SpaceX shares slide on the heels of first quarterly report

The stock was down more than ۱۳ percent as investors were spooked by the company’s heavy investments.

SpaceX share price has plunged more than ۱۳ percent, a day after the Elon Musk-run company reported its first quarterly earnings as a publicly listed company.

On Wednesday, the stock closed down at $۱۰۸.۱۰, down ۱۳.۶ percent from Tuesday’s close of $۱۲۵.۳۳.

Investors have been spooked by the increase in the company’s capital expenditure. At $۱۸.۳۷bn, it was a six-fold jump from last year, and much higher than the $۱۳.۲bn that analysts had forecast.

The majority of that investment, $۱۵.۸bn, is earmarked for artificial intelligence (AI) infrastructure, which includes specialised compute, storage, networking and software systems required to build, train, deploy and operate AI models at scale. SpaceX has said it wants to increase the capacity of its data centres from ۱.۴GW currently to ۲GW by year-end.

Investors across the technology sector are questioning whether the large investments in AI infrastructure will actually yield returns.

“We’ve watched the same scrutiny land on Big Tech this earnings season, where investors have questioned open-ended wallets and started demanding a visible return on them,” said Josh Gilbert, lead analyst at trading platform eToro.

“SpaceX faces that test with an added degree of difficulty because it’s asking shareholders to bankroll data centres in orbit.”

SpaceX has said its computing capacity not only serves its Grok models but is also actively sold, with $۱۴.۱bn in cloud-services agreements lined up.

The one area that SpaceX saw some profit was from the “connectivity” business, with revenue jumping ۶۶ percent from a year earlier as the number of subscribers to its Starlink satellite communications service doubled to ۱۲ million, bringing in $۱.۶۶bn in operating income.

SpaceX’s share price faces another test on Thursday, when the first tranche of the post-IPO lock-up expires, making up to ۹۱۱.۵ million shares, roughly ۲۰ percent of restricted holdings, eligible for sale.

Melissa Otto, head of Visible Alpha research at S&P Global, told Al Jazeera that the stock is “likely to be volatile” once the lock-up lifts.

SpaceX’s IPO was priced at $۱۳۵ per share and climbed to $۲۲۵ within days of its June ۱۲ debut, briefly catapulting Musk as the world’s first trillionaire. The stock has since dropped.