RESOLVING THE LEDGER
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SpaceX has been on a slide since hitting a $2 trillion valuation milestone at its June IPO , shedding close to $500 billion in market cap from its peak. Tuesday was its first-ever earnings report as a publicly listed company and a fresh chance for CEO Elon Musk to hype the stock and turn that frown upside down.
The company posted better-than-expected revenue growth in the second quarter and narrowed its losses to nearly half the level of a year ago.
But it wasn’t enough to win over a skeptical market. Shares of SpaceX slid more than 5% after the results were released and continued to slip during the conference call with top executives including Musk and President Gwynne Shotwell. As is his custom, Musk offered a rose-colored outlook for the rocket-and-connectivity AI giant, proclaiming that SpaceX’s internal target for hitting $1 trillion in annual revenue had moved forward a full year since the IPO from 2031 to 2030, with a “a non-zero chance” it hits the mark in 2029. He asked the market for patience with with the growth of its Starlink business, which beams internet connectivity to Earth from satellites.
“I think people are really underestimating Starlink,” he told analysts. “It’s not out of the question that at some point Starlink will deliver a majority of the world’s internet, at least in countries where we’re allowed to operate, which is the vast majority of countries.”
Musk added that this isn’t some far-off scenario either, claiming that “it’s less than 10 years.”
Shares continued to fall 6% to 8% in after-hours trading anyway.
The sticky wicket, which has been the stickiest for AI-tech megacaps, is investor angst around capital expenditures and a sluggish pace of return that could send the stock on a nosedive. “The stock is down because the capex for the AI segment was more than double what was expected,” Melissa Otto, global head of Visible Alpha research at S&P Global, told Fortune .
SpaceX reported capex spending of $18.4 billion in the second quarter, nearly $16 billion of it on AI compute infrastructure, pole vaulting past the $13.2 billion analysts had expected, and well above the $10.1 billion of capex in the first quarter. The same conundrum saw investors punish Alphabet and Tesla , but reward Microsoft and Amazon for accelerating revenue growth and posting blowout backlog numbers this quarter.
Another shoe will drop for SpaceX this week when close to a billion shares held by insiders can be sold for the first time on Thursday, which traditionally puts downward pressure on newly IPOed company stock prices.
Otto, of Visible Alpha, said the $1 trillion revenue figure was not impossible.
“It’s ambitious and remains a show-me story,” said Otto in an email after the earnings results. “However, given the pace of revenue growth and investment this quarter, if the company remains in acceleration mode, it’s possible.”
Musk: “It sounds super sci-fi right now, but it’s going to happen.”
Despite the stock decline, SpaceX’s earnings report contained multiple bright spots. Revenue nearly doubled year-over-year to $7.8 billion, chugging past analyst expectations of $6.9 billion. Adjusted EBITDA tripled and each business line including rockets, connectivity via Starlink, and AI all came in above expectations. Musk pointed to each of the three business lines as part of the pillars of the company that will fuel what would have to be 10x growth in three or four years to hit his $1 trillion revenue projection.
Ever the hype man, Musk suggested thinking of SpaceX’s satellites as robots, given that “they’re autonomous and don’t need servicing.” In the not-so-distant future, Musk mused, robots will be used to scale manufacturing on the moon. From there, moon-based robots will enable SpaceX to build a mass accelerator with solar production. Even Musk admitted it all sounded “totally nuts” but claimed that it could lead the company to scale to 1,000x the economy of Earth. From there, factories will be built and robots “will be helpful with that,” Musk added.
“It sounds super sci-fi right now, but it’s going to happen,” he said.
Hypothetical moon markets aside, SpaceX’s Starlink business posted revenue of $4.3 billion in the second quarter, up 66% year-over-year. Its subscriber base doubled to 12 million and SpaceX added 1.7 million new customers in the quarter. Airlines are eating it up with American, Southwest, Virgin Atlantic, Iberia, and Ireland’s Aer Lingus all aboard during Q2 with Starlink agreements.
The AI business line grew revenue by 247% to $2.6 billion, most due to cloud hosting agreements with Google and Anthropic along with growth from Grok subscriptions and X advertising. SpaceX has also inked deals worth $6.7 billion in cloud services for the second half of the year and Musk said it is on path to hit $100 billion in annualized revenue run rate by December, including the Cursor acquisition. SpaceX ended Q2 with 1.4 gigawatts of compute capacity, compared to the 400 megawatts it had a year ago, and Musk pledged to be exclusive to Nvidia going forward.
The rocket business posted $962 million in revenue and Musk said SpaceX could be launching Starship—its next-generation rocket—at least once a day within “probably a year from now.” Starship’s potential underpins much of potential growth for all of SpaceX with the promise of cheaper satellites, data centers in orbit, and would-be moon factories. The path of 10x growth from $7.8 billion in quarterly revenue to $1 trillion a year requires on-track Starship development, expanded bandwidth on Starlink satellites, and the AI business to continue humming along and converting capital spending into revenue before investors lose patience.
Musk, however, did not sound daunted by the prospect of finding an incremental $961 billion in revenue. He said Starship’s launch capacity is expected to grow 2,500 tons a year to more tha...
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