SpaceX shares are tumbling Wednesday after the company reported its first earnings since its record-breaking IPO after market close Tuesday. Advisors facing questions from their clients about the movement in the company’s stock will need to weigh the demands of SpaceX’s massive growth against its massive spending on AI.
Certainly, SpaceX’s topline numbers were impressive. For the second quarter, SpaceX reported revenue of $7.8 billion, up 92% from $4.1 billion in the prior year’s quarter. Within that number, space revenue rose to $962 million from $619 million, while the company’s connectivity business, which includes its Starlink satellite operation, generated revenue of $4.3 billion, up from $3.3 billion. AI revenue was $2.6 billion, up from $818 million.
However, the company’s capital expenditure ballooned to $18.4 billion, up from $10.1 billion a year ago with AI capex, in particular, soaring – it rose to $15.8 billion from $7.7 billion in the year-ago quarter. SpaceX merged with xAI earlier this year, and its data center spending was in the spotlight prior to its first post-IPO earnings.
SpaceX’s bottom line was also a stark contrast to its revenue growth – the company reported a net loss of $541 million, although this was narrowed from a loss of $1 billion in the prior year’s quarter.
The capex number, particularly around AI, has spooked investors and SpaceX’s stock has tumbled more than 19% Wednesday, raising questions about the cost of the company's growth.
“SpaceX (SPCX) delivered a blowout quarter, and the stock’s negative reaction is less a rejection of the fundamentals than a reflection of the enormous price of growth,” said Luke Lango, technology analyst and publisher of Innovation Investor, in a note. Lango pointed, in particular, to the company’s $18.4 billion capex, which came in well above expectations, its recent $60 billion acquisition of Cursor, continued GAAP losses, and the imminent expiration of the share “lockup” window that could send 912 million shares flooding onto the market as adding “financial and technical risk.”
The lockup window expires on Aug. 6, Reuters reports.
“The quarter powerfully validates SpaceX’s integrated space-connectivity-AI flywheel, but investors are demanding clearer evidence that its extraordinary growth can ultimately generate returns commensurate with its extraordinary spending and valuation,” Lango added.
But there was a lot to like in SpaceX's results, according to Paul Golding, senior digital infrastructure and payments analyst at Macquarie. "The print validates what we like about SPCX including mgmt. execution and tangible results from ensuring this: incumbency, scale, first-mover advantage, unit economics, vertical integration, AI compute primacy," he said, in a note.
On June 12, SpaceX made its hugely anticipated debut on the public markets in the biggest IPO of all time – at the end of the first day of trading the company had a valuation of more than $2 trillion. However, SpaceX’s stock has fallen more than 56% since its IPO, although it rallied 20% Tuesday ahead of the company’s earnings.
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