We Raised Our Fair Value Estimates for Tesla and SpaceX. Are They Buys?

On the Oct. 26, 2026, episode of The Morning Filter podcast, guest host Sarah Hansen and Morningstar Chief US Market Strategist Dave Sekera discuss why Morningstar raised its fair value estimates for SpaceX SPCX and Tesla TSLA. Here is an excerpt from the show.

Is SpaceX Stock a Buy After Earnings?

Sarah Hansen: Moving on to SpaceX. We’ve talked about this stock quite a bit. You spoke with our equity analyst who covers it. That was a great conversation. After we filmed our episode, it made some big waves in the market. I think it was its second earnings report ever since the IPO. Walk us through those numbers and tell us what Morningstar thinks of that stock.

David Sekera: As far as the numbers go, their numbers just easily beat everyone’s expectations coming into the quarter. I think AI revenue was really the biggest driver of that outperformance, but yet Starlink is still growing exceptionally quickly. Our analyst went back to our model. I know he ratcheted a number of his forecasts a bit higher here and there, so he did increase his fair value, but our fair value is still only $70 a share. Here’s what we have in our model. We’re looking for 2026 revenue of $41 billion. That’s already doubling last year’s revenue. We’re looking for a five-year compound annual growth rate of 65%. By 2030, we’re looking for revenue of $228 billion, so essentially 5.5 times what they’re projected to do in 2026. 2026, we’re looking for negative earnings per share of $0.12. We’re looking for an operating margin to expand to 28%. That gets them to an earnings per share of $2 in 2030.

If you’re buying the stock here, I think you have to be able to assume that not only are they going to be growing much faster than what we’re currently modeling in, they almost have to double what we’re currently modeling in, and that’s just to get to fair value. That’s not even to think about saying that the stock is cheap here. Again, you would really have to see just gigantic amounts of earnings growth over the next five years and even thereafter just to be able to get to that fair value today, and much less say that that stock’s cheap.

Why Morningstar Raised Its Fair Value Estimate for Tesla

Hansen: Let’s move on to Tesla. We raised our fair value estimate there, too. What was behind the change last week?

Sekera: I’d say that the earnings were what we called solid. I think we were a bit surprised that they were free cash flow positive, but our analyst also noted that a lot of that free cash flow that was positive is probably a difference in timing when that cash is actually being spent, not necessarily a change in how the company’s going to be spending capex. The company did note that their long-term growth plans still remain intact. I think there’s really no change there. Looking at some of the individual levers on the growth here, we expect that they’ll begin production of the Optimus robots. Pretty short term here. I think they’re going to use those in the Tesla factories first, but we expect that by the end of next year, by the end of 2027, they’ll probably be selling those robots externally. Looking at the robotaxi business, just looking for ongoing expansion there. I think they noted they’re going to be in Dallas next month, and there’s a whole list of cities in 2027 that they’re planning on expanding into. I’m personally waiting for them to expand into the Chicago market.

As far as the fair value goes, we did bump it a little bit higher. We increased it by 5%. I think that was just really dialing in on some higher full self-driving adoption assumptions and maybe a slightly lower short-term capex forecast, but really no change in the investment thesis. Of course, the other big news with Tesla and SpaceX last week was the discussion of the two companies looking into whether or not a merger between them makes strategic sense. I know our analyst here thinks that it does make strategic sense. Specifically, he said that in a combined entity, Tesla would then be the key battery and solar provider for SpaceX. You could use Grok, which is the AI engine from SpaceX, to be the interface with Tesla’s autonomous driving software and the humanoid robots. Lastly, Starlink will just be able to connect it all, so that will allow Tesla to monitor the vehicles and the robots and really be able to communicate across its entire product base.

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