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Why SpaceX Stock Popped After Earnings
Key Points
SpaceX beat earnings by a factor of 2 last night.
Connectivity is profitable.
Artificial Intelligence is profitable.
Space is almost profitable, too.
Space Exploration Technologies (NASDAQ:SPCX), more popularly known as "SpaceX," rocketed 9% higher through 10:55 a.m. ET Wednesday after crushing its Q3 earnings report last night.
Heading into the report, analysts had forecast that Elon Musk's recently IPO'd space-'n'-AI company would earn just $0.16 per share for the quarter.
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SpaceX actually earned $0.35 per share -- more than double what Wall Street expected.
Image source: The Motley Fool.
SpaceX Q3 earnings
Revenue at the company's renamed "Super Intelligence" (nee "Artificial Intelligence" or "AI" -- so now, "SI") division exploded 830% higher, soaring to $7.6 billion. Connectivity -- once SpaceX's biggest business -- grew 69% to $5.2 billion. Space -- the division that gave SpaceX its name -- inched just 6% higher to $1.8 billion.
Total revenue at SpaceX increased 161% to $14.6 billion.
SpaceX's earnings news was arguably even better. The company's Connectivity division, until now SpaceX's only profitable division, increased its profit 99% year over year to $2.4 billion. SI flipped from unprofitable to profitable, earning $431 million for the quarter. Curiously, the Space division flipped the other way; it earned $259 million in last year's Q3, but lost $7 million this time around.
(This may be because of an accounting quirk at SpaceX, which "does not recognize any inter-segment revenue" in the Space division for launches of Starlink satellites for the Connectivity division.)
What's next for SpaceX stock
Not all of SpaceX's news was good, of course. While SpaceX's instinct will certainly be to emphasize the surprising profitability of its AI (sorry -- its "SI") business, capital investment in SI remains a drain on cash. SI capex more than tripled year over year to $16.4 billion in Q3. So far this year, SpaceX's total capex is $48.1 billion, and its total cash burn is $35 billion -- on course for $47 billion.
I remain uninterested in buying SpaceX stock.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.