Key Highlights

● SpaceX rose $2.00 to close at $162.57.

● Barclays initiated at Overweight with a $254 target.

● The $8 billion spectrum deal needs FCC approval.

● The three carriers lost about $39 billion in value.

SpaceX (NASDAQ:SPCX) rose $2.00 to close at $162.57 on Friday, October 9, a day on which Barclays (NYSE:BCS) analyst Anthony Valentini initiated coverage with an Overweight rating and a $254 price target. Some outlets described the rating as a Buy. The shares had been higher in premarket trading before giving back part of the gain.

The $254 target sits well above Friday's close and far above the $150 price at which SpaceX went public. A price target reflects an analyst's view of where a stock could trade over roughly the next year, and the gap between it and the current price shows how much growth Barclays sees ahead. The call was part of a broader Barclays launch across aerospace, defense and space, which also included Overweight ratings on Palantir (NASDAQ:PLTR) and Rocket Lab.

The spectrum deal

The bull case got a fresh talking point on the same day. SpaceX agreed to buy Grain Management's nationwide 800 MHz low-band spectrum, up to 14 MHz paired, for about $8 billion in cash, according to market data. The deal needs FCC approval. Separately, the FCC approved an expansion of SpaceX's Starlink satellite network.

SpaceX said the purchase "will pave the way for Starlink Mobile to become a major mobile carrier in the US." Elon Musk called it a "Very big deal" in a post on X on Thursday.

Low-band spectrum travels long distances and penetrates buildings well, making it valuable for mobile coverage. Owning it outright could allow Starlink Mobile to offer service directly rather than relying on partnerships with existing carriers.

A shock for carriers

Investors read the deal as a competitive threat to the established wireless industry. T-Mobile (NASDAQ:TMUS) fell about $22.76 to around $148.58, AT&T (NYSE:T) dropped $2.41 to $22.17 and Verizon (NYSE:VZ) slid $3.99 to $41.65. Together the three carriers lost about $39 billion in market value, according to market data. T-Mobile currently partners with SpaceX for satellite coverage in dead zones.

Evercore ISI (NYSE:EVR) analyst Kutgun Maral said, "The carriers' best argument just got weaker" and "This strategic shift places SpaceX in a stronger negotiating position". Scotiabank cut its price targets on all three carriers.

Tower companies, by contrast, surged. Crown Castle (NYSE:CCI) jumped $10.75 to $79.64 and American Tower (NYSE:AMT) rose $15.51 to $182.24, as investors bet SpaceX would need terrestrial towers. Morgan Stanley (NYSE:MS) analysts called the deal "incrementally constructive" for towers.

The broader market

The S&P 500 rose 46.18 points to 7,811.54, about 7 points below its record close, while the Nasdaq Composite gained 172.83 points to 27,366.17 and the Dow climbed 423.31 points to 51,654.95. Communication services was the worst-performing S&P 500 sector as the carriers slumped.

Rates remain elevated. The 10-year Treasury Yield stayed close to its 24-year high, while the Fed raised rates in September for the first time since 2023.

Verizon's October 26 Call Could Bring the Carriers' Response

The FCC review of the Grain spectrum purchase is the next major milestone for SpaceX, along with any details on how and when Starlink Mobile plans to launch service. Verizon's quarterly call on October 26 could bring further comment from the carriers. On the macro calendar, Equities trade as usual on Monday, October 12, while Treasury markets are closed for Columbus Day. September consumer prices are due Wednesday, October 14, and the Fed meets October 27 and 28.