- META
- SPCX
It’s important for investors to pay attention to the clues companies give, even if the <a href="https://bitcomme.com/an-overview-of-the-customer-relationship-management-crm-market/” title=”An Overview of the Customer Relationship Management (CRM) Market”>market ignores them.
I think this is what’s happening when it comes to SpaceX (SPCX), Meta (META), and soon a lot of other hyperscalers — even when considering the selling pressure late in the week on Big Tech names.
SpaceX strongly signaled it’s going to need loads of capital to support its ambitions in space and AI. Some on the Street I have talked with estimate SpaceX will need to raise hundreds of billions of dollars to fuel the business Elon Musk wants to build.
Right now, the market is overlooking the impact on SpaceX’s financial statement from a series of mega capital raises — likely coming soon.
More capital put on the balance means more interest payments and more pressure to execute on everything from rocket launches to Starlink. In effect, it increases SpaceX’s risk profile.
The market took a first step this week in pricing this in while still praising the company’s third quarter.
(SPCX)
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147.49+2.74(+1.89%)
At close: October 23 at 4:00:00 PM EDT
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SPCXMETA
Then we have Meta (META) and its surprise announcement of a new class of stock to power its AI build-out. JPMorgan said a new overhang has been created for the stock until the share issuance occurs.
The thing is, Meta won’t be done raising capital. This could be just like the start of SpaceX, needing hundreds of billions of dollars in fresh capital in the coming years. That capital is probably coming from debt markets.
Similar to the action in SpaceX, the market has begun to price this into Meta stock.
I get the desire to focus on the positives with Meta and SpaceX — both have a lot going right. Just don’t overlook how their capital structures will change dramatically very soon — and what that could mean for their stock prices.
Follow Brian Sozzi on X@BrianSozzi,Instagram, andLinkedIn. Tips on stories? Email him at brian.sozzi@yahoofinance.com.
