SpaceX, which debuted with a record-setting IPO on June 12 and quickly became a multi-trillion-dollar company, saw its market capitalization erase $1 trillion in value shortly after. The company's shares sank over 9% following its first earnings report, driven largely by investor concerns over a surge in AI spending. This decline occurred despite the company narrowing its losses and projecting significant future revenue, with CEO Elon Musk confidently predicting SpaceX would eventually hit $1 trillion in annual revenue, an ambitious target that FactSet analysts estimate at closer to $207 billion by 2029.
The primary concern for investors was the company's capital expenditures related to its xAI unit and its Grok AI service. These expenditures hit $15.8 billion, contributing to an overall quarterly capital expenditure of $18.4 billion, significantly exceeding analyst expectations of $13.09 billion. This substantial spending on AI infrastructure, following over $10 billion in the first three months of the year, overshadowed a reported 92% jump in revenue.
Adding to investor jitters is the impending expiration of insider lockup periods. On Wednesday, up to 20% of total SpaceX shares held by insiders, employees, and early investors will become eligible for sale. This potential influx of shares onto the open market is anticipated to increase supply and could further depress the stock price. Options traders are already pricing in a potential $225 billion swing in the company's market value, with implied volatility at massive levels for a newly listed company of SpaceX's size. The stock, which surged to an intraday high of $225.64 post-IPO, has since fallen to around $114.53, reflecting concerns about valuation and the sustainability of its growth plans.
