SpaceX shares fell by as much as 11% in after-hours trading and later settled to a 10% drop after its inaugural earnings report since its IPO in June. This significant decline was attributed to investor anxiety over the company's substantial capital expenditures, particularly in artificial intelligence, despite strong revenue growth.
While SpaceX's second-quarter revenue surged by 92% year-over-year to $7.8 billion, exceeding analyst estimates of $6.81 billion, capital expenditures skyrocketed over sixfold to $18.4 billion. This figure was more than double the company's total sales for the quarter and significantly surpassed the average analyst estimate of $13.22 billion. Specifically, nearly $16 billion of this capex was directed towards AI infrastructure, far exceeding the $13 billion Wall Street anticipated.
Bret Johnsen, SpaceX's CFO, defended the AI spending, stating that the company expects a less than one-year payback on its AI compute investments. He also announced that SpaceX had contracted $6.7 billion in cloud services revenue for the current quarter, with an anticipated ramp-up starting in October, and projected an annual recurring revenue of $100 billion by year-end, including the $60 billion Cursor acquisition. Despite these reassurances and an operating loss of $1.26 billion for its AI business (better than the forecast $2.39 billion loss), the market reacted negatively, pushing shares more than 20% below their initial trade price on June 12.
The market's reaction also reflects broader concerns, including an upcoming eligibility for over $100 billion worth of stock to be sold by insiders, potentially adding further downward pressure. This post-IPO volatility has already erased over $1 trillion from SpaceX's market value since its peak. Analysts suggest investors are still grappling with how to value SpaceX's diverse and capital-intensive ventures, particularly its ambitious AI initiatives, contrasting it with companies like Google, which agreed to a similar cloud services deal for $920 million a month.
