The SpaceX share price had been enjoying a resurgence in recent week, but when markets open on Wednesday it is set to plummet by more than 11 per cent – and it’s nothing to do with an out of control rocket.
A long-since disused part of a Falcon 9 spacecraft which launched back in 2025 is believed to have crashed into the moon’s surface on Wednesday morning, reportedly hitting with the power of three tons of TNT and creating a new crater in the process.
But it’s the first financial report released by the company which has had the bigger impact back on Earth’s financial markets – with up to $200bn (£148bn) set to be wiped from SpaceX’s value.
Elon Musk’s $1.6tn (£1.2tn) company went public on 12 June, with shares priced at $135, though that quickly soared higher in the first week of trading. It then embarked on a rolling journey lower– pricing at about $108 by the end of July – before this week’s mini bump back upwards, closing above $125 on Tuesday.
However, despite beating analysts’ expectations of revenue for the April to June period and closing losses compared a year ago, it’s the extraordinary expenditure the company is making on artificial intelligence-related development which has investors concerned – allocating some $5.1bn more than had been anticipated.
In that regard, SpaceX are not alone. The likes of Meta and Alphabet have come under scrutiny for raising capital expenditure on AI-related plans this year, while Apple saw its share price rise in part because it had not, unlike some rivals, spent hugely on AI.
“Investors are concerned about the massive surge in capex spending. It rose sixfold to $18.37bn, exceeding estimates of $13.22bn. The concern for investors is how fast expenditure growth is outpacing revenue growth,” said Kathleen Brooks, research director at XTB.
“While SpaceX’s expenditure numbers are huge, the longer-term stock market reaction will depend on whether this rate of investment is affordable and worthwhile? The company’s cash pile has surged due to its recent IPO. It now has cash of $93.5bn, up from $24.7bn at the end of Q1. However, the company has increased its debt and leasing agreements to $36.8bn. Thus, if SpaceX continues to repeat AI spend at the Q2 rate, its healthy cash flow position could soon deteriorate.”
AJ Bell investment director Russ Mould noted that while the main spending within the company is on AI, the actual cash it generates comes from its space-based internet business for the most part – which appears to be almost a side bonus for investors.
“As visual metaphors go the fact a SpaceX rocket crashed into the moon hours after it had delivered its debut quarterly earnings feels almost too on the nose,” he said.
“The problem wasn’t so much the numbers themselves, as revenue beat expectations and losses were narrower than anticipated, but the heavy AI spending revealed in the results.
“Right now, it’s no secret that the Starlink satellite internet business generates most of the money SpaceX takes in, along with renting out data centres. In the earnings call Elon Musk suggested Starlink could build a terrestrial mobile network to compete with the likes of T-Mobile, AT&T and Verizon.
“Starlink is not necessarily why many shareholders are on board. Many will be prepared to face some turbulence in the hope Musk’s grander visions around colonising Mars, data centres in space and building lunar bases can be realised.”
There is unlikely to be much respite for the share price in the coming weeks.
Aside from being a new firm on the stock markets, which is generating interest, another key factor which will impact its valuation will be early investors opting to take some profits.
Some early-stage backers are able to sell shares once pre-set dates arrive, and a mass sell-off could send the price lower once more.
“The next key test of investor confidence in the story comes on Thursday this week as the first lockup expiry lands – with more than 900 million shares potentially up for sale. Many of these will be held by insiders whose entry point was significantly below the $130 IPO price, providing an incentive to sell even in light of the recent indifferent showing for the stock,” Mr Mould added.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, added that AI will remain the story around SpaceX’s share price, despite rockets, space missions, internet connection and social media platform X all being part of the wider business.
“Analysts are still trying to work out what the business should look like, while Elon Musk is already describing what it might become over the next decade,” he said.
“For now, the numbers play second fiddle to that story. Starship and the next generations of Starlink remain critical to the post-2030 vision, but the financial engine over the next few years will increasingly be AI.
“Musk has effectively gone all-in on building AI infrastructure. While demand remains high and SpaceX can bring clusters online faster than rivals, that looks like a compelling way to turn speed and access to hardware into revenue.
“SpaceX could soon resemble an AI infrastructure company with an extraordinary space business attached, and that is not an unattractive combination. Near term, however, lock-up expiries, a growing public float and upcoming Starship launches are likely to keep the shares volatile.”
As of noon UK time, SpaceX shares are set to open 11.5 per cent lower on Wednesday, at around $110.80.
