SpaceX (SPCX) Shares Gain Ground Following Musk’s Power Turbine Expansion Announcement

Key Takeaways

• Shares of SpaceX advanced 1.6% on Monday following Elon Musk’s disclosure that the company intends to begin manufacturing power-turbine castings and blades.
• GE Vernova shares declined 1.5% while Howmet Aerospace dropped 7.5% following the announcement.
• ARK Invest purchased approximately $27 million worth of SPCX shares; Wall Street consensus stands at “Moderate Buy” with a $220.20 mean price target.
• The company delivered 91.9% revenue growth year-over-year in its most recent quarter, surpassing EPS projections by $0.17.
• An upcoming September 9 lockup expiration will increase the publicly available shares to approximately 17.7%, potentially creating downward price pressure.

Shares of SpaceX (SPCX) advanced 1.6% during Monday’s trading session, reaching an intraday peak of $144.13 before settling at $143.69, following CEO Elon Musk’s revelation that the company plans to expand into power-turbine casting and blade production.

Space Exploration Technologies Corp., SPCX

In a social media statement, Musk indicated that “Casting of blades and vanes is the most limiting factor for power until solar AI satellites are launched at scale.” Investors interpreted this as a clear indication that SpaceX intends to compete in a market currently dominated by legacy industrial manufacturers.

Market participants responded swiftly. Shares of GE Vernova declined 1.5%, while Howmet Aerospace experienced a more significant 7.5% decrease during the same session.

In-house manufacturing isn’t new territory for SpaceX. According to RBC analyst Ken Herbert’s estimates, the company internally manufactures approximately 90% of its rocket components, significantly higher than the roughly 40% Boeing produces for its aircraft. This vertical integration strategy represents a fundamental aspect of SpaceX’s operational philosophy.

Adrian Helfert, who serves as chief investment officer at Westwood Holdings Group, articulated the broader trend: “We’re going through a new consideration in manufacturing production.” The conventional approach of streamlined supply chains and contracted component production faces increasing scrutiny.

SpaceX is currently constructing a foundry facility in Texas dedicated to gas-turbine component production, potentially addressing power-equipment bottlenecks associated with its artificial intelligence data center initiatives.

Wall Street Coverage and Institutional Activity

Cathie Wood’s ARK funds acquired approximately $27 million in SPCX shares during Monday’s session. Institutional investor interest has expanded throughout the second quarter, with organizations such as Hyperion Asset Management establishing a new position valued above $201 million.

Among sell-side analysts, Bernstein continues to rate the stock Outperform, while Morgan Stanley maintains a bullish stance. Cantor Fitzgerald projects a price target of $246, and Bank of America holds a Buy rating with a $235 objective. However, not all analysts share this optimism. Citigroup downgraded SPCX to Sell in August, and DZ Bank initiated coverage with a Sell rating alongside a $100 price target. The aggregate consensus from 41 analysts indicates a “Moderate Buy” rating with a mean price objective of $220.20.

In its latest quarterly results disclosed on August 4, SpaceX reported revenue of $7.81 billion, representing a 91.9% year-over-year increase. The company recorded a per-share loss of $0.09, exceeding analyst expectations by $0.17 versus the consensus estimate of a $0.26 loss.

Potential Challenges

Several notable risks warrant investor attention. The September 9 lockup expiration will expand the publicly tradable float to approximately 17.7% from current levels. Following an approximately 30% rally in August, this increased share supply could exert downward pressure on the stock price.

Additional concerns surround SpaceX’s acquisition of Cursor, the coding platform. OpenAI has reportedly terminated model access for Cursor following security incidents involving Russian hackers. This controversy, connected in part to the ongoing Musk-Altman dispute, may negatively impact the transaction’s valuation.

During Tuesday’s premarket trading, SPCX declined approximately 1%, while both the S&P 500 and Dow Jones Industrial Average retreated roughly 0.5%.