SpaceX shares tipped to rocket after latest results

As always, there’s a lot going on at this Elon Musk company, and now there’s speculation about a Tesla merger. Graeme Evans reports on results and more.

21st October 2026 12:35

by Graeme Evans from interactive investor

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SpaceX, Falcon Heavy Demo mission, Flickr

The SpaceX Falcon Heavy test flight. Credit: SpaceX via Flickr.

Potential upside of 85% on Space Exploration Technologies Corp Class A (NASDAQ:SPCX) shares was today highlighted by a Wall Street bank after Elon Musk’s rockets-to-AI conglomerate delivered bullish guidance alongside forecast-beating results.

Morgan Stanley’s $300 price target compares with today’s starting point of about $160, having seen shares rise by 8% in extended dealings following the release of third-quarter results overnight.

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Based on its updated forecasts for 2028, the bank said SpaceX’s forward valuation multiple of 15.7 times earnings was cheaper than AI counterparts Microsoft Corp (NASDAQ:MSFT), Alphabet Inc Class A (NASDAQ:GOOGL) and Amazon.com Inc (NASDAQ:AMZN).

It believes that the current level of $160 priced in most or all of the company’s opportunities in divisions spanning space launches and Starlink-based connectivity, leaving just $27 for AI.

The Nasdaq-listed shares have risen 28% since August’s maiden quarterly results, having been priced at $135 when SpaceX listed in June’s record initial public offering (IPO).

Last night’s results showed a 161% jump in third-quarter revenues, with an even bigger boost for investors coming from guidance for revenues of between $33 billion and $37 billion in the first quarter of 2027. The mid-point is 52% above the Wall Street consensus.

On a call with investors, Musk then said that a merger of SpaceX and Tesla Inc (NASDAQ:TSLA) would be a “good idea” and that special committees had been set up to discuss a possible tie-up.

For Scottish Mortgage Ord (LSE:SMT) Investment Trust, which has 15% of its portfolio invested in SpaceX, the move could mean a return to the car maker after it sold its remaining stake earlier this year.

Tesla, whose current market value of $1.5 trillion compares with SpaceX’s $2 trillion, at one point accounted for more than 10% of the Scottish Mortgage portfolio.

The FTSE 100-listed trust first invested in SpaceX at 2018’s $30 billion valuation, which by the time of June’s IPO had become $2 trillion and a quarter of the Scottish Mortgage portfolio.

Lock-up agreements have allowed pre-existing shareholders such as Scottish Mortgage to cut their positions at pre-determined stages until they are fully free of restrictions in December.

Scottish Mortgage said in a recent update to investors: “Conviction remains high, but concentration matters. As trading restrictions lift we’re making meaningful reductions and redeploying some capital into new opportunities.”

The next lock-up date is tomorrow (Thursday), which at up to 1.3 billion shares is the largest release since the IPO and may weigh on Wall Street’s reaction to last night’s results.

The figures showed that third-quarter revenues jumped 161% to $14.6 billion, some 14% stronger than Wall Street expectations after a $1.3 billion beat in Super Intelligence.

This segment, which has been renamed after US President Donald Trump said it was a more accurate term than artificial intelligence (AI), grew revenues over the previous quarter by 195% to $7.6 billion.

The performance reflected the leasing of data-centre capacity to companies including Anthropic, as well as impact of the acquisition of AI coding assistant start-up Cursor and increased adoption of the Grok AI assistant by enterprise customers.

SpaceX also reported momentum in its Starlink-based Connectivity division, which now has about 11,000 satellites in low-Earth orbit providing broadband connectivity to 13.6 million customers worldwide.

Recurring revenues from Starlink’s subscription model provides diversification from the more cyclical launch market. Connectivity revenues were $5.2 billion, representing a rise of 22% on the previous quarter and a jump of 69% on a year earlier.

Morgan Stanley said the 13.6 million subscriber figure missed consensus by 5% but that this was more than offset by a beat on average pricing per user.

Space segment revenues were $1.8 billion, up 84% sequentially and 6% year-over-year after 12 customer launches during the quarter included NASA’s mission to launch the Nancy Grace Roman Space Telescope.

Across the group, adjusted earnings of $8.8 billion were 306% higher than a year earlier and 29% above consensus. Net income of $4.4 billion swung from last year’s loss of $1.1 billion.

Chief financial officer Bret Johnsen said the combination of SpaceX’s launch leadership, recurring Starlink revenue and the significant expansion of super-intelligence infrastructure continued to drive meaningful operating leverage.

He added: “We are building the infrastructure of the future with discipline - focused on capital efficiency, strong returns on invested capital and maintaining a robust, investment-grade balance sheet - while moving with the velocity to capture the opportunity in front of us.”

Capital expenditure totalled $19.6 billion in the quarter, including $16.4 billion in the super-intelligence segment. Johnsen told investors that SpaceX expects a fourth-quarter figure of between $35 billion and $40 billion, reflecting faster AI compute build.

The company’s record listing and operational progress continues to attract significant attention from ii customers, with SpaceX the second most-bought tech stock on our platform last week.

About 100,000 investors in the UK were involved in June’s IPO, when they spent a total of £271 million at the opening price of $135.

Those who applied for up to $2,700 (£2,013) received the full amount, meaning they are sitting on a paper profit of about £350 based on the position of last night’s after-hours dealings.

Indirect beneficiaries of the launch include holders of Baillie Gifford’s Scottish Mortgage, Baillie Gifford US Growth Ord (LSE:USA) and Edinburgh Worldwide Ord (LSE:EWI), as well as owners of NVIDIA Corp (NASDAQ:NVDA) after the chip giant disclosed a holding worth $21 billion at the end of the second quarter.

Scottish Mortgage added recently: “Looking ahead, we continue to see a substantial opportunity in launch, connectivity (Starlink), and AI infrastructure.

“We expect continued volatility in the share price as one of the world’s most exciting companies draws the attention of investors with shorter time horizons than ours.”

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