“Burn money - monetize” was verified for the first time in a closed loop! SI business supports SpaceX (SPCX.US)'s first quarterly profit since listing, Musk presses the “Merge” button

The Zhitong Finance App learned that after the US stock market on October 20 (Tuesday) EST, SpaceX (SPCX.US) handed over its second financial report after listing. If the second-quarter earnings report of “revenue exceeded expectations and stock prices plummeted 11%” three months ago showed the market the power of artificial intelligence (AI) to burn money, then this time Musk gave three answers at the same time: the company can make money — net profit of 4.4 billion US dollars, the first quarterly profit after listing; AI can “carry the flag” — revenue of 7.56 billion US dollars, a nine-fold increase over the previous year, surpassing the sum of Starlink and rocket launches); and the merger with Tesla (TSLA.US) is real — Musk confirmed it personally on the phone call, SPAC eX and Tesla have been established The Committee discussed the merger.

As of press release, SpaceX shares rose more than 7% to around $159 after the market on Tuesday. The stock price, which was struggling at the $105 mark two months ago, is once again approaching a new high above the issue price of $135.

“Crushing” disassembly of financial reports that exceeded expectations: three major sectors, three roles

Let's look at the general ledger first. According to financial reports, SpaceX's third-quarter revenue reached 14.575 billion US dollars, far exceeding analysts' general expectations of 12.72 billion US dollars, an increase of 161% from 5.576 billion US dollars in the same period last year, and an increase of about 87% from 7.814 billion US dollars in the second quarter.

Operating profit for the third quarter reached US$2,791 million, compared with an operating loss of US$273 million and an operating loss of US$143 million in the second quarter; net profit for the third quarter reached US$4.404 billion, far exceeding analysts' general expectations of US$1.57 billion to US$1.88 billion, a significant improvement over the net loss of US$1,054 million for the same period last year, turning a loss into a profit.

According to US GAAP, SpaceX's diluted earnings per share for the third quarter were $0.35, which also far exceeded analysts' general expectations of $0.15. The loss was $0.36 per share for the same period last year.

According to non-US GAAP calculations, SpaceX's adjusted profit before interest, tax, depreciation and amortization (EBITDA) for the third quarter reached US$8.809 billion, up 306% from US$2,169 billion in the same period last year, and about 149% from US$3.538 billion in the second quarter, and far exceeded analysts' general expectations of US$6.59 billion.

The capital expenditure that the market is focusing on reached $19.59 billion in the third quarter, in line with analysts' general expectations of $19.6 billion.

Superintelligence (SI): One quarter, from loss of 1.26 billion to profit of 430 million

The biggest structural change in this financial report is the explosion of the superintelligence (SI) sector — revenue of 7.56 billion US dollars, up 195% month-on-month and 830% year-on-year, exceeding market expectations by about 20%, accounting for about 52% of the company's total revenue. A company famous for building rockets now derives more than half of its revenue from AI computing power and model services. At an internal meeting in August, Musk said that AI revenue “may exceed the sum of all other business revenues in September.” Today, financial reports have confirmed this prediction.

What's more important is profit. The SI sector's operating profit was US$431 million. Compared with the operating loss of US$1,257 million in the second quarter, the correction was completed within one quarter, and this US$431 million was also included in the US$1.2 billion equity incentive expenses generated by the acquisition of Cursor. The adjusted EBITDA for the business was US$4.95 billion, about 49% higher than expected.

The growth consists of three parts: the launch of a new cloud service agreement (customers include Anthropic, Google, etc.), Cursor's consolidated statement, which completed delivery on August 14 (contributing $608 million in revenue by the end of the quarter), and an increase in Grok usage in enterprises and individuals. The company also launched the Grok Bot, an all-weather intelligent system. On the computing power side, the nominal computing power scale increased from 1.4 gigawatts at the end of the second quarter to 1.7 gigawatts (only 0.6 gigawatts a year ago), and the construction of the COLOSSUS II cluster continues to advance.

Starlink (connected business): a real “profit cow”

AI supports the imagination of revenue, but it is still Starlink that actually makes money. The connected sector's revenue was US$5.25 billion, up 69% year on year; operating profit surged 99% year over year to US$2.37 billion — according to some media bluntly, almost all of SpaceX's profit still comes from Starlink. The sector's adjusted EBITDA increased 82% to US$3.5 billion.

The number of consumer-side subscribers reached 13.6 million, an increase of 1.6 million over the previous month; monthly ARPU rebounded 5% month-on-month to $69, and the effects of the May price increase began to be realized. Aviation connectivity continues to be implemented, and more than 3,800 aircraft are equipped with Starlink terminals. The company also announced the signing of an agreement to acquire a national low frequency license for the 800 MHz band (expected to be delivered in the first half of 2027, pending approval by the FCC and others), paving the way for the second curve of Starlink directly connected phones.

Space business: small but stable “strategic base”

The launch sector's revenue was US$1.8 billion, up 84% month-on-month and 6% year-on-year. It completed 12 customer launches within the third quarter (including NASA's Nancy Grace Roman Space Telescope mission); the 14th Starship test flight completed its first entry into orbit and deployed 26 Starlink V3 satellites. The increase in downstream bandwidth brought about by a single mission was about 10 times that of the Falcon 9 Starlink mission.

