Elon Musk wants to hand every American kid a SpaceX share.
Anthropic is putting 5% of its shares into a public trust. How has everyone gotten so gloriously generous in the AI space?
You can’t spell bribe without an I in AI.
Right after today’s close, SpaceX reports earnings, and we find out what the AI business behind that free share is worth.
The revenue number will make the headlines, but 2 numbers underneath it will decide whether SpaceX rallies or falls tonight, and you can watch it play out live, for free.
You think Anthropic and SpaceX would be doing this 8 months ago, when AI was still well-loved? No. Under no circumstances would the AI companies be doing that.
It goes to show you the PR nightmare AI is in right now, and the stock is feeling it. SpaceX came public at $150, fell almost 30% in its first few weeks, climbed back, and it’s trading around $147 this morning. It’s down more than 10% this month along with everything else tied to AI.
The AI Business Could Pass Starlink Tonight
Analysts expect revenue of about $12.7 billion to $12.9 billion, up from $7.8 billion last quarter. That’s a 65% jump in 3 months. They also expect earnings of about 14 cents a share after a 9-cent loss, which would make this SpaceX’s first profitable quarter as a public company.
The piece everybody’s watching is AI computing. SpaceX rents out computing power from the data centers it’s building, and that business did $2.6 billion last quarter, up 247% from a year earlier.
Analysts expect it to clear $6 billion this quarter. That would make it bigger than Starlink, the satellite internet business, which had 12 million subscribers as of June.
The company says it can reach a $100 billion yearly revenue pace by year-end. Until the filings back it up, that’s a sales pitch.
Who’s Paying For All That Computing?
I’m watching 2 numbers underneath the headline.
The first is who’s paying for the computing, and for how long. SpaceX’s reported customers include Alphabet and Anthropic, and a big AI number is worth a lot when it comes from outside companies on multi-year contracts.
If a big chunk comes from companies tied to Musk, it’s the same money moving from one pocket to another. The report should break that out.
The second is how much SpaceX spends to build it. Last quarter, it spent $18.4 billion on construction and equipment, mostly data centers, which is more than twice the revenue it brought in. Management said spending would stay around that level for the next 2 quarters, and SpaceX is reportedly spending another $8 billion on wireless spectrum so Starlink can reach phones indoors.
A company that spends faster than it earns has to keep raising money, and money got more expensive this month. If management raises the spending plan again, SpaceX can fall even on a revenue beat. I think it’s the most likely way this stock drops tonight.
Options traders are pricing a move of about 8% in either direction on the report. And in December, the lock-up ends, when early investors and employees can finally sell, so even a good quarter can run into a lot of selling.
This Is A Bigger Week In Earnings Than A Lot Of People Realize
SpaceX goes today, and Meta and Tesla report tomorrow night. Right now, I see people a little bit paralyzed and people completely overreacting.
This is not the time to be paralyzed, folks. What you need is a plan for what the price does after the numbers hit.
So I want you in the room with Licia Leslie this week. On our show, she’s the Queen of the Candles, and most days we just call her the Queen.
Licia is running a free 3-day live series starting this afternoon at 4:15 p.m. ET.
SpaceX’s call starts at 4:30 p.m. ET, 15 minutes into her session, and she’ll cover it live.
She’ll also teach pitchforks, a charting tool that maps out key levels and the paths price is likely to take, using Meta and Tesla before they report. Tomorrow, she adds trendlines and how to trade gaps, with both companies reporting during the session.
Thursday, she reads the first candle after earnings and looks for a trade with you. Everyone’s welcome, and it costs nothing.
===>Save Your Seat For Licia’s Free Series
Your only option, Mark Sebastian
P.S. If you can’t make it this afternoon, come Thursday at 4:15 p.m. ET. That’s when Licia ties all 3 tools together on Meta and Tesla’s post-earnings moves and finds a trade live. Join her here.