Elon Musk’s SpaceX will report earnings for the first time since going public on Tuesday in an early test of whether the firm can overcome Wall Street’s fears about its massive spending on AI.
SpaceX, which has lost more than $500 billion in market value since its debut in June, will announce its second-quarter results after the bell alongside chipmaker AMD. Tech stocks have been under pressure as investors fret over whether costly AI investments – such as Musk’s plan to build AI data centers in space – will pay off.
“SpaceX is an indirect part of the AI trade as its satellite network, launch infrastructure and future data ambitions require huge computing investment,” Mark Vena, CEO and principal analyst at SmartTech Research, told The Post. “But this report will test whether investors are still happy to reward vision before profits.”
The Texas-based company was trading at roughly $111 per share on Monday morning – far below its $135 IPO price. The forthcoming earnings results are just one concern for the stock, which could see additional volatility when the first “lock-up” period blocking early investors from selling their shares expires on Thursday.
Musk’s Starlink satellite network accounted for about 60% of SpaceX’s overall revenue last year – and Wall Street will be watching closely to see if its profits are trending in the right direction, according to Stephen Callahan, trading behavior specialist at online brokerage Firstrade.
Wall Street is projecting revenue of $3.82 billion and operating profit of $1.42 billion in the second quarter for the Starlink segment.
“Unlike the large technology companies, investors have very little history to use when evaluating the company as a public stock,” Callahan said. “Strong Starlink results and a clear path for its AI investments would help reassure investors, while heavy spending without a clear return could put additional pressure on the shares.”
Analysts expect SpaceX’s spending to exceed an eye-watering $14 billion in the second quarter alone.
Short-sellers are already circling with bets against SpaceX’s fortunes. Short interest hit 219.3 million shares as of July 29 – up from just 23.3 million about one month earlier, according to data from S3 Partners cited by Bloomberg.
Musk has outlined a grandiose vision for SpaceX. The billionaire has identified Starship, the company’s next-generation shuttle, as the key to his long-term goal of establishing a habitable colony on Mars.
Some experts are taking a more optimistic view of SpaceX with an eye toward such long-term plans. Analysts at Bernstein have set a price target of $239 for SpaceX’s stock ahead of Tuesday’s earnings.
“We believe the quarterly results should not matter,” the analysts wrote in a note to clients. “What will be important is the level of confidence projected by management regarding the company’s growth path.”
Ben Harwood, an analyst at New Street Research, pointed to the upcoming launch schedule for Starship as another key data point that could emerge from the earnings call.
“We are optimistic on SpaceX,” he said in an email. “The shares have been volatile since IPO, as expected, and will probably stay that way with various lock-ups approaching. But for a long-term investor we think this is an attractive entry point: the growth runway is enormous, and SpaceX has one of the widest moats in the market today.”
As for AMD, Wall Street will be watching closely for any signs of a slowdown in AI spending – as well as how the chipmaker is faring in its competition with market leader Nvidia.
“AMD doesn’t need to leapfrog Nvidia overnight, but it does need to demonstrate that hyperscalers are increasingly depending on its chips and software as a reliable second platform, rather than just using it as leverage in their negotiations with Nvidia,” said Vena.
AMD, Nvidia, Intel and other chip stocks each suffered a major plunge last week as concerns about a potential AI bubble picked up steam.
Elsewhere, Apollo Global Management also reports earnings on Tuesday. Memory chip firm SanDisk, Eli Lilly and Novo Nordisk report on Wednesday, following by tech investment giant SoftBank on Thursday.
With Post wires