SpaceX shares plunged 13% in Wednesday’s trade, falling to an intraday low of $109.21, even after the company reported better-than-expected quarterly revenue and a narrower-than-expected loss. Investors instead focused on the company’s sharply higher artificial intelligence (AI) spending plans, which overshadowed the earnings beat.
In its first earnings report since going public, SpaceX said it spent $18.4 billion on capital expenditure during the June quarter—a six-fold increase from a year earlier and well above analysts’ expectations. The bulk of the investment was directed towards expanding its AI infrastructure.
The spending amounted to nearly one-fifth of the $85.7 billion the company raised in its June IPO, leaving it deeply free-cash-flow negative as it continued to invest aggressively in AI infrastructure.
Although SpaceX’s AI business generated $2.6 billion in second-quarter revenue, more than three times the level a year earlier, it remained loss-making. The segment reported an operating loss of $1.26 billion, an improvement from the $2.39 billion loss analysts had expected.
The company indicated that the heavy spending is unlikely to slow anytime soon. Chief Financial Officer Bret Johnsen said capital expenditure over the next two quarters is expected to remain broadly in line with second-quarter levels as SpaceX continues to expand AI computing capacity, accelerate Starship production, and develop next-generation Starlink satellites.
SpaceX reported revenue of $7.8 billion, comfortably ahead of the $6.81 billion expected by analysts surveyed by Bloomberg. The company posted a loss of 9 cents per share, narrower than analysts’ forecast of a 24-cent loss.
The company also said Starlink, its satellite internet business and only profitable segment, ended the quarter with 12 million subscribers, slightly below analysts’ estimate of 12.19 million. Starlink provides broadband connectivity to consumers, businesses, and governments through a network of more than 10,000 low-Earth orbit satellites.
While SpaceX’s in-house AI models are considered to trail those of OpenAI and Anthropic, the company is positioning itself as an alternative AI cloud provider by leasing the Nvidia-powered computing infrastructure it is building.
To monetise its AI infrastructure, SpaceX has already signed several long-term computing agreements. In June, Alphabet’s Google agreed to pay $920 million per month under a cloud services contract running through mid-2029. The company has also signed a similar agreement with Anthropic.
Meanwhile, heavy AI-related investments also weighed on Tesla’s second-quarter performance. The EV maker’s spending on long-term growth initiatives surged 142% year-on-year to $5.8 billion, resulting in its first quarterly cash burn in two years.
Shares extend post-IPO slide
SpaceX’s latest results capped a volatile run since the company raised $85.7 billion in the world’s largest IPO in June. Since then, the stock has come under pressure amid post-listing volatility and a broader sell-off in AI-related stocks.
With Wednesday’s decline, SpaceX shares are now down about 52% from their post-listing peak and nearly 20% below the IPO price.
Investor sentiment could face another test later this week, with more than $100 billion worth of shares becoming eligible for sale following the expiry of the IPO lock-up period, potentially adding further pressure to the stock.
(With inputs from Bloomberg)
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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