Space stock fell 10% in early trading Wednesday

Investment Analysis Clubs Macro Economic Trends and Risks
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SpaceX (SPCX) is becoming an AI giant faster than expected — it is also spending like one.

The company’s first quarterly report as a public company showed its AI business growing rapidly and swinging to an adjusted profit. But SpaceX spent nearly $16 billion on AI infrastructure during the quarter — more than six times the segment’s revenue.

SpaceX entered the public market with a rocket company reputation, but its own filings pointed investors toward AI.

AI revenue more than tripled from the first quarter to $2.6 billion. Adjusted EBITDA swung from a $609 million loss to a $1.1 billion profit.

Adjusted EBITDA strips out depreciation, stock compensation, and several other expenses. It can show whether an operation is covering its immediate costs, but it does not capture the full price of building the infrastructure behind it.

By conventional accounting, SpaceX’s AI segment still lost $1.3 billion from operations.

Then came the much larger number.

Capital spending on AI jumped to $15.8 billion from $7.7 billion in the first quarter and just $749 million a year earlier. AI accounted for more than 86% of SpaceX’s total capital spending during the quarter.

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.

*“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.”

“It sounds super sci-fi right now, but it’s going to happen.”

Musk-Madman or 21st century PT Barum.
Musk’s over promising droving TSLA to unbelievable heights.
Can he do it again with Space X?

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Space Stock fell 10%…

The first “unlock” period for shares for early investors is tomorrow. It will be interesting to see if a lot come on the market or not, and what the result might be.

Almost a billion shares get unlocked. These are already existing shares, in the lab as of people for whom the funding has been illiquid until now.

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There was some looney stuff on the earnings call, even by Elon Musk standards.

For example, he claimed there would be 100 billion in recurring revenue by the end of 2026, and 1 trillion by 2030 maybe by 2029. Revenue is currently about $30 billion annual run rate. 3x by the end of the year is…a lot. 30X in 3.5 years is a CAGR of 140%. Good luck with that.

Musk said they are anticipating having “close to 10 GW” compute capacity next year, up from 2 GW by the end of this year. I asked Gemini how much it would cost to build 6 GW of compute (2+6 = close to 10). It spit out $210B – $360B. SpaceX spent $15 billion on AI capex last quarter, so $60 billion annual run rate. They would have to radically expand the capex. And of course, data center construction is already constrained by labor and power shortages, not to mention crowds of angry villagers. No way.

I’ll say it is pretty much out of the question. The main obstacle for space-based Internet and to a lesser extent phone service is bandwidth. Each Starlink satellite has limited radio spectrum and must share that capacity with everyone underneath it. As more users are added to a given area, each user’s share of capacity declines. Now imagine trying to supply Internet to NYC or Tokyo where you have a very high concentration of users. It would require a very high concentration of satellites. Fiber has enormous bandwidth and it is easy to add more. And unlike satellites which need to be refreshed regularly, once fiber is installed the maintence costs are very low.

Now, Starlink is great for rural/underdeveloped areas, maritime uses, aircraft, that sort of thing. But a majority of the world’s population can’t afford the hardware and subscription fees.

And finally, Musk touted the prowess of SpaceX’s terrestrial data center team, saying that SpaceX vs Google building terrestrial data centers is like “the New York Yankees going in and playing a little league team.”

Keep in mind, Google invented the way modern data centers work, and been building and operating them since the late 1990s. Virtually their entire business, Youtube, search, Gmail, etc. uses data centers. Google designs their own chips and builds their own networks. XAI only became part of SpaceX this year, and has only been in business for two years. It isn’t plausible that in some short period of time they cracked some code that puts them leaps and bounds ahead everyone to the extent Musk claims.

The Tesla earnings call was pretty sedate, but this one was borderline unhinged.

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Musk's EV Company Stumbles
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I’m surprised it’s only 10%.

{{ SpaceX (SPCX) has approximately 13.18 billion to 13.6 billion total outstanding shares, with a public float of roughly 640 million shares. An initial lockup expiration is releasing over 911 million insider and employee shares into the public market. }}

Maybe they’re thinking that all these insiders believe in the future. {{ LOL }}

intercst

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$1.4 Trillion market cap. $7.8 billion in revenue. Where do I sign up?

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Well, the “addressable market”, which venture capitalists use to determine valuation, is as infinite as space itself.

intercst

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Lots of aliens with crappy Internet who are willing to pay up!

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Stranded Aliens pay big time to go back to Planet Home!

The Space Captain

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https://www.morningstar.com/stocks/spacex-earnings-stock-significantly-overvalued-massive-ai-investments-outweigh-hefty-neocloud-rent
SpaceX Earnings: Stock Significantly Overvalued as Massive AI Investments Outweigh Hefty Neocloud Rent

We think investors are factoring in more optimistic scenarios than are most probable.

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Bouncing back a buck or two after dropping another 13% yesterday.

52 week range: High: $225 / Low: $109.

Quite a swing, I’ll say.

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Excellent post

The chickens are coming home to roost since DOGE, and many people are or will dying needlessly. No one should support musk.

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Here’s the 52-week swing (low of $64, high $255) for Corning which is about a 60-bagger for me at today’s price (i.e., $157, down from the recent high of $255).

I don’t think you can tell that much from the size of the swing. I guess we each have to do our own style of arithmetic.

intercst

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Maybe neither rocket nor AI company but an Internet provider? That is how Farzad Mesbahi views the company. Farzad, who used to work at Tesla, was one of my favorite Tesla podcasters when I first started investing in Tesla.

Is Tesla a car company? Tesla is better described as a conglomerate based around electric power → EVs, semis, storage, charging, AI, VPP, robots, transportation as a service, etc. In Farzad’s view a similar structure exists at SpaceX. He values SpaceX based on Starlink:

The Captain

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There’s no question on that point. Starlink is by far the biggest part of the business by revenue, and it is high margin, recurring revenue. There is pretty big upside too. Everyone who has crappy or no Internet who can afford the terminal and subscription fees is a potential customer. That’s a lot of people. SpaceX mostly just supports Starlink.

Tesla is definitely a car company. The rest of those businesses either don’t exist or are tiny compared to the car portion of the company.

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Looking back, yes, they "either don’t exist or are tiny" but investing is about the future.

In 2025 automotive was around 73% but Tesla has discontinued the pricier models as it pivots to those non-existing segments.

The Captain

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Agree 100%. And that’s why it is not accurate to call Tesla a conglomerate. They are a car company which has also made speculative bets on other, future businesses.

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GoogleAI:

Tesla operates differently from legacy car companies by functioning primarily as a technology and software firm rather than a traditional mechanical hardware manufacturer. [1, 2]

Key differences include:

  • Over-the-Air Updates: Vehicles receive continuous feature upgrades and bug fixes remotely via software, similar to a smartphone, rather than requiring a dealership visit. [1]
  • Direct-to-Consumer Sales: They bypass the traditional franchise dealership network, selling straight to the consumer. [1]
  • Vertical Integration & Chip Density: Modern models utilize thousands of proprietary chips and a centralized software stack rather than outsourcing dozens of disjointed electronic control units from separate suppliers. [1]
  • Broader Tech Ecosystem: The business model heavily incorporates artificial intelligence, autonomous driving research, and energy storage solutions alongside vehicle manufacturing. [1]

The Captain

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SpaceX closed up 16% today despite the size of the public float increasing from 638 million shares to 1.6 billion. Employees and insiders are now free to dump those shares in a panic at any price.

I wonder what they know that METAR “experts” don’t?.

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I’m glad that Google AI agrees with me.

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