Elon Musk's SpaceX recently concluded a $25 billion bond sale, its first foray into the debt market, just days after its record-breaking initial public offering. The bond offering, which saw an overwhelming demand of $89 billion, allowed SpaceX to lower its annual interest burden from an estimated $1.8 billion to $1.5 billion. The proceeds are primarily earmarked to repay a $20 billion bridge loan that covered previous debt from X (formerly Twitter) and xAI, and to fund general corporate purposes, including ambitious AI infrastructure development and the Starship program.
The strategic move involved consolidating the high-interest, junk-rated debt of xAI under SpaceX's investment-grade credit profile, leveraging strong revenue streams from Starlink and government rocket contracts. This financial maneuver, while successful in attracting debt investors and securing investment-grade ratings from Moody's, Fitch, and S&P, triggered a significant negative reaction in the equity market. SpaceX's stock plummeted 22% to 25% from its post-IPO peak, with one report indicating a drop of more than $600 billion in market value within three sessions.
Analysts and bond buyers have focused on the robust performance of Starlink, which generated approximately $4 billion in operating profit in 2025, and the reliability of SpaceX's rocket launch contracts. In contrast, xAI, while generating $3.2 billion in sales, recorded a substantial $6.4 billion operating loss in the same year, doubling its losses from 2024. This discrepancy highlights the company's reliance on its space and satellite operations to subsidize its AI ventures, a factor that has caused some concern among equity traders regarding the increased debt and heavy spending. Susquehanna initiated coverage with a Neutral rating, citing that the current valuation requires "premium multiples on very aggressive revenue and EBITDA growth assumptions."
