Should You Buy SpaceX Stock Before Its Next Earnings Report?

Since going public in June, Space Exploration Technologies (NASDAQ: SPCX) has already experienced a full market cycle. Although shares were priced at $135, SpaceX stock opened closer to $150. From there, Elon Musk's space empire witnessed extreme volatility, even for an IPO stock -- ripping to an all-time high of roughly $226 before sliding all the way to $105 and eventually bouncing back toward $155.

This opening pop, fade, and subsequent rebound perfectly capture what happens when a tiny float meets giant expectations. With SpaceX's third-quarter earnings report expected in November, the question smart investors are asking is whether this bounce is a setup or a trap.

Image source: Getty Images.

SpaceX's S-1 displayed the company's different personalities

SpaceX disclosed first-quarter numbers in its S-1 filing ahead of the IPO. The company's business model is split into three categories: space, connectivity, and artificial intelligence (AI).

Total revenue came in around $4.7 billion, up 15% year over year. Connectivity carried the company, with Starlink generating $3.3 billion in sales and about $1.2 billion in operating income. The space side of the business looked more like a development shop, with launch revenue totaling $619 million and bleeding a $662 million operating loss as research and development (R&D) costs for Starship chewed through $930 million.

The AI segment is the newer part of SpaceX's story. During the first quarter, AI booked just $818 million -- barely half of which came from true AI infrastructure rather than advertising. Even worse, this division lost $2.5 billion from operations.

The number that investors need to keep an eye on is capital spending. AI capital expenditures (capex) reached $7.7 billion during the first quarter, on top of $1.05 billion for the space business and $1.3 billion for broadband. Capex is the real line item to watch heading into Q3 earnings, not whether Starlink keeps adding subscribers, but whether accelerating infrastructure costs stay ahead of contracted revenue.

SpaceX's sprint since going public

In early August, investors got a thorough look at SpaceX for the first time as a public company. Admittedly, the company's acceleration looked real. Total revenue jumped 92% to $7.8 billion. Starlink reached 12 million subscribers while AI revenue nearly tripled to $2.6 billion as cloud hosting deals started showing up. Moreover, the company completed two Starship V3 tests in 90 days and completed Starship Flight 13 in July, which deployed 20 production V3 satellites.

The bigger shift is happening on the AI side of the house. Both Elon Musk and SpaceX CFO Bret Johnsen are talking with a straight face about the company reaching an annual recurring revenue (ARR) run rate of $100 billion by year-end.

Deutsche Bank analyst Edison Yu is aligned with SpaceX's run rate target, calling the forecast "likely very achievable." SpaceX's AI-driven growth stems from two sources: integrating new services from the Cursor acquisition with Grok and signing cloud capacity agreements.

For now, SpaceX boasts the following compute deals: Anthropic for $1.25 billion a month, Google Cloud at $920 million a month, a $6.7 billion six-month contract rumored to be with the Department of Defense, another $1.11 billion-a-month deal beginning in December from an unnamed customer, and $150 million a month from Reflection AI. While its customer acquisition spree is impressive, SpaceX may be on the verge of taking things up a notch.

Bloomberg recently reported that SpaceX is potentially in talks to buy customer and operational data from AI start-ups that went belly up. If true, this would be incredibly savvy as SpaceX would essentially be buying cheap training fuel -- GPUs and memory -- while all of the other hyperscalers continue to pay a premium for off-the-shelf chips. This arbitrage would allow SpaceX to accelerate its ownership of scarce compute inputs while simultaneously selling the scarce output to customers who cannot afford to wait around.

SpaceX stock is not cheap, but it might be a buy anyway

SpaceX currently boasts a market cap of around $2 trillion. If the company actually exits 2026 at a $100 billion ARR, the implied forward price-to-sales (P/S) ratio would be about 20. That is rich compared to legacy industrial companies.

This is why investing in SpaceX is not a clean "buy the earnings" trade. November will likely be noisy, with ongoing capital expenditure concerns, additional lockup agreements expiring, and hopefully some commentary on whether the new cloud deals will scale or risk cancellation after a few months.

The real takeaway is to think longer-term. SpaceX is not just a rocket company anymore. Musk is stitching together a vertically integrated infrastructure conglomerate: launch and space exploration, Starlink broadband and telecom, terrestrial and potentially orbital data centers, chips through Terafab, robotics, and a frontier model.

SpaceX is not a stock to buy in hopes of an earnings pop. It is a business you own if conviction tells you the company's proprietary technology stack will compound for the following decades. In reality, the rebound from $105 has already priced in some hope. The November report should be the first of many signals of whether this hope is translating into a durable, competitive, and profitable opportunity.

Adam Spatacco 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.