Tech Earnings Sink SpaceX Shares as Intel Cuts Outlook
Space Exploration Technologies shares fell 2.9% after Intel’s forecast for the next quarter missed analyst expectations. The guidance also weakened a potential…
Space Exploration Technologies shares fell 2.9% through 11 a.m. ET on Friday after Intel’s outlook for the next quarter came in below analyst expectations, putting pressure on a partnership viewed as a potential catalyst for both companies. Intel reported earnings for its third quarter the previous night.
The immediate concern was not Intel’s past-quarter results, which topped forecasts, but its warning about what comes next. That changed the market’s read on the SpaceX partnership and weighed on its shares.
Why did Intel’s forecast weigh on SpaceX?
Intel said it expected to earn $0.25 per share in the fourth quarter, below the analyst consensus of $0.44 per share. The company also forecast revenue of no more than $16 billion, compared with analysts’ expectation of $17.1 billion.
For the third quarter, Intel beat analyst earnings forecasts by $0.12 per share and slightly exceeded revenue expectations, reporting $16.5 billion in sales. The contrast between those results and the weaker guidance shifted attention to the company’s expected performance in the coming quarter.
Northland analyst Gus Richard had predicted before Intel released its results that the company would beat earnings and provide “very strong guidance.” Richard viewed Intel’s partnership with SpaceX as “a significant catalyst” that could help drive Intel higher.
Intel’s weaker forecast undercut that expectation. The connection matters to SpaceX because Richard had tied the partnership’s potential to a stronger outlook from Intel. With the company projecting lower earnings and revenue than analysts expected, the partnership no longer appeared as supportive a signal for either stock.
What other risk hangs over the reported merger plan?
A separate potential catalyst is also uncertain. Bank of America warned that reported plans for SpaceX to merge with Tesla could face a challenge if Chinese antimonopoly authorities intervene to block the deal.
The bank pointed to Tesla’s production in Shanghai: half of the electric carmaker’s production comes from the city, giving China a significant say in whether the reported merger can proceed.
A blocked deal would likely pose a bigger risk to Tesla, whose investors expect it to be acquired at a premium, than to SpaceX, the analysis said. Still, a setback to Elon Musk’s plans could weigh on both companies.
The two developments leave investors weighing more than Intel’s latest quarterly performance. Its results beat forecasts, but its next-quarter guidance missed them, weakening one rationale for the SpaceX partnership. Meanwhile, the reported Tesla merger plan faces a possible regulatory obstacle tied to the location of half of Tesla’s electric car production.
Space Exploration Technologies shares were down 2.9% through 11 a.m. ET on Friday.
