SpaceX stock fell 9.14% on October 22 after approximately $200 billion in restricted shares became eligible for sale, despite stronger quarterly earnings and higher price targets from JPMorgan and Bank of America.

SPCX closed at $144.75, down from Wednesday’s $159.31. The decline followed the release of roughly 1.3 billion restricted shares, while Elon Musk confirmed that independent committees were examining a potential merger between SpaceX and Tesla.

$200 Billion Share Unlock Expands Potential Supply

SpaceX shares declined more than 5% on October 22 as approximately 1.3 billion restricted shares became eligible for trading. The release represents nearly 28% of the restricted-share pool established during the company’s June initial public offering, making it the largest single tranche described in the company’s staggered release calendar so far.

The unlock allows employees and early investors to sell their holdings, although eligible shareholders are not required to sell immediately. It nevertheless expands the potential supply of SPCX shares and follows Wednesday’s post-earnings rally.

A further 328 million shares are scheduled to become tradable on October 26, the next step in the staggered release calendar and the nearest scheduled supply event for traders to track. Elon Musk’s holdings remain subject to separate restrictions that extend until June 2027, keeping a portion of the pool locked well beyond the current unlock.

The selling pressure came after SpaceX stock declined from its October high following the company’s third-quarter earnings. SpaceX reported quarterly revenue of $14.6 billion, a 161% year-over-year increase, even as its shares fell on Thursday.

In its October 20 earnings release, the company said it generated $4.4 billion in net income and $8.8 billion in adjusted EBITDA. Its Super Intelligence division generated $7.56 billion, while the Connectivity segment contributed an additional $5.25 billion.

JPMorgan and BofA Raise Price Targets

Wall Street analysts increased their SpaceX stock estimates even after Thursday’s decline. JPMorgan maintained its Overweight rating on SPCX and kept its price target at $500.

The bank estimated that SpaceX could generate approximately $254 billion in revenue in 2027 as computing activity increases. By the end of this year, it expects the company to have 10 gigawatts of computing power and generate roughly $400 billion in annual revenue.

JPMorgan cautioned, however, that its forecasts depend on the availability of funding, the development of computer systems and continuing customer demand.

BofA Securities raised its SpaceX price target from $235 to $275 while maintaining its Buy rating. Analyst Ronald Epstein cited the company’s quarterly performance and its expanding artificial intelligence and satellite operations. Set against Thursday’s $144.75 close, both targets sit well above where the stock traded, a gap that measures the distance between analyst projections and current market levels.

SpaceX’s Connectivity revenue increased 69% year over year. Its most recent Starship mission deployed 26 operational Starlink V3 satellites. The company is also developing the Starlink Mobile network and continuing to expand its satellite operations.

Musk Explores Potential Tesla-SpaceX Merger

Elon Musk is exploring a potential merger between Tesla and SpaceX that could value the combined companies at approximately $3.7 trillion. The two companies have formed special independent director committees to examine possible transaction structures.

During SpaceX’s most recent earnings call in October, Musk described the agreement as a “good idea” but warned against assuming it would be completed. The discussions remain at an early stage, and both companies would need to secure shareholder approval.

Bloomberg reported on Thursday that advisers were considering several options, including SpaceX acquiring Tesla or the creation of a holding company. The report put the potential combination’s value at approximately $3.5 trillion. The differing figures underscore that no agreed valuation or structure exists while the talks remain preliminary.

The discussions face additional scrutiny because Musk owns stakes in both companies and serves as their chief executive. According to reports, Musk’s public support for the proposal had raised concerns among people involved in the negotiations.

Any transaction would require independent board reviews, regulatory consideration and agreement on its financial structure, with shareholder approval from both companies also required. Neither company has announced final merger terms or a timetable for completing the discussions, leaving those steps as the markers to watch for whether the proposal advances.

Source: The Market Periodical