Order reserves continue to grow. Three additional NASA manned missions, 18 national security launches, and 3 commercial Starfall missions were added, and a contract was awarded to use a starship to transport payloads to the lunar surface. At the same time, the company announced plans to build a star base in Louisiana. The target is to launch the starship thousands of times a year. The first launch is scheduled for 2029. The 15th test flight of the Starship at the earliest in early November will be the first attempt to “capture” the upper stage returned by a launch tower — once successful, the launch cost will drop by an additional order of magnitude. Musk's pace expectations during the conference call are: launch once a week in the first half of next year, and at least twice a week in the second half of next year.

This is not an ordinary excess of expectations; it is the first verification of a closed loop of “burning money — monetization”

The biggest question the market had about SpaceX before the earnings report was that capital expenditure of US$18.37 billion in the second quarter was still a loss — at that time, the stock price plummeted 11% after the market. The reason why this report card for the third quarter was viewed as a watershed by most organizations is that for the first time, it met three conditions at the same time:

1. AI investment begins to “return water”. The SI sector switched from a loss of US$1,257 million to a profit of US$431 million in a single quarter, verifying that the new billing power contract (in September the CFO revealed that the new agreement brought in additional revenue of about US$1.1 billion a month) is entering the revenue recognition period, not just construction projects under construction on the balance sheet.

2. Operating leverage began to show. While revenue increased 161% year over year, the company as a whole changed from operating loss of US$143 million to operating profit of US$2.79 billion, with a net profit margin of about 30%. What the CFO calls a “clear inflection point for super-smart businesses” is essentially that fixed costs are rapidly being diluted by explosive revenue.

3. The valuation anchor has new coordinates. Prior to the earnings report, UBS reiterated the purchase target price of 210 US dollars (its estimated SI revenue of 7.6 billion US dollars is almost no different from the actual value); Goldman Sachs raised the target price to 230 US dollars, positioning AI as the “next growth engine”; and Evercore ISI's target price of 275 dollars. Morgan Stanley's quantitative framework is: Each additional gigawatt of computing power can contribute about 27 US dollars to the stock price — according to Goldman Sachs's calculation path of “2.4 gigawatts at the end of 2026 and 7.0 gigawatts by the end of 2027”, the expansion of computing power itself is a tradable valuation curve.

However, the bearers were not convinced by this financial report. SpaceX's capital expenditure in the third quarter was still greater than revenue. The free cash flow gap was not closed by profit, and its expansion still depended on cash reserves and external financing. Although cash and marketable securities were about US$89.86 billion at the end of the quarter, the buffer was still thick, but refinancing costs and terms will be strictly scrutinized in an environment of high interest rates.

At the same time, Starlink's growth showed signs of slowing — the consumer side added 1.6 million new households month-on-month, lower than analysts' expectations of about 2.29 million; although ARPU rebounded to $69, it was still far lower than $85 a year ago. This indicates that the “lactating speed” of these “profitable cows” may be close to the platform period, and the dilution effect of the expansion of the low price market is still there.

The merger committee sits down! How the financial report became an “invisible pricing day”

Prior to the earnings report, Barclays analyst Dan Levy's deduction was already circulating on Wall Street: if SpaceX merged with Tesla, it would probably be a “reverse merger” of all shares — the larger SpaceX premium swallowed up Tesla. Reference valuations of SpaceX were 2.1 trillion US dollars and Tesla 1.5 trillion US dollars. Tesla shareholders could exchange about 0.7 shares of SpaceX per share. Musk will hold approximately 37% of the combined company's shares and control 56% of voting rights.

The schedule is just as strict: the announcement must be made from the end of October to the beginning of November to catch up with the voting window for Tesla's December 6 annual shareholders' meeting. Well-known technology analyst Ives previously estimated that the probability of merging the two companies in 2027 was as high as 80%, and released a new Roadster equipped with SpaceX propellers and pressure vessels in mid-October, interpreting it as “putting the relationship between the two companies on the table.”

Under this set of logic, Tuesday's earnings report essentially sets a benchmark exchange price for Tesla shareholders — the harder the earnings report, the more persuasive the 0.7 share ratio. Meanwhile, during the conference call, Musk personally took the rumor one step further: SpaceX and Tesla “have set up a committee to discuss the merger,” adding that the merger “has many advantages, but it is not a foregone conclusion and requires shareholder support.” From the July phrase “the merger cannot be discussed on an earnings call,” which was read by the market as “acquiescence rather than denial,” to today's committee settling down, this potential deal has completed a critical leap from rumor to agenda. The post-market increase of more than 7% is, to some extent, the market's direct pricing on the “increase in merger probability.”

summed

Overall, after Tuesday, SpaceX can no longer use any single framework for pricing: according to space companies, its launch monopoly and Starship curves are being fulfilled; according to telecom operators, Starlink price increases and spectrum acquisitions have opened a second curve; according to AI companies, it has a full stack from electricity and computing power to models and tools, and its revenue growth rate exceeds that of all listed peers. And the fourth tier of pricing that hangs over it all — merger with Tesla — has gone from rumor to an official agenda within the committee.

Three months ago, the market sold it because of $15.8 billion in AI investment; three months later, the market chased it because of $7.56 billion in AI revenue. Musk didn't change the speed at which he burned money; he just proved that burning money can be turned into income. For SpaceX's stock price, the next verification points have already been written: the 15th Starship test flight in early November, the Tesla Shareholders' Meeting on December 6, and whether it can stand at 2 gigawatts of computing power and 100 billion US dollars of ARR by the end of the year. And the biggest significance of this financial report is that it makes these three countdowns seem believable for the first time.