SpaceX Has Tremendous Earnings Power, Say Clear Street Analysts

SpaceX possesses "tremendous" earnings power, according to Brian Dobson, managing director and senior analyst at Clear Street, and Greg Pendy, director and equity analyst at the firm. In a note published this week, the analysts initiated coverage of SpaceX with a buy rating. They view the company's established rocket launch business as a "placeholder" for its other, rapidly expanding ventures.

Dobson and Pendy highlighted Starlink, SpaceX's satellite internet constellation, and xAI, Elon Musk's artificial intelligence company, as key drivers of future growth. Their analysis suggests that the valuation of SpaceX is currently understated, primarily due to the market's focus on its legacy launch services. The firm's research indicates that the combined potential of Starlink and xAI, alongside other nascent projects, far exceeds the current market capitalization attributed solely to its launch capabilities.

The Clear Street report emphasizes that while SpaceX's rocket division is a significant contributor, it represents only a fraction of the company's long-term value proposition. The analysts' buy recommendation is predicated on the expectation that Starlink will capture a substantial share of the global broadband market and that xAI will emerge as a leading player in the AI landscape. This dual-pronged growth strategy, they argue, positions SpaceX for substantial financial gains in the coming years.