3 Catalysts That Could Help SpaceX Stock Double
Key Points
Recovering both of Starship's stages would change the economics of space and set up SpaceX for more ambitious goals.
Merging with Tesla before its Cybercab and Optimus robots take off could be big future driver for the stock.
A successful Terrafab would be a gateway to ramping up important growth initiatives.
Since its initial public offering in June, Space Exploration Technologies (NASDAQ: SPCX) has already become a polarizing stock. The company (SpaceX for short) came to market with a hefty valuation and big ambitions. And although CEO Elon Musk is undoubtedly a visionary, he also rubs many people the wrong way.
Still, the potential upside in the stock is real. Musk has talked about SpaceX hitting $1 trillion in revenue in 2030, a figure that should lead to the stock doubling. Let's look at three possible catalysts that could set the stage for SpaceX to reach that revenue target and help the stock double from here.
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1. The Starship dual-stage recovery
SpaceX helped revolutionize the space industry when it introduced its reusable Falcon 9 rocket in 2010. The company is now looking to take that technological achievement and apply it to its Starship rocket, with its much larger payload.
It has already successfully caught Starship's Super Heavy booster, and its goal is to recover the upper stage intact next year. There are still technical hurdles to overcome: The upper stage will need to survive extreme thermal loads and hypersonic orbital reentry without harm to its structural integrity or damage to its heat shield tiles. However, Musk and company appear confident, recently announcing plans to phase out the smaller Falcon 9 in the coming years.
If successful, this will be a major accomplishment for SpaceX because it will fundamentally change the economics of rocket launches and be the first step toward some of its loftier space ambitions.
2. A merger with Tesla, sooner rather than later
Musk's other company, Tesla (NASDAQ: TSLA), has had some struggles with its core electric vehicle (EV) business: increased competition, the end of the federal EV tax credits, and a significant drop-off in high-margin regulatory credits. As a result, the stock has been stagnant over the past few years, trading at roughly the same price it was in November 2021.
However, now could be a great time for Musk to bring both his companies under one roof. Tesla just launched its new Cybercab, and while it trails Alphabet's Waymo in cities where it's available, Tesla's robotaxis could have far superior economics.
The reason is that its vision-only system and manufacturing scale will allow it to produce these vehicles at a significantly lower price. At the same time, the company is making big strides with its Optimus humanoid robots, which Musk believes will become Tesla's biggest business over time.
By purchasing Tesla before these initiatives really take off, SpaceX would be giving itself two more big shots on its goals. Predictions market Kalshi lists a 70% chance a merger happens before 2028.
Image source: The Motley Fool.
3. See Terrafab become a success
Terrafab is a planned huge semiconductor fab backed by SpaceX, Tesla, and Intel. It's an ambitious project from Musk that will consolidate chip design, logic, and memory manufacturing, advanced packaging, and testing under one roof. The initial phase is projected to cost roughly $55 billion, with the total cost reaching up to $119 billion. The project is expected to begin this year and be completed by the end of 2028.
Musk has complained that Taiwan Semiconductor Manufacturing (TSMC) and other foundries are unable to keep up with chip demand from his companies. As such, Terrafab is an effort to vertically integrate and produce the chips it needs in-house, using Intel's 14A processing technology. Musk has said that SpaceX will fund the initial phase of the Terrafab construction.
Manufacturing advanced logic chips is a difficult business, which is why TSMC has become a near-virtual monopoly in the space. Nvidia CEO Jensen Huang has questioned the project's feasibility, noting how difficult it is to replicate what TSMC does. However, he said that if anyone can pull it off, it's Musk.
Once complete, the fab could span 100 million square feet and manufacture a massive 1 terawatt of computing power per year. It would also give SpaceX -- and perhaps a combined SpaceX-Tesla -- much more control over its supply chain and allow it to ramp up production of the chips it would need to support its AI infrastructure business, robotaxis, Optimus robots, and more.
Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Intel, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.