Elon Musk's Tweet About SpaceX Casting Turbine Blades Causes Short-Term Sell-Off in Howmet Aerospace Stock
On August 30, Elon Musk announced that SpaceX plans to build its own foundry for gas turbine blades and vanes in Texas. This statement led to a sharp drop of about 8% in the stock price of Howmet Aerospace (HWM), as investors feared competition from SpaceX. However, analysts argue this reaction may have been overblown. The market's concern stems from the fact that these specialized turbine blades are produced by only four companies globally, with Howmet controlling a significant share. Analysts like Bernstein and Jefferies suggest Musk’s move reflects supply constraints rather than direct competition, noting it could take SpaceX around four years to achieve meaningful production. Additionally, Howmet reported strong financial results in its last quarter: revenue rose 24%, and earnings increased by 46%. Despite the recent dip, some analysts view this as a buying opportunity for HWM stock due to continued demand for these critical components. However, investors are also cautious about how overvalued Howmet appears compared to historical averages.
Topics: Elon Musk Howmet Aerospace investor reaction SpaceX turbine blades