SpaceX shares fell 12% to trade below $110 on Tuesday, slipping under the $135 IPO price set less than two months ago in June. The drop coincided with investor scrutiny of the company’s capital-intensity: quarterly capital expenditure hit $18.4 billion, roughly a fifth of the $85.7 billion raised in the offering, while free cash flow remained deeply negative.
The AI revenue ramp is real but unprofitable
The company’s AI division generated $2.6 billion in second-quarter revenue, more than triple the year-earlier figure, and management highlighted new cloud-computing agreements. Yet the segment stayed unprofitable at the operating level, and AI-related capex alone reached $15.8 billion in the quarter. CFO Bret Johnsen said returns on those investments are improving rapidly but signaled spending would stay elevated, with each of the next two quarters expected to track broadly in line with the second quarter.
The funding narrative has shifted
Before the results, the market viewed Starlink’s growing cash flow as the primary bankroll for SpaceX’s AI ambitions. Management now argues the AI infrastructure business is producing enough revenue to help finance its own expansion. “New compute capital monetises so quickly that it behaves more like cost of goods sold than capital expenditure,” said Michael Monaghan, portfolio manager of the Founders 100 ETF, which holds SpaceX shares. The company expects more than two gigawatts of AI compute capacity by year-end; if utilisation stays full, the segment could increasingly self-fund.
Lock-up expiration looms as overhang
Analysts flagged the coming lock-up expiration as a potential volatility catalyst. “With capex expected to remain elevated and investor enthusiasm cooling, I believe the stock could remain under pressure ahead of the lock-up expiration,” Carolane de Palmas of ActivTrades told Reuters. David Wagner of Aptus Capital Advisors compared the dynamic to Musk’s Tesla timelines: “Elon has continued to surprise investors on what innovation and technology can do, but there has always been a mismatch in terms of the time frame of when that execution is going to occur.” Wagner added the numbers are aggressive but not fantasy, they just require flawless execution.