SpaceX's shares experienced a significant drop, falling between 6.5% and 9% in after-hours trading following its inaugural quarterly earnings report since its June IPO. This decline occurred despite the company surpassing Wall Street's revenue forecasts, with reported revenue of $7.8 billion for the second quarter, a 92% increase from the previous year, and higher than the average analyst estimate of $6.81 billion. The company also reported a net loss of $2 billion for the first six months of the year, and a loss of $0.09 per share for the quarter, which was better than the anticipated loss of $0.24 to $0.26 per share.
The primary concern for investors was SpaceX's surging capital expenditures, largely attributed to its xAI unit and the Grok AI service. Total capital expenditures for the second quarter soared to approximately $18.4 billion, far exceeding analyst expectations of $13.09 billion to $13.22 billion. This figure represents a more than sixfold increase year-over-year and was almost double the capital expenditure of the previous quarter. The AI spending alone accounted for the majority of these overall capital expenditures, and the company reported an operating loss of $1.26 billion for its AI business.
SpaceX executives, including CFO and CEO Elon Musk, addressed Wall Street during the earnings call. Musk noted that the company expects to receive a "significant percentage" of Nvidia's highly sought-after graphics processing units next year and that the pace of AI development is expected to improve dramatically. Furthermore, SpaceX has already contracted $6.7 billion in cloud services revenue for the third quarter, with this six-month period beginning to ramp up in October. Despite these positive remarks and projections, the message did not fully resonate with investors, leading to the stock's decline.
Looking ahead, SpaceX anticipates total revenue to reach $100 billion in annualized recurring revenue by the end of the year, assuming the closure of the $60 billion Cursor acquisition. They also indicated that capital spending in the third and fourth quarters would remain similar to the second quarter's high levels. This substantial investment in AI, while promising a quick payoff, unnerved Wall Street and overshadowed the otherwise strong revenue growth and better-than-expected loss figures.
