SpaceX doubles its revenue and exceeds forecasts

The company’s shares have fallen by 8 per cent since its IPO in June, which valued the company at around 1,750 billion dollars. The share price could come under further pressure as the post-listing lock-up period is due to expire on Thursday: this could see a flood of shares, worth over $100 billion, held by insiders and early investors, hit the market.

SpaceX’s president, Gwynne Shotwell, has said she expects the Starlink business to take ‘a considerable number’ of customers away from T-Mobile, AT&T and Verizon. The aim is also to develop ground infrastructure to support the satellite network in order to offer “a true mobile service”. Shares in the telecoms companies fell in after-hours trading.

Starlink and SpaceX’s wider connectivity operations remain the company’s main financial driver, underpinning Musk’s strategy on artificial intelligence: not only computing power, but also the development of more advanced models, software for consumers and businesses, and, looking ahead, data centres in space.

Critics argue, however, that it is unsustainable to use Starlink’s profits to fund the AI sector and Starship’s launch operations until these are able to support themselves. “It’s an extremely positive surprise – the very fact that AI is starting to generate revenue on its own. They aren’t relying on Starlink to fund those operations. I think that’s a key aspect of the story,” said Brian Mulberry, chief market strategist at Zacks Investment Management.

The company’s satellite internet division has continued to expand its subscriber base globally, thanks to the launch of further satellites and a growing range of services aimed at consumers, businesses, the aviation and maritime sectors, and government organisations.

However, average revenue per subscriber fell by 22 per cent compared with the previous year, as SpaceX entered new international markets and introduced lower-priced plans, despite the number of subscribers doubling to 12 million.

SpaceX’s AI division — which includes xAI, Grok, the social media platform X and a rapidly expanding data centre division — has been the company’s main area of investment. The company is generating revenue through computing service contracts with Anthropic, Google (part of Alphabet) and Reflection AI, although a portion of its recurring revenue has not yet been recognised.

SpaceX has drastically increased its capital expenditure on AI, investing $15.83 billion in the second quarter ending 30 June, compared with $749 million in the previous year.

Revenue soars in the space sector

Starship, SpaceX’s next-generation reusable rocket system, has not yet entered commercial service, but it is expected to enable the deployment into orbit of higher-bandwidth Starlink satellites and orbital infrastructure for AI-based computing.

Revenue in the space sector grew by 29 per cent year-on-year.

The company’s ability to turn Starship into a reliably reusable vehicle is crucial to its long-term strategy. Investors have been closely following updates on the progress of tests, launch frequency, milestones achieved in terms of reusability, and the vehicle’s ability to deploy satellites into orbit.

At the same time, SpaceX has announced a partnership with Nvidia to use its chips in the Starmind AI1 satellites for in-orbit computing.

The space segment, which includes commercial launches, government missions and the development of Starship, remains a significant source of costs and uncertainties.

Although launch activity for the Falcon — SpaceX’s partially reusable rocket — has remained steady, revenue may vary depending on the mix of internal deployments for Starlink, missions for commercial customers and government contracts.

In recent years, SpaceX has increasingly prioritised launches for its own satellite network over external contracts, whilst continuing to incur substantial costs associated with the development of Starship.

SpaceX’s valuation — at around 1,600 billion dollars, a figure close to that of several mega-cap companies and exceeding that of Musk’s Tesla — has been fuelled by the billionaire entrepreneur’s ambitions to achieve large-scale growth and make futuristic technological leaps across the company’s various divisions. However, uncertainties remain regarding the sustainability of the various operations: the long list of growth plans, including the construction of data centres in space, entails high costs, significant risks and could take many years to yield results.

Meanwhile, the group’s internal organisation and the structure between Musk’s companies could be reviewed: in recent days, the Wall Street Journal had gathered evidence regarding the spinning off Tesla’s operations in China, ahead of a possible merger between SpaceX and Tesla.