SpaceX shares fell approximately 10% on Wednesday following the company’s first quarterly results as a public company, as investors reacted to massive capital spending on artificial intelligence that offset a significant revenue beat. The decline followed a volatile Tuesday session where shares rose 9.4% during regular trading before falling 7.5% in after-hours trading, according to Reuters.
The stock traded near $114.60 late Wednesday morning, dropping as low as $109.41 during the session. This movement pushes the share price further below the $135 price established during the company’s June public offering, which raised approximately $85.7 billion. The price drop also means 455 million shares that would have been unlocked this week if the stock had hit certain thresholds will remain ineligible for release.
Revenue Growth and Earnings Beat
SpaceX reported second-quarter revenue of $7.81 billion, a 92% increase from the $4.1 billion reported in the same period last year. This figure exceeded the consensus analyst estimate of roughly $6.93 billion. The company also reported a net loss of $541 million, or 9 cents per share, which was narrower than the 26-cent loss expected by analysts.
The growth was driven largely by two segments:
- Starlink: The satellite internet division produced $4.29 billion in quarterly revenue, up 66% year over year, accounting for more than half of total company revenue.
- AI Business: This segment generated approximately $2.6 billion in revenue, an increase of about 250% year over year.
Massive AI Capital Expenditures
Despite the revenue gains, investors focused on the company’s capital expenditures, which reached $18.4 billion in the quarter—up from $2.83 billion a year earlier and exceeding analyst expectations of approximately $13 billion. Roughly $15.83 billion of that spending was dedicated to AI infrastructure, including data centers and reuters.com computing chips.
These expenditures represent more than one-fifth of the proceeds from the June public offering. SpaceX executives indicated that spending will likely remain near second-quarter levels for the next two quarters to support Starship production, the next-generation Starlink network, and expanded AI computing capacity. The company expects its computing capacity to exceed two gigawatts by the end of 2026 and recently signed an additional $6.7 billion in cloud computing agreements.
Financial Sustainability and Payback
The company remains deeply negative on free cash flow because infrastructure spending is outpacing the cash generated by its operating businesses. While Starlink is profitable and serves as the primary financial support for wider ambitions, its average revenue per subscriber fell 22% from a year earlier as SpaceX offered lower-priced plans and entered more international markets.
SpaceX Chief Financial Officer Bret Johnsen stated that new AI capital deployments could have a payback period of less than one year. However, the AI segment remains unprofitable on an operating basis. Investors are currently weighing whether the AI business can produce returns quickly enough to justify the investment cycle or if the connectivity business is merely acting as a financing source for the AI bet.
Market Context and Share Lock-ups
The earnings report arrives less than two months after the company’s public listing. In addition to the spending concerns, the market is anticipating the unlock of 911 million shares previously subject to restrictions, an event expected to add further pressure to the stock.
Analysts have offered varying perspectives on the results. Ken Herbert of RBC Capital Markets viewed the results as positive, noting the company delivered on both top and bottom lines. Conversely, Brian Mulberry of Zacks Investment Management highlighted the doubling of Starlink subscriptions from 6 million to 12 million as a standout detail. Adam Sarhan of 50 Park Investments noted that fluctuations are normal within the first one to two years of an IPO and that the company’s mission is long-term.
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