Why SpaceX Stock Dropped Today
Key Points
Wall Street hoped a strong Q3 earnings report from Intel would mean good things for SpaceX.
Intel's earnings actually were fine -- it's Intel's guidance that's the problem.
Bank of America has raised new concerns about a SpaceX-Tesla merger.
Space Exploration Technologies (NASDAQ:SPCX) stock slid 2.9% through 11 a.m. ET on Friday -- and it's all Intel's (NASDAQ:INTC) fault.
Intel reported its Q3 earnings last night, beating analyst forecasts by $0.12 per share and edging out revenue forecasts with $16.5 billion in sales. The problem was that Intel then went ahead and gave guidance for next quarter as well, and the company's prediction that it would earn only $0.25 per share in Q4 fell far short of consensus estimates of $0.44 per share. Similarly, Intel warned that its Q4 revenue would be no more than $16 billion -- versus the $17.1 billion that Wall Street analysts had hoped for.
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What that means for SpaceX
What does any of that have to do with SpaceX stock? Here's the connection:
Yesterday, before Intel reported its results, Northland analyst Gus Richard predicted that Intel would beat earnings "and provide very strong guidance." If both those things happened, this would have been good news for SpaceX (says Richard), because he viewed Intel's partnership with SpaceX as "a significant catalyst" that would drive Intel higher.
But now Intel's weak guidance suggests the partnership isn't great news for either Intel or for SpaceX.
What's next for SpaceX stock
This isn't the only catalyst at risk for SpaceX, either. In a note yesterday, Bank of America warned that SpaceX's reported plans to merge with Tesla (NASDAQ:TSLA) could be at risk if Chinese antimonopoly authorities intervene to block the deal. BofA points out that half of Tesla's electric car production comes from Shanghai, giving China a sizable say in whether the reported merger can proceed.
If a merger is denied, this is probably a bigger risk for Tesla (which investors expect to be bought at a premium) than for SpaceX. But any thwarting of Musk's plans is probably bad news for both companies.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Tesla. The Motley Fool has a disclosure policy.