- SpaceX reported 92% revenue growth in its first earnings report.
- The company's jump in AI spending rattled investors, leading to a 10% drop in shares.
- SpaceX shares dove 10% in premarket trading following the earnings report.
- SpaceX's capital expenditures jumped sixfold to $18.4 billion in the second quarter, with most spending directed towards AI.
- Despite narrowing its losses, the share price fell as investors are concerned about multibillion-dollar investments yielding returns.
- CFO Bret Johnsen defended the capital spending, stating it was efficient and that AI-compute capital had less than a one-year payback.
- CEO Elon Musk projected that SpaceX would reach $1 trillion in annual revenue by 2030, earlier than a previous forecast of 2031.
- SpaceX is positioning itself as an alternative cloud player by renting out computing capacity built with chips.
- A potential market-moving event, the expiration of insider lock-ups, is set for Thursday, allowing insiders to sell a portion of their shares.
SpaceX's stock fell over 10% on Wednesday following a significant increase in capital expenditures, which surged to $18.4 billion in the second quarter, primarily for AI initiatives. This spending, which was sixfold higher than previous quarters, raised investor concerns despite the company reporting a 92% revenue growth.14
CFO Bret Johnsen attempted to reassure investors, stating that the company has been "efficient" with its spending and that they expect a payback period of less than a year for AI investments. CEO Elon Musk also projected that SpaceX could achieve $1 trillion in annual revenue by 2030, a year earlier than previously forecasted, aiming to alleviate investor fears.67
Despite these optimistic projections, the stock closed at just over $125, below its $135 IPO price and significantly off its all-time high of over $200. Investors remain cautious, with concerns about the sustainability of growth and profitability amidst rising tech investment scrutiny. Steve Westly, founder of The Westly Group, highlighted the ongoing questions regarding the pace of growth and the costs associated with reaching profitability.
Additionally, SpaceX faces potential market volatility with the upcoming expiration of insider lock-ups, allowing insiders to sell a portion of their shares, which could further impact stock performance.9
“SpaceX's capital expenditures jumped sixfold to $18.4 billion in the second quarter, mostly on AI, and CFO Bret Johnsen said AI-compute capital has less than a one-year payback. CEO Elon Musk predicted $1 trillion in annual revenue by 2030, while Thursday's expiration of insider lock-ups looms as another market-moving event.”
CNBC
