SpaceX: Everything, everywhere, all at once

Few investors or the market in general could have been disappointed by SpaceX’s Q3 results. Analysts at MoffettNathanson (MN) distilled the results down and while recognising the achievements also covered the enormous amount of spending, both Capex and Opex, ahead for SpaceX and its various divisions. MN is concerned about the investment required.

“In the Space segment, Starship continues to require significant R&D. Starbase Louisiana has a reported price tag of $100 billion+,” said MN.

“Within the AI segment, the implied ramp in compute over the coming years will cost hundreds of billions of dollars. Management has also discussed building a foundry for gas turbine blades and vanes in Bastrop to help support power infrastructure. And that is just for training and inference that takes place on the ground; orbital compute at scale will require a separate envelope of expenditure. Further, we have yet to mention the R&D that is likely required to push Grok to the frontier,” added MN.

“A terrestrial buildout for Starlink Mobile’s D2D ambitions would require tens of billions, or more, for ground infrastructure and additional spectrum, and still more in start-up costs (think handset subsidies),” MN suggested.

“Where do all these capital calls fall in the priority stack? How will SpaceX fund it all, especially if debt capital markets develop a case of AI project indigestion? Ultimately, what does this all mean for Elon Musk’s often pulled-forward operational and financial targets?” MN asked.

Indeed, the analysts sid that SpaceX’s earnings call provided little clarity. “Rather, the earnings call served to amplify the enormous calls on capital that loom over the next few years (particularly in the AI segment).”

MN is cautious on SpaceX’s prospects, and in particular its potential share price. It gives SpaceX a share price target of $142 per share and stays ‘Neutral’ on SpaceX’s prospects.

Meanwhile, SpaceX has seen a slew of complaints over the past few days from nations using its Starlink broadband-by-satellite service. High-profile complaints from Ukraine have generated plenty of headlines, and sympathy from country leaders worried that they could be next to be denied service or suffer reduced access.

The countries now joining – or threatening – exodus from Starlink include Canada (which has its own Lightspeed broadband service coming in 2028) and with Prime Minister Mark Carney being reported as being highly critical of Starlink. Carney is on record as saying that Starlink usage will soon be removed.

Germany is building its own high-secure broadband system for its military and governmental use, while the EU (and France in particular) is keen to see the IRIS2 highly-secure come on stream. But that isn’t expected to be fully deployed much before 2032.

Meanwhile, Paris-based Eutelsat and a potential fleet by 2030 of about 1300 OneWeb satellites is already busy with its initial fleet of more than 650 craft and these are being increased and improved with Gen-2 satellites and will work with the IRIS2 constellation. The market will learn more in a week’s time on October 29 when Eutelsat unveils its latest revenues. Eutelsat has seen a significant 34 percent rise in its share price this past few days, helped by enthusiasm and optimism for its OneWeb business.

Set against this negativity the various bank report which have emerged since SpaceX’s results on October 20 all of which have upgraded their forecasts and share price expectations. CitiBank is the latest, which on October 21 raised its SpaceX price target 20 percent to $240 from $200, maintains its ‘Buy’ rating and opened a 90-day upside catalyst watch on SpaceX. Citi’s rationale was that all three main SpaceX businesses exceeded their Q3 forecasts on nearly every metric. The bank’s analysts expect SpaceX to keep beating expectations and raising its outlook into Q4.

However, investment bank JPMorgan doubled its expectations for SpaceX, raising its share price target from an already bullish $240 to a very aggressive $500 per share. The $500 JPMorgan target is 20x its own 2028 Earnings/share estimate of $24.41, and management told the bank it isn’t considering raising equity. JPMorgan says “no other company is as well positioned to go after the combined anticipated Total Addressable Market of $28 Trillion+.”

Categories: Blogs, Broadband, Business, Inside Satellite, Satellite

Tags: JP Morgan, MoffettNathanson, spacex, starlink

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