3 weeks ago
SpaceX Shares Plunge 13% as AI Spending Overshadows Earnings Beat
SpaceX makes rockets and satellites, and it recently became a public company so people can buy small pieces of it.
The company just told everyone how much money it made.
It made more money than people expected, which is usually good news.
But SpaceX also said it is spending a huge amount of money on artificial intelligence, or AI.
AI is the technology behind smart computer programs.
The big spending made investors worried, so the price of SpaceX shares went down a lot.
SpaceX also runs Starlink, a service that brings the internet from space to Earth.
Starlink is the only part of the business that makes money.
The company believes the big spending will help it grow in the future, even if it loses money right now.
SpaceX shares plunged 13% on Wednesday to an intraday low of $109.21, even after the company beat revenue and loss expectations.
Quarterly revenue came in at $7.8 billion versus the $6.81 billion expected, with a loss of 9 cents per share against a forecast 24-cent loss.
Capital expenditure hit $18.4 billion in the June quarter, a six-fold year-over-year increase, with most directed at AI infrastructure.
Starlink, SpaceX's only profitable segment, ended the quarter with 12 million subscribers, slightly below analysts' estimate of 12.19 million.
Shares are now down about 52% from their post-listing peak, and over $100 billion in shares become eligible for sale after the IPO lock-up expires.
- Who
- SpaceX, its CFO Bret Johnsen, and stock-market investors reacting to the company's first earnings report as a public company.
- What
- Shares plunged 13% to an intraday low of $109.21 as heavy AI spending plans overshadowed a better-than-expected earnings report.
- Where
- Stock markets, in the wake of the company's June public listing.
- When
- Wednesday, after SpaceX reported its June-quarter results following its June IPO.
- Why
- Investors focused on sharply higher AI capital spending that left SpaceX deeply free-cash-flow negative.
Company Growth Strategy
Investor Concerns
Aggressive AI capital spending
Company Growth Strategy
Executives plan to keep capital expenditure near Q2 levels for the next two quarters to expand AI computing capacity, accelerate Starship production, and develop next-generation Starlink satellites.
Investor Concerns
Investors focused on the spending's impact, with the company deeply free-cash-flow negative and shares down more than half from their post-listing peak.
AI business viability
Company Growth Strategy
SpaceX is signing major long-term cloud deals, including a Google contract worth about $920 million a month, positioning itself as an alternative AI cloud provider.
Investor Concerns
SpaceX's in-house AI models trail those of OpenAI and Anthropic, and the AI segment still posted a $1.26 billion operating loss.
Key facts
- Share move
- -13% on Wednesday; intraday low of $109.21
- Quarterly revenue
- $7.8 billion vs. $6.81 billion expected
- Loss per share
- 9 cents vs. 24 cents expected
- Q2 capital expenditure
- $18.4 billion, a six-fold year-over-year increase
- IPO size
- $85.7 billion, the world's largest IPO, in June
- AI segment result
- $2.6 billion revenue; $1.26 billion operating loss
- Starlink subscribers
- 12 million (estimate was 12.19 million)
- Google cloud deal
- $920 million per month through mid-2029
Quotes
Bret Johnsen
Chief Financial Officer of SpaceX
“Capital expenditure over the next two quarters is expected to remain broadly in line with second‑quarter levels as SpaceX continues to expand AI computing capacity, accelerate Starship production, and develop next‑generation Starlink satellites.”
livemint.com
Sources
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