For a rocket company, SpaceX is spending a lot of money to build out its AI capacities.
Too much, according to investors.
The company reported revenue in its first quarterly update as a public company that surpassed analysts’ expectations. Most of its revenue came from its Starlink satellite offering.
But investor focus turned to capital expenditures related to its xAI unit, which runs the Grok AI service. Those hit $15.8 billion, higher than expectations of $13.09 billion, according to Bloomberg News data, and about double the previous quarter. The AI spending also accounted for most of SpaceX’s overall $18.4 billion quarterly spending on capital expenditures.
The report caused SpaceX shares to reverse a healthy run-up during regular trading hours Tuesday. The stock fell over 10% before Wednesday’s market open, after having surged 9% ahead of its report Tuesday.
Musk at Tesla’s Gigafactory in Grünheide, Germany, in March 2022. Patrick Pleul / AFP via Getty Images file
SpaceX immediately became a multitrillion-dollar company after a record-setting IPO on June 12 — but nearly just as quickly, it erased $1 trillion in value as the stock plunged amid anticipation of insider stock sales and broader jitters about the pace of AI spending.
Still, it continues to enjoy a market valuation of more than $1 trillion, making it one of the most valuable companies in the world. The stock got an additional boost Tuesday when the company announced a deal with Nvidia to partner on a future satellite project.
That announcement sent shares of other data center infrastructure providers like AMD lower. SpaceX’s strong results in its Starlink connectivity division also knocked shares of major wireless carriers, including AT&T and Verizon, as well as Viasat, which now faces competition from SpaceX for providing uplinks on airplanes.
Investor speculation that SpaceX may try to merge with its sister company Tesla has grown. That would give Elon Musk even more control over his multifaceted technology empire than he already exerts.
The vast majority of SpaceX’s stock is privately held, with just 5% of the 13.9 billion shares trading on the open market.
Along with Musk, who owns about 42%, the other shareholders are known to regulators as “insiders” and have been barred so far from selling their shares.
That “lockup period” will expire Wednesday, when up to 20% of the total SpaceX shares held by insiders may be sold on the open market.
More shares on the market equals more supply, which means the price per share is likely to fall further.
But some retail investors aren’t concerned by the steep drop in SpaceX’s share price.
Forde Todd, 20, received three shares of SpaceX stock as part of the company’s IPO, then bought and sold several more on the open market.
Todd told NBC News he plans to hold on to his IPO shares despite the stock’s plunge.
“I’m in it for the love of the game — like, I’m in it for SpaceX,” Todd said. “I truly believe in this company.”
“At the end of the day, everybody is going to want a part in the space economy,” he added.
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