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I’ll admit it; I was a Space Exploration Technologies (NASDAQ: SPCX) skeptic when it first debuted on the public markets in June. While I wasn’t skeptical of the business, I was skeptical of the $2 trillion valuation it went public at. However, my opinion has shifted a bit, especially after seeing its latest results.
The third-quarter report was incredible, and included several exciting developments for investors. All of this has me considering investing in SpaceX’s stock, so I wanted to run some hypothetical calculations to see what kind of returns the stock could conceivably deliver through 2028.
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I think there is a good chance SpaceX will be a far bigger company than it is right now in a couple of years, and that it could turn a $5,000 investment made today into a position worth $12,500 by the end of 2028.
SpaceX is doing great in every area except the one you’d expect
SpaceX splits its business into three parts: space, connectivity, and “super intelligence” (its new name for what it previously called artificial intelligence). Space is the division you likely think of first when SpaceX comes to mind. It includes the impressive technology that launches rockets into space and lands them safely back on Earth for reuse on future missions. The reality is that this division doesn’t hold a candle to the other two despite being the company’s primary segment. The space division grew from $962 million in Q2 to $1.77 billion in Q3 — strong, but still far less than what its other divisions delivered. However, its year-over-year growth was from $1.67 billion to $1.77 billion — not much of an increase.
Its connectivity division delivered another impressive quarter. This division is essentially the Starlink broadband service, which can provide satellite-based internet connectivity to customers in almost every part of the world. Its revenue increased from $3.1 billion last year to $5.3 billion this year. However, what’s more notable about connectivity is that its operating income totaled $2.37 billion, which was a major factor in SpaceX delivering its first profitable quarter.
But the super intelligence segment stole the show in Q3, as it delivered 830% growth. With revenue totaling $7.56 billion (up from $813 million a year ago), it is now SpaceX’s largest division. This rapid growth rate could persist for some time, as demand for AI products (like its Grok AI model or Grok Bots) is rapidly increasing.
