SpaceX's Boring Co. Stake Just Handed It Half a Billion Dollars in Profit

SpaceX's third-quarter earnings had a surprising standout: not rockets or Starlink, but tunnels. The company said Thursday that its stake in Elon Musk's The Boring Co. generated a $561 million investment gain during the quarter, according to SpaceX's filing with the Securities and Exchange Commission. That single gain made up more than half of SpaceX's "other income" for the period and helped push its net income past $4 billion.

It's a striking number for a company best known for digging tunnels under Las Vegas. Boring Co. was born inside SpaceX in 2017 before spinning out as its own entity a year later, and SpaceX has held onto a stake ever since. That stake just turned into a nine-figure windfall, driven not by anything Boring Co. built this quarter but by how investors are now valuing the company.

The trigger was a fundraising round last month that valued Boring Co. at $23 billion, with Boring Co. raising $3 billion from backers including the United Arab Emirates and other longtime Musk allies. When a private company's valuation jumps like that, stakeholders who hold equity in it, SpaceX in this case, get to mark up the value of their stake accordingly, which flows through as an accounting gain even though no tunnels changed hands.

What's notable is how far that valuation has run ahead of what Boring Co. has actually delivered. Despite pitching itself as a company that will "revolutionize transportation" with networks of underground tunnels and passenger stations, Boring Co.'s only tunnel currently open to the public is the Las Vegas Convention Center Loop, where Tesla vehicles shuttle passengers between the downtown convention center and a cluster of casino resorts. The company has announced roughly a dozen city projects, but Vegas remains the sole example people can actually ride.

The next big test is underway in Nashville. Boring Co. struck a deal in July of last year to build about 20 miles of tunnels there under a project known as the Music City Loop, designed to carry paying riders in Tesla vehicles between downtown and the airport. The project moved on a fast track that sparked a partisan dispute when local officials approved it, and this week it drew fresh scrutiny over safety concerns tied to sinkhole risk, according to the reporting.

Boring Co.'s most ambitious plans, though, are overseas. In the UAE, the company is planning more than 150 kilometers, about 93 miles, of tunnels, including the Dubai Loop project announced in February of last year. That scale dwarfs anything built so far in the US, and it helps explain why Gulf investors were willing to back the company's latest, much higher valuation.

A widening web of Musk-company ties

The Boring Co. gain wasn't the only cross-company detail buried in SpaceX's filing. The company also disclosed that it spent $151 million on Tesla's Megapack energy storage systems during the quarter, another example of money moving between Musk's various ventures.

That financial entanglement looks likely to deepen. On SpaceX's earnings call Tuesday, Musk said he thinks it would be a "good idea" to merge SpaceX and Tesla, and said the two companies have each formed special committees to explore a potential transaction, according to the reporting.

None of this changes what Boring Co. has physically built. The $561 million gain reflects what investors are willing to pay for a stake in the company's future, not evidence that its tunnel network has suddenly expanded. But for SpaceX, a side bet made nearly a decade ago on a tunneling spinoff just became one of the more consequential numbers in its latest earnings report, and a reminder of how closely Musk's companies are now wired into each other's balance sheets.