SPCX Stock Surges Premarket – JPMorgan Says SpaceX May Need Ground-Based Network To Rival Telecom Giants

The firm believes building a competitive network would require significant investment from SpaceX.

• JPMorgan said SpaceX would likely need to deploy a terrestrial network using large cell towers.
• KeyBanc called SpaceX’s spectrum acquisition a positive for tower operators.
• Despite the dip in share prices, JPMorgan sees limited near-term competitive risk for U.S. wireless carriers.

SpaceX (SPCX) could need to build a ground-based mobile network to compete with established U.S. telecom operators following its latest spectrum acquisition, JPMorgan said on Friday.

The firm maintained its ‘Overweight’ rating on SpaceX, saying the agreement makes Starlink Mobile’s long-term opportunity more credible, although building a competitive network would require significant investment, according to TheFly.

The stock was up 3.7% in pre-market trading, while SPCX was among the top trending tickers on Stocktwits at the time of writing.

SpaceX Buys Grain’s Portfolio

On Thursday, SpaceX announced an agreement to acquire Grain Management’s nationwide portfolio of 800 MHz wireless spectrum licenses, covering up to 14 MHz of paired spectrum. Grain confirmed that SpaceX would acquire its entire portfolio, subject to Federal Communications Commission (FCC) approval.

SpaceX said that the frequencies address an important technical gap in Starlink Mobile’s push to become a major mobile carrier.

The acquisition follows SpaceX’s earlier purchase of higher-frequency spectrum from EchoStar and supports its ambition to combine satellite connectivity with traditional mobile infrastructure.

Wall Street Sees Tower Operators Gaining

JPMorgan said SpaceX would likely need to deploy a terrestrial network using large cell towers unless it secures a mobile virtual network operator agreement, which would allow it to use an existing carrier’s network.

This brings tower operators into play. KeyBanc analyst Brandon Nispel called the acquisition positive for tower operators, saying SpaceX’s strategy appears to be shifting toward traditional cell towers rather than smaller cellular equipment. The firm also suggested SpaceX could potentially take over some existing DISH Network tower leases.

Goldman Sachs echoed the sentiment, saying it expects SpaceX to deploy the 800 MHz spectrum via cell towers in major cities and other urban areas to strengthen its mobile network coverage.

Tower operators surged in pre-market trading on Friday. American Tower (AMT), Crown Castle (CCI) and SBA Communications (SBAC) were up around 8% each.

Meanwhile, shares of AT&T (T), Verizon (VZ) and T-Mobile (TMUS) fell between 5% and 7%, over competition and a potential long-term disruption of the industry. However, JPMorgan sees limited near-term competitive risk for U.S. wireless carriers.

Retail Split On SPCX’s Telecom Foray

Retail sentiment surrounding SPCX trended in the ‘Bullish’ zone on Stocktwits over the past 24 hours, amid ‘high’ message volumes.

One user said the spectrum deal is going to generate a lot of revenue for SpaceX.

View this Stocktwits post

However, another user highlighted market risks.

View this Stocktwits post

SPCX shares have gained around 23% from their IPO price.

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