RESOLVING THE LEDGER
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Topline SpaceX’s stock once again took a hit on Wednesday after the rocket maker posted its first-ever earnings report, which seemingly spooked investors and analysts after the Elon Musk-led firm announced a sixfold increase in quarterly spending.
SpaceX on Tuesday reported quarterly revenue of $7.81 billion and a loss per share of $0.09, beating Wall Street estimates of $6.9 billion and a loss of $0.26, respectively, according to FactSet, as the firm’s net loss narrowed to $541 million from $1 billion.
The rocket maker said it spent $18.3 billion in its second quarter, $15.8 billion of which went toward AI, exceeding estimates of $13.2 billion, as SpaceX’s capital expenditures totaled $28.5 billion in the first half of this year—that marks a sixfold increase over last year’s nearly $7 billion.
Both Musk and Bret Johnsen, SpaceX’s chief financial officer, tried to cool concerns about the ramp-up in spending during an earnings call: Johnsen said “all capex is not the same,” especially when it comes to AI, to which Musk announced to shareholders SpaceX planned to build AI data centers in space using Nvidia chips exclusively.
Musk also said SpaceX now expects revenue to top $1 trillion by 2030 and potentially by 2029, down from his earlier projection for 2031.
Some brokerages appeared optimistic about SpaceX’s quarterly earnings: JPMorgan analysts, who lifted their price target for shares to $240 from $225, wrote SpaceX is benefiting from “extreme vertical integration” while noting its “pace of change in AI is incredibly fast,” and that a step-up in AI infrastructure and higher monetization could push SpaceX’s AI revenue to $100 billion in 2027. Wells Fargo analysts cut their price target for SpaceX shares to $215 from $230 amid broader caution about its AI spending, noting that SpaceX was “off to an ambitious start” and that revenue projections for 2027 and 2028 were higher than expected, but so were capital expenditure estimates. Kathleen Brooks, research director at the brokerage XTB, told The Wall Street Journal, “The concern for investors is how fast expenditure growth is outpacing revenue growth.”
A stray piece of a SpaceX rocket that floated in space over the last year likely crashed into the moon early on Wednesday, the BBC reported , though images of the collision have yet to be processed. The rocket is believed to have crashed near the Einstein Crater, located on the other side of the moon from the Apollo 11 landing site in an area that receives daylight and is visible from Earth.
Chris Beauchamp, IG’s chief market analyst, told CNBC : “Part of a SpaceX rocket crashing into the moon this morning is probably a good metaphor for the share price performance so far.”
If SpaceX shares fall below $100, that would imply investors saw no value from the rocket maker’s AI business, Morgan Stanley analysts wrote last month. Some already see “zero or negative value” as SpaceX ramps up its spending on space and connectivity amid “largely uncertain economics,” the analysts said.
Musk’s net worth was cut by $81 billion to $701.5 billion in SpaceX’s decline, according to Forbes’ estimates . His fortune swelled by more than $57 billion ahead of SpaceX’s earnings report on Tuesday, and a reduction on Wednesday still has his net worth well above that of Google co-founder Larry Page ($309 billion) and Amazon’s Jeff Bezos ($278.3 billion), who rank as the second- and third-richest people in the world, respectively.
The earnings report marks the first quarterly financial update from SpaceX since its historic trading debut in June. SpaceX shares have lost more than half their value since hitting an all-time high above $220 by June 16, when Musk’s fortune topped $1.45 trillion, even as analysts still appeared bullish about the company’s business prospects. Not much has pushed SpaceX shares toward the green, even after a successful Starship test launch last month that later resulted in the stock stumbling by nearly 5%.
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