027 targets is not guaranteed.
SpaceX shares soared after Elon Musk predicted the company could deliver annual recurring revenue of between $500 billion and $1 trillion in 2027. Musk also acknowledged that meeting all his 2027 targets was not guaranteed, and that there are risks to reaching them.
The stock was up about 9% from its $135 IPO price before the earnings report on Tuesday.
Compute and launch cadence drive the forecast
Musk's projections stem mainly from more compute capacity and a faster rocket-launch pace. SpaceX plans to bring online an additional 10 gigawatts of computing power in 2027.
On launches, the company's goal is for Starship to fly weekly in the first half of the year and possibly twice a week in the second half. That depends on SpaceX rapidly recovering, refurbishing and fully reusing its Starship rocket, which it still needs to do.
Q3 results beat estimates
Q3 revenue surged 161% to $14.6 billion, topping the $12.7 billion analyst consensus compiled by LSEG. Adjusted EBITDA more than quadrupled to $8.8 billion, while net income was $4.4 billion.
The superintelligence segment, formerly AI, led growth, with revenue climbing from $813 million to $7.56 billion from a year ago. Starlink subscribers climbed 89% year over year and were up 13% sequentially.
In the space segment, revenue rose 6% to $1.8 billion, but operating income flipped from a profit of $259 million to a loss of $7 million.
Risks behind the upside
SpaceX said it remains on track to reach $100 billion in ARR by the end of 2026. It also anticipates Q4 capital expenditure of between $35 billion and $40 billion.
The Motley Fool's Geoffrey Seiler notes that the current 2028 analyst revenue consensus is under $250 billion, so hitting Musk's targets could move the stock significantly higher. However, he says Musk's track record of ambitious predictions has been pretty spotty. He also warns that if supply and demand become more balanced, SpaceX's current AI economics could worsen.
Source: The Motley Fool
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