SpaceX will release its third-quarter financial report after the close of U.S. markets on Tuesday this week, while Tesla (TSLA.O) plans to announce its results on Wednesday. As market speculation about a merger between the two companies intensifies, investors are closely watching whether Elon Musk (Elon Musk) will take this opportunity to reveal his next steps for capital operations.
According to a report by The New York Times on Tuesday, the focus of Wall Street this week includes the rapidly growing capital expenditure on artificial intelligence (AI) by SpaceX, the profitability of the satellite internet business by Starlink, and the potential for integration with Tesla by SpaceX.
At present, neither Musk nor the two companies have officially announced a merger plan. However, Barclays and Royal Bank of Canada have recently released research reports discussing the possible timing of the transaction, valuation, and equity arrangements, which has further fueled these expectations.
Barclays analyst Dan Levy ( Dan Levy ) recently suggested that news of a merger between SpaceX and Tesla could be announced before the end of this year. Tesla announced on Monday that it will hold its annual general meeting of shareholders on December 3rd, providing a new milestone for market attention regarding potential transaction timing.
Barclays believes that SpaceX could become the acquirer in the transaction. The bank estimates that if the merger is completed through a wholly stock transaction, Musk may hold approximately 37% of the shares in the combined company and control about 56% of the voting rights.
Tom Narayanan, an analyst at Royal Bank of Canada ( Tom Narayan ), suggested last Friday that Tesla investors might accept a potential transaction price of $480 per share. According to his calculations, at current market valuation levels, the original SpaceX shareholders could hold approximately 52% of the shares in the merged company.
However, Narayan made it clear that he does not possess any information regarding actual transaction arrangements or precise timelines, and his valuation analysis is based on hypothetical mergers.
The main business rationale for the integration of the two companies focuses on artificial intelligence services.
SpaceX acquired Musk's artificial intelligence company xAI in February of this year and completed its initial public offering in June. Currently, SpaceX's business covers rocket launches, Starlink communication services, artificial intelligence models, and computing infrastructure, while Tesla is developing autonomous vehicles, robotic taxis, and Optimus humanoid robots.
The two parties have also carried out specific cooperation, including a semiconductor manufacturing project named Terafab, which plans to produce chips for use in Tesla cars, robots, and SpaceX space computing devices.
Deepwater Asset Management Managing Partner Jean Monst ( Gene Munster ) told The New York Times that if Musk's long-term goal is to build a complete artificial intelligence enterprise, then Tesla's physical equipment and robotics business will be an important supplement to the SpaceX existing technology system.
Potential transactions still face obstacles such as shareholder approval. Barclays pointed out that both Tesla and the shareholders of SpaceX may need to approve the merger, and the transaction structure and voting arrangements will be important issues during the implementation process.
Compared to the unconfirmed merger transaction, the ongoing investment in artificial intelligence by SpaceX has already been reflected in the financial data.
According to Reuters, SpaceX reported revenue of $7.8 billion in the second quarter, with a net loss of $541 million, and its capital expenditure on artificial intelligence reached $15.8 billion, more than doubling from the previous quarter.
According to market expectations compiled by the London Stock Exchange Group ( LSEG ), SpaceX is expected to generate revenue of approximately $12.74 billion in the third quarter, with earnings per share of about $0.14.
Deutsche Bank analyst Edison Yu expects that in the third quarter, SpaceX's revenue from artificial intelligence business could nearly triple compared to the second quarter, reaching approximately $6 billion.
However, the expansion of computing power business requires continuous procurement of high-performance chips, construction of data centers, and investment in infrastructure such as electricity.
Edison It is estimated that SpaceX's capital expenditure in the third quarter could reach $19 billion. FactSet A summary of market expectations indicates that SpaceX's annual capital expenditure this year could reach $67 billion.
Financing needs are also growing rapidly. According to MarketWatch, SpaceX is seeking approximately $40 billion in financing to purchase NVIDIA's artificial intelligence chips. Morgan Stanley analyst Adam Jonas ( Adam Jonas ) expects that the company may also need to issue about $80 billion in debt next year.
Jonas pointed out that the market's concerns regarding whether SpaceX can secure financing are relatively less than its focus on the cost of financing. As the debt risks of artificial intelligence infrastructure companies are re-evaluated, further financing may have an impact on the valuation and cash flow expectations of SpaceX.
The satellite Internet business of SpaceX, Starlink, is also a key focus of this round of financial reports.
In the second quarter, the revenue from communication services, including Starlink, reached $4.3 billion, a year-on-year increase of 66%. This business contributes the majority of SpaceX's income and is also an important source of profit for the company at this stage.
But Starlink is entering a phase of expansion that requires higher capital investment.
On October 8th, SpaceX agreed to purchase 800MHz of spectrum resources from Grain Management for approximately $8 billion, in order to create conditions for the development of Starlink Mobile's business. This transaction still requires approval from the Federal Communications Commission of the United States.
SpaceX hopes to enter the markets covered by traditional mobile operators by expanding satellite communication capabilities. Achieving this goal will require the deployment of more satellites and the construction of related ground facilities, which may further increase capital requirements.
Investors will focus on the subsequent investments required for Starlink's mobile communications business, as well as whether such expansion will affect the current profitability of that department.
On the Tesla side, the market expects its revenue for the third quarter to be around $27.88 billion, with an adjusted earnings per share of about $0.43, which is lower than the $0.50 from the same period last year. The company delivered 486,532 cars in the third quarter, exceeding analysts' expectations, but investors are still concerned about the car's profit margin and the commercialization progress of its robotics business.
Two companies have released their financial reports in succession, allowing the market to focus on the capital needs and profitability of Musk's main businesses.
As of now, SpaceX and Tesla have not made any formal commitments regarding a potential merger transaction. The disclosures in this week's financial report regarding AI capital expenditures, Starlink revenue growth, financing arrangements, and shareholder returns will provide new grounds for investors to assess whether the two companies are ready for integration in the future.
