SpaceX shares slide after rally amid Tesla merger worries

SpaceX shares fell about 5% in morning trading on Thursday, Oct. 22, erasing a large part of Wednesday's post-earnings gain. Investors weighed a reported push by Elon Musk to complete a merger with Tesla ↘ 0.63%, competition from Europe and a jump in planned spending, Investing.com reported. The drop came one session after the stock rose nearly 8% following third-quarter results that beat Wall Street forecasts.investing.com+1

Merger timeline rattles holders

On the Oct. 20 earnings call, Musk said combining the companies would be "a good idea." He confirmed that both boards had formed special committees to consider a deal but cautioned that they had not agreed on terms. Bloomberg then reported a push to announce a deal by the first half of 2027 so that it closes while President Donald Trump is still in office. Some analysts warned that taking on Tesla, given its high valuation, could dilute SpaceX's fast-growing earnings. Reuters also reported that Musk's public support for the deal unsettled some insiders, who feared it could invite shareholder scrutiny and slow the process by several weeks.reuters.com+3

Other pressures added to the selling. The European Union is preparing a fast-track antitrust review of Project Bromo, a satellite venture combining parts of Airbus, Leonardo and Thales, according to a Bloomberg report from Oct. 15. The broader market also fell, with the Nasdaq Composite and S&P 500 ↘ 0.52% lower after earnings from Tesla and Meta Platforms ↘ 0.96%.investing.com+1

Strong quarter, heavy spending

SpaceX's earnings release showed third-quarter revenue of $14.6 billion, up 161%, and net income of $4.4 billion, compared with a loss of $1.1 billion a year earlier. Its Super Intelligence AI unit grew revenue 830% to $7.56 billion. Executives guided to fourth-quarter capital spending of $35 billion to $40 billion, roughly double Wall Street's estimate of about $20 billion, and to first-quarter 2027 revenue of $33 billion to $37 billion.fortune.com+2

Analysts lift targets

Some analysts stayed positive despite the decline. BofA Global Research raised its price objective to $275 from $235, and Pivotal Research raised its target to $260 from $230 while keeping a Buy rating. Musk has acknowledged that a deal faces a high bar: at least 50% of Tesla's shareholders would have to approve it, which he called "quite a high hurdle to achieve."moomoo.com+2