Tesla vehicles transport people between casino resorts and conference rooms via a tunnel beneath the Las Vegas Convention Center. They travel silently through concrete hallways that resemble a prototype for something bigger than a real transit system. It is the most well-known product of The Boring Company and, until recently, the only one available to the general public. For SpaceX investors, that same company transformed into something else this past quarter: an unexpected line item valued at over half a billion dollars.
An unrealized investment gain of $561 million from SpaceX’s equity stake in The Boring Company was disclosed in the company’s October third-quarter financial filing. Over half of SpaceX’s “other income” for the period came from the gain, which increased total net income to just over $4.4 billion on $14.58 billion in revenue—a 161% increase in top-line sales over the previous year. The figures appeared impressive. As usual, it’s important to carefully read the fine print.
The Boring Company’s September fundraising round, in which it raised $3 billion at a $23 billion valuation with support from the United Arab Emirates and a group of devoted Musk supporters, set off the gain. When a new valuation is determined, companies that own equity stakes in other companies must modify the carrying value of those investments in accordance with standard accounting rules. The September round produced a $561 million paper gain and set a new benchmark because SpaceX owns equity in The Boring Company. No money was exchanged. Not a single share was sold by SpaceX.
When attempting to determine SpaceX’s actual earnings for the quarter, it’s important to pay attention to that particular detail. The $561 million came without any operational work on SpaceX’s part and represented about 12.7% of the company’s total net income. Operating income, which came in at $2.8 billion—a genuinely solid figure and a significant reversal from an operating loss of $273 million in the same quarter a year earlier—is a more honest lens for assessing the company. This enhancement provides a clearer picture of the rocket company’s true operations.
For big holding companies, this is not wholly out of the ordinary. Earlier in 2026, Alphabet revealed a similarly startling “other income” figure when its net income was inflated to $112.2 billion in a single quarter due to unrealized gains from its SpaceX stake. The accounting treatment is consistent, but investors don’t always pay enough attention to where the profits come from, and headlines frequently report the total amount without providing much context.
Beyond the accounting, the history of the SpaceX-Boring Company relationship is what makes it intriguing. Beginning in 2017, when the concept was essentially a side project, The Boring Company was developed within SpaceX before becoming a separate company in 2018. Because of this origin story, SpaceX’s stake predates the company’s public identity and was purchased for a small portion of its current paper value. Boring Co. is now valued at $23 billion, about four times the $5.7 billion it was in 2022.
The Music City Loop in Nashville, a planned subterranean connection between downtown and the airport, has garnered political attention as well as some safety concerns due to sinkhole risks. The company has now announced about a dozen city projects. Plans to build more than 150 kilometers of tunnels in the United Arab Emirates are underway, supported in part by the same investors who recently wrote the check in September. It’s still genuinely unclear if any of these projects will produce at the scale that has been promised.
Investors who follow SpaceX seem to be asked to hold two ideas at once: a company that is actually growing at an extraordinary scale, investing between $35 and $40 billion in capital expenditures in a single quarter, and a company whose reported profits occasionally owe more to accounting revaluations than to cash generation. It is possible for both to be true at the same time. Over the coming years, it will be more fascinating to see how those two realities diverge.
