In its first quarterly report since offering shares to the public, Elon Musk's SpaceX announced soaring revenues and shrinking losses — but still not a profit.
On Tuesday the aerospace and artificial intelligence company reported a near-doubling in revenue over the same quarter last year to $7.8 billion, beating expectations. But it logged a loss of $541 million as it poured money into its Starlink satellite communications network, spacecraft development, and artificial intelligence.
The company spent $18.4 billion in capital investments during the quarter, and on an earnings call founder Elon Musk sought to paint a picture of a company that is doing "very big things."
He said SpaceX is launching far more satellites into orbit than the rest of the world combined; it's developing a satellite communications network that is quickly growing its user base and may deliver "a majority of the world's internet" in less than 10 years; and it's standing on the cusp of deploying a heavy lift rocket that will revolutionize launches. He said the company is planning to launch orbiting AI data centers next year.
"This is not some far future, distant thing," he said of the space data centers. "The SpaceX team is solving some of the hardest engineering problems in the history of humanity and I think the team is succeeding."
But the company's share price has had a bumpy ride this summer, and analysts say it could get worse.
Shares lifted off like a rocket after the company launched the world's biggest initial public offering — but then fell like a rock. SpaceX raised some $75 billion in an early June IPO. Shares started trading at $150, and in mid-June shot to a intraday high of $225.64, but closed Tuesday at $125.33, well under the initial offering price.
More than $1 trillion has been erased from the company's market capitalization since the stock hit its mid-June peak. On Tuesday, SpaceX's shares leapt more than 9% ahead of the earnings, but promptly gave much of it back in after-hours trading following the report.
The turbulence reflects the jitters of a market that is both excited and nervous about companies that make massive investments in artificial intelligence, and unsure of how to value SpaceX, the first of as many as three AI giants that could offer "mega-IPOs" this year.
And selling pressure could mount this week. The supply of publicly tradable shares will more than double when a so-called "lockup" expires on Thursday. That has prevented SpaceX employees and other insiders from selling shares for a period following the IPO.
This comes at a time when concern has grown about SpaceX's valuation as a company that has big plans but remains in the red. In the first quarter, it reported a net loss of nearly $4.3 billion.
SpaceX's future plans are grandiose. Musk — who, for a time at least, became the world's first trillionaire through the IPO — has said he wants to send people to the moon and Mars. Earlier this year, SpaceX acquired xAI, Musk's startup, as part of its push towards investing in artificial intelligence. The company is also developing a reusable heavy lift rocket called Starship, but the craft has been dogged by development delays.
"Maybe more than any IPO ever, the SpaceX IPO was about hopes and dreams and not the nuts and bolts of the business," said Cory Johnson, chief market strategist at Epistrophy Capital Research.
Johnson said some of SpaceX's revenue is coming from renting out computing data centers — capacity that he said is available because the company's own AI product, Grok, has not impressed in a fiercely competitive AI market. In the short run, that revenue stream is positive. "But in the long term, that's not as good a business as having a great large language model," Johnson said.
The initial rise in SpaceX's stock price was buoyed, he believes, by retail investors who support Musk's vision and were excited to buy a piece of the company.
"At a certain point you have to decide whether you're going to do business analysis or you're going to break out the pompoms and root for companies. And I think that for Elon Musk, more than any CEO in recent memory, people pretend to do business analysis when what they're doing is cheerleading," Johnson said.
The share price pop after the IPO was also catalyzed by the fact that the company "floated" a relatively small share of total shares — around 5% — creating a demand-supply mismatch. Several stock indexes, including the NASDAQ 100, also relaxed rules for how soon new issues could be included, further pumping up demand. (Other indexes require a waiting period of at least a year, and until the company can show profitability.)
"I think this could be a period of market adjustment, of finding what is actually the right price for a share of SpaceX," said Kathleen Curlee, senior research analyst at Georgetown University's Center for Security and Emerging Technology.
That could be a challenge, though, given that SpaceX's AI efforts are "basically eating up" any profits that its satellite communications arm Starlink is creating, she said.
"We don't know what the viability of these AI products will be. We don't know if data centers will be functional in space, or worth it to put them in space," she said. "It's just a risky bet."
The fate of SpaceX post-IPO is likely something other major AI companies considering IPOs of their own, including Anthropic and OpenAI, will be watching, analysts said.
One lesson, Johnson said, is that a small float can push up demand, but eventually gravity will tug shares downward if they are deemed overvalued — even for companies with sweeping plans at the center of the conversation about AI and its future.
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