SpaceX Earnings: The Bear Case Nobody's Talking About
In a Nutshell
SpaceX's $1.5T valuation faces a potential 16.7% decline as the company reports its first earnings with $19B revenue against $8.6B losses, while a massive $110B share unlock hits two days later. Wall Street estimates show $6.9B revenue and 24-cent EPS loss, with capex concerns mounting at $45B for 2026. Historical delivery failures on products like Optimus and full autonomy, combined with xAI's heavy spending, cast doubt on whether the company can justify its premium valuation despite AI growth hopes.
These notes were generated by AI and may contain inaccuracies.
SpaceX reports earnings today for the first time in history. The company is set to report after market closes alongside AMD. SpaceX stock has been showing signs of lower highs and lower lows with aggressive selling. From highs of $230 per share, the stock has drawn down to $104, representing over 50% loss in value. At the current price of $119, the stock is down 48% from its highs, having lost over $1.5 to $1.6 trillion in market cap value.
According to fair value analysis from Investing Pro software, there appears to be another 16.7% downside potential. The company trades at a negative PE ratio and produces $19 billion in revenue against a $1.5 trillion market cap. The company loses $8.6 billion in net income. The stock is described as highly speculative with analysts warning against expecting huge returns.
Wall Street expects $6.9 billion in revenue and $2.1 billion in EBITDA for the current quarter. The earnings per share loss is estimated at 24 cents. Revenue estimates stand at $6.8 billion with little conviction behind the numbers. Loss estimates have widened up to 18% over the past month, with one strategist noting that analysts appear to be guessing the numbers.
Two days after earnings, on August 6th, over $110 billion worth of SpaceX shares will be unlocked. This represents 911 million shares becoming tradable, allowing private sellers to begin selling their holdings for the first time. This marks the first unlock of private sellers being permitted to sell.
Capex is expected to reach $18.5 billion for the quarter and $45 billion for 2026. Markets have not been favorable to companies with high capex spending, particularly those with high valuations that miss revenue targets while margins widen.
The quarterly results may not matter significantly according to some analysts. Instead, focus is on management's confidence in AI and orbital data center strategy. Bernstein's investment thesis centers on the potential for a multi-trillion dollar valuation, while Dick Bank expects inline results and believes the stock could stabilize after lockup expirations. Both analysts see AI growth as the key catalyst.
xAI has burned through significant capital, which is identified as a major concern. The bear case scenario involves revenue misses, losses remaining near Q1 levels, or spending rising further. Markets have not favored companies with aggressive capex spending, especially those with high valuations missing revenue targets while margins continue to widen.
Markets have been celebrating potential peace talks with Iran, with the S&P 500 hitting new all-time highs. Treasury Secretary Bessent indicated that a peace deal could potentially be reached by the following day. Markets rallied 2.7% on the day and 1.7% the previous day based on these developments. However, the market has been described as irrational, with sentiment potentially supporting SpaceX's valuation during earnings.
AMD is also reporting earnings and trades at 172 times earnings. While the company has performed well in previous earnings reports, the high premium leaves no room for disappointment. If AMD disappoints, it could lead to further declines in AMD and potentially other chip stocks.
Elon Musk has presented various products over the years including the Optimus robot, the Roadster, and full autonomy features, some nearly a decade ago, yet delivery timelines have not been met. Despite this, Tesla maintains nearly a trillion dollar market cap. The speaker notes that while Elon is considered one of the greatest minds of the generation, there is a pattern of overpromising and underdelivering on timelines.
The speaker purchased some SpaceX shares for their children when trading at $118-$115, with the stock later selling off to lows of $104. A few thousand dollars were invested with no intention of selling even if the stock drops 50%. The position was kept small to gain exposure for the children, with the hope of participating in potential rallies if SpaceX begins delivering results.
The speaker owns two expensive Teslas and has a Tesla Roadster on pre-order. Despite appreciation for the products and Elon Musk, the current valuation premium is described as insane. The speaker emphasizes wanting to see actual results rather than repeated presentations of future products, noting that many Tesla and Elon investors likely share this sentiment.
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