SpaceX shares surged 9.18% to $161.35 in premarket trading early on October 21, a rally driven by a standout third-quarter earnings report and Elon Musk's confirmation that Tesla and SpaceX are exploring a potential merger. Premarket readings can shift once the regular session opens, since trading volumes in those early hours are typically thinner.

The Nasdaq-listed company closed at $147.79 on October 20, ahead of the earnings announcement. Investors then weighed the financial results alongside the prospect of a combination with Tesla.

Key points:

• SpaceX stock rose 9.18% in premarket trading after revenue increased 161% to $14.58 billion.
• Elon Musk confirmed that independent committees were reviewing a potential Tesla–SpaceX merger.
• SpaceX reported $19.59 billion in quarterly capital expenditure, raising questions about the returns on its AI investment.

Musk Confirms SpaceX and Tesla Merger Discussions

One of the defining elements of SpaceX's earnings report was Musk's confirmation of the Tesla merger rumors. He said the two firms were in talks and that their respective boards would make a final determination soon. The involvement of independent committees aligns with standard governance practice for deals in which a shared leader sits on both sides, an arrangement intended to let proposed terms be evaluated free of conflicts of interest.

Musk argued that a deal would be a good idea because it would help the two companies create an AI singularity. He stressed, however, that no final decision had been reached and that the two companies and their advisors would continue negotiations. Until the boards make that determination, the committees' review remains the key procedural step to watch.

Prediction market activity reflected the heightened speculation. Odds of a deal being completed by December 2027 jumped to 70% on Polymarket, the prediction platform. Some traders anticipate an earlier agreement, with odds of an announcement coming before June 30 rising to 55%. Prediction markets let traders take positions on the likelihood of real-world events, and their odds serve as a running gauge of sentiment rather than a guarantee of any outcome.

A merger of Tesla and SpaceX would create a company with extraordinarily broad reach. Tesla is the market leader in the electric vehicle industry, and its energy business is experiencing strong demand as utility costs climb. Tesla is also pursuing other areas, including robotics and robotaxis.

SpaceX, for its part, is a leading player in the satellite launching industry and a top competitor in the artificial intelligence (AI) and satellite communications segment through Starlink. The two companies are also collaborating on Terafab, a Texas semiconductor manufacturing venture that will cost more than $100 billion to complete.

A combination would nonetheless create a conglomerate at a time when the market is rewarding simpler corporate structures. Indeed, many companies, such as General Electric and Corteva, have simplified their businesses by creating spinoffs. Large combinations between US-listed companies also typically pass through antitrust review, a stage that has shaped deal timelines across the technology industry in recent years.

SpaceX's Business Is Growing

The SPCX share price is climbing because the latest earnings report — the company's second as a publicly traded firm, a stage at investors typically look for evidence that early momentum can be sustained — showed a business that is thriving. Revenue jumped 161% to $14.58 billion, while net income reached $4.40 billion, a reversal from the $1.05 billion net loss recorded in the same period a year earlier.

Every one of SpaceX's segments posted strong growth. Space revenue rose to $1.7 billion, connectivity generated more than $5.2 billion, and, most notably, the super intelligence (SI) segment produced over $7.5 billion in revenue.

The company continued to boost its capital expenditure, particularly in its AI business. It spent over $16.4 billion during the quarter, compared with $18.34 billion in the June quarter, and its capital spending for the first nine months of the year climbed to more than $48 billion. Heavy AI infrastructure spending has become a defining theme of the current technology cycle, with investors weighing upfront costs against the pace at which AI-related revenue materializes.

SpaceX management expects revenue growth to accelerate in the near term, driven by the company's data center business and a potential entry into the telecommunications industry. How that expansion unfolds, and what returns the mounting capital outlays generate, is likely to be a focal point in the company's upcoming reports as a listed firm.

SpaceX Stock Price Technical Analysis

The four-hour chart shows that SPCX stock had been declining in recent days. It fell from a high of $176 to a low of $140 after reports emerged that the company was raising $40 billion to buy Nvidia chips.

The stock then rebounded after forming an island reversal pattern, which often precedes a strong recovery, and it has remained above the 50-period Exponential Moving Average (EMA).

According to the analysis, the stock is likely to continue rising, with bulls targeting the key resistance level of $176. A move above that level would signal further gains over time.

This article is for informational purposes only and does not constitute financial advice. Stock investments involve market volatility and potential capital losses. Readers should conduct independent research before making investment decisions.

This article was originally published on The Market Periodical.