Just 53 days after its public listing, SpaceX has seen its market capitalization plummet by over $1 trillion from its peak, falling below its initial public offering price and erasing the equivalent of the entire market value of Tesla Motors.
As the largest IPO lockup expiration in history approaches, SpaceX has released its first quarterly earnings report. The results show strong revenue growth from Starlink, driving a 92% increase in total revenue. However, single-quarter capital expenditures of $18.3 billion sparked Wall Street concerns about runaway spending, sending shares down nearly 8% in after-hours trading.
With short interest surging to 34%, CEO Elon Musk taunted short sellers, stating, "I tried to warn them, but they just wanted to double down..." He cautioned that shorts are blindly "feeding the fire" and risk a squeeze. During the earnings call, Musk unveiled a counter-offensive, advancing the $1 trillion annual revenue target to 2030 and rebranding SpaceX as an "AI giant" with exclusive engineering data moats.
Earnings Debut: Starlink Soars, AI Burns Cash
SpaceX reported quarterly revenue of $7.81 billion, a 92% year-over-year increase. Net loss narrowed to $541 million from $1.01 billion a year earlier, while adjusted EBITDA surged 191% to $3.54 billion. However, capital expenditures hit $18.37 billion for the quarter, more than six times the prior year, with 86% ($15.83 billion) allocated to AI computing. Operating cash flow for the first half was only $3.47 billion, while investment activities saw a net outflow of $34.49 billion. This gap was filled by IPO proceeds and a $25 billion investment-grade bond issuance in late June. In essence, SpaceX is rapidly deploying capital raised from primary markets and debt into AI.
The company's three business segments now have clear strategic roles. Starlink remains the sole cash cow. The connectivity segment, including Starlink, posted quarterly revenue of $4.29 billion, up 66% year-over-year, with operating profit of $1.66 billion, up 79%. It is the only profitable business unit. Global users doubled to 12 million, with enterprise and government revenue growing 108%. New contracts with airlines like American Airlines and Southwest Airlines, plus the military Starshield program securing over $6 billion in multi-year government orders, boosted performance. The only concern is average revenue per user (ARPU) falling to $66 from $85, indicating a "volume over price" strategy.
The space segment generated $962 million in revenue, up 29%, but operating loss widened to $542 million. Of the 38 launches in the quarter, 28 were for Starlink satellites. The launch business has become infrastructure for the broader strategy, with losses driven by heavy investment in Starship development.
The AI segment bled the most cash, with revenue of $2.56 billion, up 247%, but massive capital expenditures alarmed secondary markets. CFO Bret Johnsen noted that Q3 and Q4 capital spending will remain at Q2 levels, leading to a nearly 8% after-hours stock drop despite revenue exceeding expectations. On Stocktwits, retail investors lamented, "Revenue growth can't hide the cash burn." Comparing SpaceX to AMD, which reported $11.5 billion in revenue and an $800 billion market cap, one user joked, "At SpaceX's valuation, AMD should be worth $2.6 trillion."
Hedge fund manager Gary Black, a vocal critic, called SpaceX "absurdly expensive" at 45x 2026 projected enterprise value to revenue. After the stock fell below the IPO price, he added, "Don't say I didn't warn you."
Musk's Vision Upgraded: Trillion-Dollar Target Accelerated
The earnings call was dominated by Musk's ambitious projections. He presented three key signals. First, the revenue guidance was moved forward. Musk stated that annualized revenue run rate (ARR) would surpass $100 billion by December this year. More strikingly, the $1 trillion annual revenue target was advanced from 2031 to 2030, with a "non-zero" chance of achieving it by 2029. President and COO Gwynne Shotwell attributed this to explosive cloud business growth and next-generation Starlink satellites.
Second, computing power strategy shifted to Nvidia. SpaceX expects computing capacity to exceed 2 GW by end of 2026 (currently 1.4 GW), with all future builds based on Nvidia architecture. "Going forward, we decided to build entirely on Nvidia's architecture because we believe Rubin is the best," Musk said, effectively sidelining AMD. Its shares fell 8% on the news. Musk cited memory as the biggest bottleneck and predicted that "by next year, I don't think there's anything digital that AI can't do."
Third, Starship and lunar timelines were accelerated. Musk said the company will attempt to recover both stages of Starship V3 later this year, possibly on the next flight. The next launch will also carry the first V3 Starlink satellites, with 10x the capability of V2. The ultimate goal is to deliver 1 million to 10 million tons of payload to orbit annually. For crewed missions, Musk predicted Starship would meet safety standards by end of 2027, with lunar landings by 2028. Regarding the heatshield, Musk said it was "being addressed," adding, "Outside of China, SpaceX and Tesla Motors are the two toughest hardware companies globally."
Wall Street fixated on specifics. One institutional investor noted that NASA's Artemis 3 mission requires successful in-orbit fuel transfer tests, calling the test schedule "an investor lifeline." The call addressed dual-stage recovery, heatshield, and crew timelines but didn't provide a specific date for in-orbit fuel transfer.
DeFi Lockup Tsunami Looms, Musk Warns Shorts
According to the lockup schedule, on the second full trading day after this earnings report, up to 911.5 million Class A shares from the 180-day lockup pool will be unlocked, representing 20% of the pool. This excludes "affiliates" under Rule 144, meaning insiders like Musk, Shotwell, and directors cannot sell. Non-affiliate employees and early investors can. External shareholders like Oracle founder Larry Ellison and Twitter founder Jack Dorsey, who received shares via X and xAI acquisitions, can sell up to 20% of their holdings if no extended lockup agreements exist. Ellison is estimated to cash out $430 million in August, while Dorsey could sell $400 million.
Before the earnings, popular X account zerohedge cited S3 data showing short interest rose to 34% of float, with 95% of lendable shares borrowed. Musk responded, "I tried to warn them, but they just wanted to double down..."
Bulls remain strong. Deepwater Asset Management partner Gene Munster argued that while AI capex raises concerns, the scale is "still manageable." He noted that Musk confirmed on the call that SpaceX's accumulated engineering data will be used to train Grok 5 by year-end. "The data from rocket design, manufacturing, and flight is exclusive to SpaceX," Munster said, predicting Grok could become the top enterprise AI model by year-end. "More important than the quarterly report is SpaceX's transformation into a top-tier AI company," he concluded.
With a 92% revenue growth report and a trillion-dollar roadmap, SpaceX has set the stage for the massive lockup expiration. Starlink is generating cash, Starship is cutting costs, AI is accelerating, and Musk's shares are locked until mid-2027. The message: core insiders remain committed, and the future looks bright. But the ultimate outcome hinges on profitability. As one analyst hinted, the unasked question on the call was: when will $18 billion per quarter in AI spending translate into tangible returns?
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