To The Moon

Can SpaceX Actually Turn a Profit? What Unprofitable IPOs Tell Us About Future Stock Prices

As a company that was net loss-making at the time of its IPO, $Space Exploration Technologies Corp(SPCX)$   may replicate $Tesla Motors(TSLA)$   's arduous path to turning profitable. This is especially challenging given the high capital expenditures and R&D spending required by xAI, one of its three major business segments. Intense bullish and bearish sentiment will amplify SpaceX's volatility, creating opportunities for tactical buying on dips and selling on rallies.

What Challenges Lie Ahead on SpaceX's Path to Profitability?

Among SpaceX's three main business segments today, only the Connectivity segment (Starlink) has achieved profitability. The AI segment is currently the largest source of losses, dragging down the company's overall profits.

1. A Potential Replay of Tesla's Loss-Making Trajectory: Just as Tesla endured continuous losses for a full decade after its 2010 Nasdaq debut, SpaceX may follow a similar path. It is currently in a heavy-asset expansion phase akin to Tesla's early years. Capital expenditures have surged to build infrastructure like AI data centers. Furthermore, if SpaceX proceeds with plans to collaborate with Tesla and Intel to build the "Terafab" chip manufacturing plant, it will place even greater pressure on CapEx.

2. Insulation from Short-Term Market Pressures: Unlike Tesla, which was constrained by public markets back then, SpaceX utilizes a dual-class share structure. This institutional setup prevents outside shareholders from interfering with the company's long-term strategy under the guise of short-term profit demands.

3. Uncertainty in xAI's Profitability: Massive R&D expenses and the uncertain growth rate of compute demand within Elon Musk's commercial empire cast doubt on xAI's near-term ability to turn a profit.

Where Will SpaceX's Breakthrough to Profitability Come From? 

1. Unprecedented Speed and Cost Efficiency in AI Data Center Construction

SpaceX is deploying GW-scale computing capacity at a pace far exceeding industry benchmarks. Through brownfield site conversions, Megapack energy storage, mobile natural gas generators, and high-density server racks, SpaceX has drastically reduced both construction time and costs. Its AI compute cluster capacity rapidly scaled from 0.3 GW in Q1 2025 to 1 GW in Q1 2026. Notably, the first COLOSSUS cluster (100,000 H100s) went online in just 122 days; COLOSSUS II Phase 1 (110,000 GB200s) took 91 days; and COLOSSUS II Phase 2 (110,000 GB300s) took only 64 days. This vastly outperforms the industry benchmark of two years to build a 100 MW data center. Additionally, SpaceX’s data center construction cost stands at roughly $2.7 million per MW, about 78% lower than the industry benchmark of $12.3 million per MW.

2. Massive Cloud Services Revenue Anchor

In May 2026, the company signed a cloud services agreement with Anthropic for access to COLOSSUS and COLOSSUS II compute capacity. Under this deal, Anthropic will pay SpaceX (xAI's parent company) $1.25 billion monthly for compute power. Spanning 36 months from June 2026 to May 2029, the total contract value is approximately $45 billion. This will provide SpaceX with multi-year recurring revenue and significantly bolster its efforts to reduce losses.

How Do Companies That IPO While Unprofitable Perform Afterwards?

1. Computing/AI-Themed New Stocks Show the Strongest Short-Term Momentum:

$CoreWeave (CRWV.US)$ surged 300% within three months of listing, while $Palantir (PLTR.US)$ jumped 164%. Pure thematic plays and sector tailwinds are the primary short-term drivers. Capital aggressively crowds into high-growth new sectors, allowing short-term gains to easily outpace all other industries.

Cloud software companies ($Snowflake (SNOW.US)$ , $CrowdStrike (CRWD.US)$ ) and consumer internet platforms (Airbnb, Roblox) also generally posted positive returns in their first three months. Markets grant valuation premiums to new listings, with investors willing to bet on growth expectations.

Conversely, ride-hailing, EV, and fintech stocks face immediate pressure. Lyft, Rivian, Affirm, and DoorDash fell over their first three months. Markets price in their fundamental weaknesses upfront—losses, heavy asset bases, and difficult paths to profitability—leaving no new-stock premium.

2. For the Medium-to-Long Term (12 Months): Short-Term Hype Fades, Fundamentals Dictate Returns:

Short-term surges mostly give back gains over 12 months. The most typical example: CoreWeave's 300% three-month gain shrank to just 87% at the 12-month mark; Twilio's 125% three-month rally faded to a mere 3%. Early-stage purely emotional/thematic speculation lacks earnings support. Once lock-ups expire and valuations digest, capital quickly cashes out, causing short-term bubbles to deflate within a year.

Steady SaaS with solid fundamentals deliver sustained medium-to-long-term returns. $Datadog (DDOG.US)$ , $MongoDB (MDB.US)$ , $Cloudflare (NET.US)$ , Okta, and CrowdStrike saw moderate three-month gains (0%–30%), but their 12-month returns all exceeded 60%, peaking at 128%. These companies consistently delivered revenue and cash flow growth without overextending valuations early on. Over a one-year horizon, sustained earnings continuously pushed their stock prices higher, resulting in long-term bull runs.

By comparison, stocks that weaken within three months are almost universally deeply trapped at the one-year mark.

$Lyft Inc (LYFT.US)$ , $Rivian Automotive (RIVN.US)$ , $Robinhood (HOOD.US)$ , Coupang, Affirm, and Snap closed lower at the three-month mark and suffered 12-month declines ranging from -25% to -74%. The market sees through their flawed business models, persistent massive losses, and deteriorating cash flows right at the IPO, leading to year-long downtrends with no meaningful recovery.

Conclusion & Investor Takeaways for SpaceX

Given its industry attributes, SpaceX's AI business enjoys high sector tailwinds, though its heavy-asset nature suggests the road to profitability could be lengthy. Investors should watch for potential positive catalysts, such as SpaceX being added to broad-based indices, as well as negative catalysts like lock-up expirations, to time trade accordingly. Given the relatively lenient inclusion criteria for the Nasdaq Composite, SpaceX's addition to the index could happen sooner rather than later, potentially serving as its next major catalyst.

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