On August 4, 2026, following the close of the U.S. stock market, SpaceX (SPCX), which had just executed the largest initial public offering (IPO) in human history in June, unveiled its inaugural quarterly results post-IPO.

The figures are striking—revenue soared to $7.8 billion in the second quarter, marking a 92% year-on-year surge and significantly surpassing market expectations of $6.9 billion. Adjusted EBITDA reached $3.5 billion, nearly tripling from the previous year. Net losses contracted from $1 billion in the same period last year to $541 million.

By any conventional standard, this is an exemplary earnings report. Yet, the market remained unimpressed. Following the announcement, SpaceX's stock price plummeted nearly 9% in after-hours trading. How did the positive news of revenue doubling become the catalyst for a stock price nosedive?

01. Starlink: The Cash Cow Propping Up the Sky

To comprehend this earnings report, one must first understand SpaceX's business architecture. The company is currently segmented into three primary divisions: space launches, network connectivity (centered around Starlink), and AI. Among these, the network connectivity business stands as the sole profit-generating segment. In the second quarter, the connectivity business, which encompasses Starlink, generated $4.29 billion in revenue, a 66% year-on-year increase, with an operating profit of $1.66 billion, up nearly 80% year-on-year. The number of Starlink users doubled from 6 million a year ago to 12 million, with a net increase of 1.7 million in the quarter.

However, rapid expansion comes with its costs. As SpaceX ventures into more international markets and introduces lower-priced plans, Starlink's average revenue per user (ARPU) declined by 22% year-on-year. Yet, revenue from enterprise and government clients surged by 108% year-on-year, offsetting the shortfall in consumer revenue. United Airlines, Emirates, British Airways, and Southwest Airlines have all launched Starlink Wi-Fi services. Additionally, SpaceX's military and national security satellite business for the U.S. government, dubbed 'Starshield,' has secured multi-year contracts exceeding $6 billion. Starlink is transitioning from 'providing internet access to ordinary people' to 'engaging in business with enterprises and governments.'

02. AI: Musk's Gamble on the Future—Still Draining Funds

If Starlink represents SpaceX's present, then the AI business embodies Musk's wager on the future. In the second quarter, AI revenue reached $2.56 billion, a staggering 247% year-on-year increase. xAI, the Grok chatbot, social media platform X, and a rapidly expanding data center business collectively constitute this high-growth new segment. SpaceX has inked cloud computing service agreements with clients such as Anthropic and Google, with total contract sales reaching $14.1 billion.

But growth comes at a hefty price. The AI business reported an operating loss of $1.26 billion in the second quarter—though this marked a significant improvement from the $2.47 billion loss in the previous quarter, the absolute figure remains substantial. What makes investors even more jittery is capital expenditures. In the second quarter, SpaceX's total capital spending reached $18.4 billion, far surpassing market expectations of $13.2 billion. The AI business alone accounted for $15.8 billion, or 86% of the total. A year earlier, AI capital expenditures were just $749 million. SpaceX executives also stated during the earnings call that capital spending in the third and fourth quarters would be roughly on par with the second quarter. Goldman Sachs estimates that SpaceX will not achieve positive free cash flow until the fourth quarter of 2030. In other words, investors will have to endure at least four more years of 'burning cash.'

03. Aerospace: The Core Competence, Yet a Money-Losing Venture

Now, let's examine SpaceX's traditional forte—aerospace launch services. Revenue in the second quarter reached $962 million, a 29% year-on-year increase, exceeding market expectations. Over the past 90 days, SpaceX completed two test flights of its third-generation Starship. At the end of July, it also secured a $1.6 billion rocket launch contract from the U.S. Space Force. However, the aerospace business remains unprofitable, reporting an operating loss of $542 million in the second quarter. The primary culprit is the sustained increase in R&D investment for the Starship V3 project. SpaceX described the Starship in its prospectus as a 'key pillar for future growth,' believing it could slash orbital launch costs by more than 99% compared to historical averages. On July 24, the 13th Starship test flight was successful, deploying 20 next-generation Starlink V3 satellites for the first time. Musk also stated that the next flight would attempt to recover the Starship upper stage using a launch tower. However, the Starship has not yet officially entered commercial operations and remains far from generating returns.

04. Capital Expenditures: Investors' Primary Concern

Returning to the original question: Why did a robust earnings report trigger a stock price plunge?

The answer lies in capital expenditures. The $18.4 billion in capital spending in the second quarter was 6.5 times that of the same period last year. In the first six months of this year, SpaceX's AI-related capital expenditures reached $23.55 billion, compared to just $3.32 billion in the same period last year. Wall Street expects the company's full-year capital spending to exceed $45 billion. For comparison: SpaceX's full-year revenue in 2025 was just $18.7 billion. In other words, capital spending in the first half of 2026 already surpassed last year's full-year revenue.

Investors are not oblivious to the potential of the AI business but are uneasy about such aggressive spending. Moreover, SpaceX's valuation is already astronomically high. The company went public at $135 per share in June, raising $75 billion in the largest global IPO on record. On its debut, its market cap briefly exceeded $2.1 trillion. However, the stock price has been declining ever since, shedding over $500 billion in value by the time the earnings report was released. Based on expected revenue for the next 12 months, SpaceX's price-to-sales ratio remains as high as 41x, far exceeding the 32x of Palantir, the highest-valued company in the S&P 500. In the view of bearish institutions like the Danish Pension Fund, SpaceX's fair value is closer to $1 trillion—meaning there is still significant downside risk for the current stock price.

Another factor keeping investors up at night: lock-up expiration. Two trading days after the earnings release, SpaceX's unique lock-up structure will allow insiders to sell up to 20% of their holdings, far earlier than the 180-day lock-up period typically faced by most newly public companies. With hundreds of billions of dollars in shares set to flood the market, this poses significant pressure on any stock.

05. Conclusion

SpaceX's first earnings report serves as a mirror, reflecting the company's true nature: Starlink is generating profits, AI is draining funds, and aerospace is awaiting the Starship's commercialization. Revenue is surging, losses are narrowing, but capital expenditures are spiraling out of control. During the earnings call, Musk said SpaceX's current goal is to achieve $1 trillion in revenue by 2030. This is an even more audacious target than colonizing Mars—in 2025, full-year revenue was still below $20 billion. To grow nearly 50-fold in the next five years requires not just technological breakthroughs but also sustained patience and substantial capital from the markets.

Wall Street will now focus on three things: whether Starlink's user growth can sustain its rapid pace, whether the Starship commercialization timeline can be further clarified, and when the AI business can transition from 'high growth, high losses' to 'high revenue, narrowing losses.' This earnings report proves one thing: SpaceX's revenue growth is robust enough, Starlink's profitability is solid enough, and AI's losses are not as severe as the market feared. But at this valuation level, 'good enough' is no longer sufficient. The market demands perfection—and for SpaceX, that means one successful Starship launch tower capture and an AI division that stops draining funds.

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