SpaceX shares tumbled by more than 14 per cent yesterday as heavy spending on artificial intelligence spooked investors. The slump came despite better-than-expected financial results from Elon Musk's rocket firm overnight on Tuesday, which saw revenue for the three months to June soar 92 per cent to $7.8 billion, well above estimates of $6.8 billion.
Shareholders took fright at the company's huge $18 billion spending bill, up from just $2.8 billion a year earlier. Around $16 billion of that total was spent on its AI operation. SpaceX also said it expected that the enormous levels of spending would continue for at least the next six months.
The decline left shares trading at $108, which is 20 per cent below their $135 debut price during the company's blockbuster float in June. That price is also well under a peak of $225 reached in the week after it went public. Fears remain of another slump today as a stock lock-up expires, meaning some SpaceX employees and early investors will be able to sell their shares.
Musk built SpaceX into the world's largest rocket business by pioneering reusable launchers and putting thousands of Starlink internet satellites into space. He briefly became the world's first trillionaire when the company's stock surged following its debut. His wealth has since fallen to around $777 billion as shares slipped, according to Bloomberg's Billionaire Index.
Potential merger and orbital data centres
Analysts are watching to see whether SpaceX's share price will drop below $100. This would suggest that the market believes SpaceX's AI business, which Musk has highlighted as its biggest potential growth engine, is adding little or no value to the company.
Musk has so far doubled down on his grandiose AI plans, saying on an earnings call that the company had made progress on building its first generation of orbital data centres, called Starmind AI-1, which he expected would be launched into space next year.
There is also lingering speculation around whether Musk will decide to merge SpaceX with his electric car business Tesla to bring together major parts of his sprawling business empire, which also includes social media website X, formerly known as Twitter. The tycoon previously said Tesla had been collaborating closely with SpaceX, but that any merger would need to happen through an "appropriate process".
