- SpaceX said in its quarterly filing with the Securities and Exchange Commission that its stake in Elon Musk’s Boring Company generated an unrealized gain of $561 million in the third quarter. The gain accounted for more than half of SpaceX’s “other income” and boosted net income to just over $4 billion.
- By our calculation, the Boring gain equals roughly 14% of SpaceX’s quarterly net income, a meaningful contribution from a non-cash mark on a private holding. It also implies, by our calculation, that other income totaled less than about $1.12 billion.
- The gain follows Boring’s $3 billion raise last month at a $23 billion valuation, backed by the United Arab Emirates and a roster of longtime Musk supporters. Boring was created inside SpaceX in 2017 and spun out a year later.
- The filing also showed SpaceX bought $151 million of Tesla’s Megapack energy storage systems during the quarter. The disclosure adds to the web of transactions between Musk companies at a time when SpaceX and Tesla have both formed special committees to discuss a potential merger.
What Happened?
SpaceX disclosed on Thursday that its stake in the Boring Company netted a $561 million investment gain in the third quarter, CNBC reported. Boring, which says its mission is to “revolutionize transportation” through underground tunnels with passenger stations, has announced about a dozen city projects. Its only tunnels currently open for public use are in Las Vegas, where passengers ride in Tesla vehicles on the Las Vegas Convention Center Loop. Boring also has a deal to build about 20 miles of tunnels in Nashville and plans more than 150 kilometers of tunnels in the UAE, including the Dubai Loop.
Why It Matters?
The disclosure separates the quality of SpaceX’s earnings from its operating story, since an unrealized gain on a private stake is a paper mark rather than cash from launches or services. Investors valuing SpaceX on earnings may want to treat the $561 million as a one-off unless Boring’s valuation keeps rising. The Megapack purchases and the Boring stake show how financially intertwined Musk’s companies are, which matters as SpaceX and Tesla weigh a combination. Related-party dealings are likely to draw more scrutiny from shareholders as merger talks advance.
What’s Next?
Boring’s execution will decide whether the gain holds, and the Nashville Music City Loop, which sparked a partisan feud when it was greenlit, drew new safety concerns over sinkhole risks this week. Progress on the UAE projects, including the Dubai Loop, will be a key test of the $23 billion valuation. Watch the special committees at SpaceX and Tesla for any formal merger proposal, after Musk called a combination a “good idea” on SpaceX’s earnings call Tuesday. Future filings will show whether SpaceX’s purchases of Tesla Megapacks keep growing.
Affected Tickers and Coins: SPCX, TSLA
Source: CNBC
