Elon Musk's SpaceX is set to report third-quarter earnings on Tuesday, a result that could shape the near-term trajectory of the Global X Space Tech ETF (ORBX). As of October 16, SpaceX accounted for 25.44% of the fund's assets, giving the rocket and satellite company an outsized influence over its performance.
Wall Street expects SpaceX to post revenue of $12.89 billion for the quarter, a roughly 65% increase from the same period last year, according to TipRanks. Consensus estimates point to earnings of 14 cents per share, a turnaround from the nine-cent loss recorded in the prior quarter.
The growth narrative hinges on two key segments: Starlink and artificial intelligence. In the second quarter, SpaceX's connectivity revenue climbed 66% to $4.29 billion, while AI-related revenue surged approximately 247% to $2.56 billion. Starlink's expansion into direct-to-cell connectivity adds another potential revenue stream, with around 650 satellites already equipped for the service and regulatory approval for 15,000 more.
However, analysts caution that network growth does not automatically translate into proportional financial gains. Rich Smith of The Motley Fool noted on October 18 that "how much that translates into revenue growth and earnings growth, of course, remains to be seen."
Spending Pressures Loom
Revenue growth tells only part of the story. SpaceX invested $18.4 billion in capital expenditures during the second quarter, including $15.83 billion on AI infrastructure, according to its SEC filings. The company ended June with substantial cash reserves, but maintaining that pace of spending could strain free cash flow and test shareholder patience.
Despite generating $7.8 billion in quarterly revenue, SpaceX reported an operating loss of $143 million. Its ambitions extend beyond data centers, with Starship development, new satellite deployments, and an approximately $8 billion wireless spectrum transaction keeping investment requirements elevated.
Financial columnist James Mackintosh highlighted a broader risk facing the AI investment boom, writing in the Wall Street Journal that "an even bigger risk: construction continues at full speed." While his warning concerned AI infrastructure generally, it applies to SpaceX's situation, as heavy investment can boost supplier revenues without ensuring attractive returns for the funding company.
Can SpaceX Rescue the ETF?
Global X's latest holdings show ORBX owned approximately $8.99 million of SpaceX shares, representing 25.44% of its $35.34 million portfolio. Rocket Lab accounted for 8.75%, while AST SpaceMobile represented 7.66%. Other holdings expose investors to additional satellite and infrastructure businesses.
That concentration makes SpaceX important, but not all-powerful. Assuming its weight stays unchanged, a hypothetical 10% SpaceX rally would add roughly 2.54 percentage points to ORBX's value if every other holding remained flat, ignoring fees and tracking effects.
Strong results could spark a rebound, but restoring confidence requires more than one earnings beat. SpaceX must demonstrate that Starlink and AI growth can justify their investment costs, while the ETF's other holdings must also stabilise.
This article is for informational purposes only and does not constitute financial advice.
