SpaceX stock drops after earnings debut

SpaceX shares fell about 7% in after-hours trading Tuesday, erasing an earlier 9% gain after the company’s first earnings report as a public entity showed revenue that exceeded expectations but capital spending that jumped to over $18 billion.

The quarter ending June 30 generated $7.8 billion in revenue, a 92% increase from $4.1 billion the previous year and above the $6.93 billion analysts had predicted. The net loss shrank to $541 million, or 9 cents per share, less than half the 26-cent loss Wall Street anticipated.

Spending spree dwarfs revenue growth

Capital expenditures rose to over $18 billion from $2.83 billion a year earlier, well above the roughly $13 billion analysts had estimated. Nearly all of the increase—$15.83 billion—went toward artificial intelligence through SpaceX’s xAI unit, up from $749 million the prior year.

Chief Financial Officer Bret Johnsen stated similar spending levels were expected over the next two quarters. Analysts now project full-year capital expenditures could exceed $45 billion. The stock had climbed about 9% during Tuesday’s regular session before reversing after the report was released.

Investors are preparing for a lock-up expiration starting Thursday, when more than 900 million shares become eligible for trading, more than doubling the freely traded float. Additional shares will be released in phases over the coming months.

Starlink remains the profit engine

The quarter demonstrated SpaceX’s reliance on its satellite-internet service. Starlink, part of the connectivity segment, reported $4.29 billion in revenue and $1.66 billion in operating income. The space unit posted a $542 million loss, while the AI division lost $1.26 billion. Overall, the company reduced its operating loss to $143 million from $970 million the previous year.

Subscriber numbers for Starlink doubled to 12 million, though average revenue per user declined 22% as the service expanded into lower-priced international markets. AI revenue increased about 250% year over year, a development some analysts viewed as reducing pressure on Starlink to fund other operations.

Brian Mulberry, chief market strategist at Zacks Investment Management, said AI was already generating returns. He noted SpaceX wasn’t depending on Starlink to finance AI projects, describing it as “a major part of the story.”

Elon Musk informed analysts the company’s timeline for reaching $1 trillion in revenue had advanced from 2031 to 2030. He suggested there was a chance of hitting that target by 2029. Analysts remain skeptical, with estimates placing 2029 revenue near $207 billion.

Market reactions to the sell-off varied. Technology analyst Luke Lango said the stock’s drop reflected the high cost of growth rather than a rejection of fundamentals. GraniteShares CEO Will Rhind attributed the decline to the upcoming lock-up rather than the earnings results.

The report had broader effects. Shares of T-Mobile, AT&T, and Verizon fell after hours following comments from SpaceX President Gwynne Shotwell. She told analysts Starlink would attract customers from traditional carriers and develop ground infrastructure for a full mobile service.

Musk dismissed reports of a potential SpaceX-Tesla merger as false. Since its June 12 debut at $150 per share, the stock has declined about 16%, valuing the company at roughly $1.75 trillion.

If spending continues at this rate, the company’s cash burn could challenge even the most optimistic revenue forecasts. For now, the figures indicate SpaceX is placing a large bet on AI to offset its expenses.