Making Sense of SpaceX's First Earnings Report

**Ejaaz** (0:00)
Last week on the show, we said August 4th was the day that SpaceX had to prove themselves. The first earnings report, every analyst on Wall Street basically was bearish. They said that Elon Musk could not pull this off, that this thing is a money vacuum. Turns out, the opposite was the case. SpaceX absolutely smashed it. The revenue is up to $7.81 billion, which is 92% year on year, which is crazy for the size that they're at.
Starlink numbers doubled to 12 million subscribers. That being said, the stock is still down this morning. People are worried about the major unlocks that are happening tomorrow, where $100 billion worth of SpaceX stocks goes live. But Josh and I are here to tell you why that may not be the case, and why the market could be wrong.

**Josh** (0:45)
Yeah. Well, I understand why people are bearish. He was on the earnings call yesterday, which I sat in and listened to, and he's claiming, he's like, all right, we're going to build robots with mass drivers on the moon, and we're going to 1000 XR economy on earth because of it. It sounds ridiculous.
I was looking through the numbers, and as I was reading this, I was slowly starting to inform myself on what large companies look like. I just want to start with a question too, actually. Do you know what company had the most annual revenue ever? What company is making the most money every year? This was really surprising to me.

**Ejaaz** (1:17)
Currently? Like right now? Yeah.

**Josh** (1:19)
Total revenue per year, who's making the most?

**Ejaaz** (1:21)
I would have to say it is either like an Nvidia or an Amazon.

**Josh** (1:26)
It's not even a tech company.
It's Walmart. Walmart? Walmart. Topped out at $680 billion of revenue, which seems outrageous. I mean, it gets into the pricing thing where Walmart is not the biggest company in the world. Why is that? Well, because their profit margins are low, their multiples are lower. But SpaceX and Elon went on this conference call and he said, hey, we actually ran the numbers and instead of 2031, by the year 2030, they expect to have a trillion dollars in revenue. That is 40% or 32% more than the largest company on earth today. I think we kind of have to unpack what that looks like because, I mean, that is a tremendous amount of value given the fact that they actually just reported a net loss of half a billion dollars, which is an improvement but still a net loss. You can kind of break down the company's earnings report into these three pillars. First, it is connectivity, which is like Starlink and all of their satellite situations, then they have AI, which was up 250 percent year over year, and then they had space, which was up 30 percent year over year.
The important thing that you noted, Ijaz, is that 92 percent growth year over year is huge, because for companies with 30 billion dollars of annualized revenue, typical growth is like 5-10 percent. So clearly, they're doing something right.

**Ejaaz** (2:36)
I was keeping an eye on his social media yesterday, and one of the things that he said is, we are on track for 100 billion dollars ARR by the end of this year, 2026 Now, the only other company that I've heard that projection being made for is Anthropic. Now, when I look at SpaceX and look at Anthropic, I'm saying, okay, they may be competing in the same field, but I don't think SpaceX is quite caught up on the AI side, but that's what most people miss. SpaceX isn't just an AI company, they are a computation company. They have the largest arsenal, largest GPU footprint of Nvidia GPUs, might I add. He signed a major partnership with Jensen which we'll get to in a second, but he's the only person that's launching these things into orbital space. He has the largest data center cluster on Earth, and he's also doing the Starlink connectivity thing. All of these are different revenue drivers.
What I like about this report is he's proved a lot of the bears wrong simply by the numbers.
Let's actually walk through some of these numbers. Revenue, the estimate was $6.93 billion.
He smashed it by earning almost $1 billion more than that. Then when you look at earnings per share, people were like, okay, they're going to be at a net loss of $0.26 per share. No, came in at 0.09. Is it profitable yet? No, but it is still much better than people expected. Then the net income, as you mentioned earlier, people were expecting a $2 billion loss. He shaved that down by 3X to half a billion dollars. Now again, is this the best earnings report that they could have come up with? Probably not, but these things take time for. A CapEx heavy company such as SpaceX, I'm really impressed with what they've been able to pull off. I think it just shows that Elon has pretty crazy statements. I remember when he pitched the Starlink robots, GPUs in Space Vision about, what was this, like 12 months ago for the GPUs in Space, and everyone thought he was absolutely insane. But every step he takes, every earnings report he takes, we're starting to see a different picture start to form. I'm not saying he's there yet. I just want to be very clear. I don't think we're anywhere near there, but this is a step in the right direction. I think that after listening to the call yesterday and after seeing a lot of the reporting, I think he might be there. But of course, something that people are worried about is the unlock that is happening tomorrow. I don't know if you have any thoughts on this, Josh, but $100 billion is flooding the market.