SpaceX shares sink after execs promise more spending

SpaceX's shares experienced a significant decline of 8% in postmarket trading following the company's first-ever earnings report on Tuesday. The primary cause of the drop was investor concerns over increased capital spending on AI infrastructure, a trend observed in many other companies facing scrutiny from Wall Street and investors regarding their tech spending.

SpaceX reported a substantial increase in spending, with $18.4 billion allocated in the second quarter, compared to just $2.8 billion a year earlier. Executives, however, remained confident, assuring investors that the same or even higher spending could be expected moving forward. The company disclosed that its capital spending would quickly convert into revenue, sometimes within a year for investments in AI.

Despite a 92% surge in revenue from the previous year, SpaceX's optimistic outlook on future earnings took center stage. Elon Musk, the company's CEO, raised his revenue projection expectations, stating that SpaceX aims to generate $1 trillion by 2030, a target previously set for 2031. Gwynne Shotwell, the President and Chief Operating Officer, highlighted that SpaceX's Starlink mobile service would soon surpass the capabilities of the "big three" providers and become available to consumers by the end of next year.

Moreover, Musk veered into space-related topics, discussing the timeline for deploying robots on the moon to construct manufacturing plants. However, another contributing factor to the stock's decline was the impending lifting of the company's IPO lock-up on Thursday. This regulatory event permits early investors and employees to sell as much as 912 million shares, potentially flooding the market and triggering a short squeeze.

Analysts, such as Liz Hoffman from Semafor, cautioned bearish investors against overestimating the extent of the locked-up shares that would enter the market, advising a measure of caution in their positions.