SpaceX Doesn’t Need to Beat Verizon, AT&T or T-Mobile to Disrupt Wireless, Analyst Says

Space Exploration Technologies Corp. (NASDAQ:SPCX)/a> stock is trading lower Wednesday as broader market sentiment weakens ahead of the opening bell. Nasdaq futures are down 0.44% while S&P 500 futures have shed 0.24%.

SpaceX's Wireless Push Could Reshape Competition

SpaceX's push deeper into wireless connectivity is drawing Wall Street attention. Its combination of satellites, spectrum and potential terrestrial infrastructure could eventually give the company a foothold in a U.S. wireless market dominated by three national carriers.

Wells Fargo senior analyst Steven Cahall told CNBC on Tuesday that he does not believe SpaceX is entering wireless simply because the economics of becoming a fourth nationwide carrier are attractive.

Instead, Cahall sees broader technology ambitions behind the strategy. Over time, SpaceX could build connectivity infrastructure that supports areas such as robotics and autonomous vehicles.

He said SpaceX could combine its growing satellite constellation and spectrum holdings with terrestrial infrastructure. That could include wireless towers and a Wi-Fi offload mobile virtual network operator arrangement with cable providers.

Such a network could create modest opportunities for cable and tower companies. However, Cahall sees greater competitive pressure for established telecom operators.

"Telcos just facing another competitor, a three-player market going to a much smaller fourth player, that's still a net negative, for sure," Cahall said.

Still, Cahall does not expect SpaceX to displace T-Mobile US Inc. (NASDAQ), AT&T Inc. (NYSE) or Verizon Communications Inc. (NYSE) over the next year or two.

Those carriers operate networks designed to provide broad and reliable nationwide coverage. SpaceX may not need to match that scale.

Cahall estimated that SpaceX could initially target roughly 2% of the U.S. population. That approach could require less spectrum, fewer towers and less coverage than a traditional nationwide wireless network.

He also said the architecture would not rely entirely on satellites. SpaceX could combine spectrum with terrestrial technologies to address the physical limitations of direct satellite connectivity./p> div class="bz-see-more-ranking-block" data-ranking="quality" data-theme="light" data-variant="basic-2" >

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Analyst Outlook

SpaceX carries a Buy consensus rating. Its average price forecast stands at $227.14, based on 47 analysts. Forecasts range from $115 to $800.

On Tuesday, Wells Fargo maintained an Overweight rating but lowered its price forecast to $212. Pivotal Research initiated coverage with a Buy rating and a $220 price forecast. Meanwhile, Oppenheimer maintained an Outperform rating and raised its price forecast to $280 on Sept. 2.

Top ETF Exposure

SpaceX has significant weightings in the Baron Technology ETF (NASDAQ), ARK Innovation ETF (NYSEARCA) and ARK Autonomous Technology & Robotics ETF (BATS).

SpaceX accounts for 6.21% of BCTK, 6.04% of ARKK and 6.98% of ARKQ. Therefore, large fund inflows or outflows could contribute to buying or selling pressure in SpaceX shares.

Price Action

SPCX Price Action: SpaceX shares were down 0.27% at $153.06 during Wednesday's premarket session, according to Benzinga Pro data.

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