Elon Musk’s SpaceX is expected to launch its mobile network in rural America before expanding into major cities, reversing the strategy of traditional carriers. Recon Analytics founder Roger Entner stated that the company will leverage its existing satellite infrastructure to challenge incumbents in underserved markets.

Rural-first rollout strategy

Entner estimates that approximately 90% of Starlink’s U.S. internet customers are located in rural areas. This existing foothold allows SpaceX to "play where he's strong and the other guys are weak," according to Entner. He noted that roughly 40% of Americans live outside the country’s 100 largest markets, representing a significant addressable audience for a new entrant.

The analyst emphasized that Musk needs to fight asymmetrically against established players like T-Mobile US Inc. (NASDAQ: TMUS), AT&T Inc. (NYSE: T), and Verizon Communications Inc. (NYSE: VZ). While satellites struggle with indoor coverage, requiring terrestrial infrastructure for denser areas, the initial focus remains on regions where incumbent coverage is weakest.

Cost estimates and equipment

Entner projects that SpaceX could build a robust network for $10 billion to $15 billion, excluding additional spectrum purchases. This figure contrasts sharply with TD Cowen’s estimate of more than $80 billion for a competitive nationwide network built city-by-city. The lower estimate assumes a phased rollout that adds urban infrastructure only as demand grows.

To control costs and optimize performance, Entner expects SpaceX to develop its own cellular equipment rather than purchasing from vendors like Ericsson or Nokia. He cited Starlink’s router, described as "by far the best router in the industry," as evidence of Musk’s capability to produce superior hardware internally. Physical construction is expected to be outsourced.

Market impact and timeline

SpaceX’s recent spectrum acquisition, reportedly worth $8 billion, caused shares of major telecom operators to fall sharply on October 9. Entner stated that incumbents are "very worried" about the potential competition.

Network readiness timeline

Entner indicated that a serious threat to incumbents would emerge around 2030 to 2032. He dismissed the possibility of offering even limited service substantially sooner, citing the time required to incorporate connectivity technology into devices and satellites. On Polymarket, traders assigned a 41% probability that SpaceX would offer its own U.S. mobile plan by the end of 2027, though this could resolve positively if the company relies on another carrier’s network.

Evercore ISI Group analyst Kutgun Maral has raised the price target for SpaceX (NASDAQ: SPCX) to $275 from $230. The firm maintains an Outperform rating on the stock, signaling continued confidence in the company's trajectory ahead of its third-quarter results.

The adjustment represents a $45 increase in the projected valuation, suggesting approximately 85% upside from recent trading levels. This move comes as investors prepare for the release of Q3 financials, which Maral argues will be judged on broader strategic debates rather than just quarter-over-quarter performance.

Key debates for Q3 earnings

Maral outlined five critical areas that will shape investor sentiment following the earnings report scheduled for October 20. His analysis suggests that while execution risks remain, the AI segment is expected to drive significant revenue growth.

The $100 billion run rate

Revenue remains the primary debate. Maral estimates SpaceX is well-positioned to exit 2026 with annualized revenue above $100 billion, with his specific forecast sitting near $104 billion. Strategic compute deals are cited as the primary driver for this growth, supplemented by internal expansion in AI and connectivity businesses.

Compute capacity and pricing

The firm forecasts SpaceX will reach roughly 2.3 gigawatts of compute capacity by the end of 2026, exceeding consensus expectations. This expanded footprint is viewed as achievable and critical for signing additional compute deals.

Pricing on new 2027 deals is another focal point. Maral models 2027 pricing at about $30 per watt, a figure he considers essential for maintaining revenue streams and limiting downside risk. A shift in market conditions against this pricing model could disadvantage SpaceX on new contracts.

Capex and funding requirements

Capital expenditures are expected to rise sharply to roughly $151 billion in 2027. While Evercore believes projected EBITDA growth will overshadow this increase, Maral stressed the importance of managing this capex trajectory carefully to sustain ambitious growth plans.

Mobile service wildcard

The potential launch of a competitive mobile service remains unresolved, hinging on regulatory support and terrestrial capacity improvements. While skepticism exists, growth in the AI segment could provide flexibility for hybrid connectivity solutions.

What the numbers show

The divergence between the aggressive revenue forecast of $104 billion and the substantial capital expenditure requirement of $151 billion highlights the capital-intensive nature of SpaceX's current strategy. The analyst's view that EBITDA growth will overshadow the capex spike suggests an expectation of high-margin returns from the AI and compute segments, though this relies heavily on maintaining the modeled $30 per watt pricing structure.

SpaceX stock was down 1.81% at $145.93 at the time of publication Friday. New compute deal announcements around the third-quarter report are expected to be favorable for sustained revenue growth.