Countdown to SpaceX's first financial report after the IPO! Analysis: Investors should focus on the "Starship" rather than short-term profits and losses

Author: Bu Shuqing, Wall Street Journal

At 04:00 Beijing time on Wednesday (after the U.S. stock market close on Tuesday), SpaceX is set to release its first quarterly earnings report since going public. However, analysts warn that the short-term profit and loss figures have limited significance in assessing the investment value of this space company; what truly determines its future direction is the commercialization process of the "Starship" heavy reusable rocket.

According to analyst expectations compiled by Bloomberg, SpaceX is expected to report an operating loss of approximately $1.6 billion this quarter, with capital expenditures reaching about $18 billion. The main source of the poor performance is the AI business—this department was formed after CEO Elon Musk integrated xAI into SpaceX, with an expected operating loss of $2.4 billion in the second quarter. Currently, the satellite internet service Starlink is the only profitable business segment of the company.

Meanwhile, SpaceX's stock price has been under pressure since its historic IPO on June 12.

The company priced its shares at $135, and on the third day of trading, the closing price briefly rose to $201.80, giving it a market value of $1.5 trillion. However, as of the close on Monday this week, it had fallen to $114.46, down more than 15% from the offering price. As the lock-up period for early shareholders and insiders begins to expire starting this Thursday, the stock price may face further pressure.

Earnings Report Numbers Are Hard to Navigate; Starship is the Core Variable

Bloomberg columnist Thomas Black points out that in the early stages of SpaceX as a public company, quarterly profit and loss data has very limited reference value for investors.

Although the company's space business continues to incur losses, it provides a large number of cost-price launch services for the Connectivity business; the AI business is currently the biggest drag on profits. Whether it can turn profitable in the fourth quarter as expected—from a $2.5 billion loss in the first quarter to profitability, and increasing revenue from $800 million to $8.8 billion—will be an important observation point for the second half of the year.

What can truly provide investors with a sense of direction is the commercialization timeline of Starship.

SpaceX successfully completed the test launch of the third version of Starship on July 24, which is designed for mass production and has guided the spacecraft to achieve a soft landing in the Indian Ocean, but has not yet achieved recovery and reuse of the spacecraft components.

Full Reusability is Key to Cost Reduction; Commercial Maiden Flight Timeline is Highly Anticipated

The core value proposition of Starship lies in its full reusability.

Once the dual recovery of the rocket booster and spacecraft is achieved, combined with its ultra-large payload capacity, launch costs are expected to decrease significantly, making emerging businesses like space data centers economically viable.

SpaceX has publicly stated that its goal is to make space travel as routine as commercial flights, and it has built a new launch pad at its Starbase in Texas capable of launching Starship once per hour.

However, the time window is narrowing.

Starship needs to enter commercial operation next year to participate in NASA's Artemis III mission, completing the docking demonstration between the Starship lunar lander and Lockheed Martin's Orion spacecraft. After that, Starship will also undertake the task of landing astronauts on the lunar surface and must complete the critical technology verification of in-orbit refueling in space.

Thermal Protection System and Lock-Up Period Create Dual Pressure

On the technical side, a major obstacle to Starship's reusability is the thermal protection system.

The spacecraft must withstand temperatures exceeding 2500 degrees Fahrenheit upon re-entry into the atmosphere, making the reliability of the thermal tiles crucial—this was tragically highlighted by the loss of the Columbia space shuttle in 2003 due to damage to its thermal protection system. SpaceX is currently developing solutions, and the market expects the company to provide more details during its first earnings call.

On the stock price side, RBC Capital Markets analyst Ken Herbert noted in a research report that SpaceX's stock price trajectory may resemble that of Meta Platforms in its first year as a public company—where it also had a phased lock-up arrangement, and its stock price remained below the offering price for an extended period after the IPO. SpaceX's lock-up period will extend until June next year, when a large number of shares held by Musk himself can be sold. This ongoing pressure may keep the stock price under pressure for a long time but could also lead to undervaluation.

The First Commercial Launch of Starship is the Real Turning Point

Thomas Black concludes that until Starship achieves its first commercial launch, SpaceX's quarterly earnings reports are unlikely to provide a clear roadmap for investors.

The future growth logic of the company is based on the continuous increase in the frequency of Starship flights and the gradual phasing out of the current main rocket, Falcon 9.

What investors should focus on during this earnings season is the management's latest statements on the commercialization path of Starship and the specific arrangements for testing progress—this is the core basis for penetrating the current market noise and assessing SpaceX's long-term value.