SPCX: Reality And Fantasy

SpaceX (SPCX) reported an excellent 3Q26 after the close Tuesday afternoon. Revenue increased 160% to $14.6 billion and Adjusted EBITDA of $8.8 billion smashed analyst estimates. Further, they guided 1Q27 revenue to $33-$37 billion. As a result, the stock is up almost 10% in the premarket to ~$162 – and is lifting the entire AI complex and stock market.

SPCX’s business is divided into three segments: Space, Connectivity and Super Intelligence (formerly AI). Space is the rocket business and Connectivity is Starlink. What is getting investors so excited is the massive growth in Super Intelligence. Super Intelligence made up 52% of SPCX’s revenue in the third quarter – up from only 15% a year ago. It grew more than 800% year over year.

But the hype is getting out of control. On the conference call, Elon said that he expects Annual Recurring Revenue (ARR) of between $500 billion and $1 trillion by the end of 2027. It’s a long way from $15 billion a quarter to $1 trillion a year.

While it’s good to think big and many in Silicon Valley have adopted Steve Jobs “reality distortion field” way of thinking – convincing himself and others that the seemingly impossible was in fact possible – saying this kind of thing on a corporate conference call is reckless. No other CEO or public company does this – or could get away with it with the SEC. Only Elon.

Elon also retweeted a tweet by his friend, the futurist Peter Diamandis, that SPCX will become the first $10 trillion and $100 trillion company. A couple weeks ago Elon went even further tweeting that he saw a path to SPCX being worth orders of magnitude more than the entire current economy of Earth.

SPCX is currently valued at $2 trillion and the most valuable company in the world, Nvidia (NVDA), is worth of $5.3 trillion – the most any company has ever been worth. The entire net worth of the United States is ~$180 trillion, according to the St. Louis Federal Reserve. The chance that SPCX will one day be worth $100 trillion or orders of magnitude more than the entire current economy of the earth is miniscule to zero. It was a great quarter but please keep your pants on.