SpaceX’s AI Spending Rattles Investors & Influencers Blasted for Attending OpenAI’s Summer Camp

**Neal Freyman** (0:00)
The board recommends approving me.

**SPEAKER_2** (0:01)
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**Neal Freyman** (0:30)
Good Morning Brew Daily show. I'm Neal Freyman.

**Toby Howell** (0:33)
And I'm Toby Howell.

**Neal Freyman** (0:34)
Today, why the nut milk boom has gone sour.

**Toby Howell** (0:37)
Then to what secrets were revealed in SpaceX's first earnings report ever.
It's Wednesday, August 5th. Let's ride.

**Neal Freyman** (0:55)
There are rumblings, my friends, rumblings that MySpace could be making a comeback. In a recent documentary about MySpace, the brothers who now own the social media platform said they were planning to boot it back up. Tim Vanderhoek said in the movie, we are going to relaunch MySpace. We are just waiting for the right time to do it. This news, of course, has sent millennials into a nostalgic frenzy reminding them of the glory days when you had to use HTML or CSS to customize your page or pick a song that would greet every visitor. Toby, I can't wait to get so addicted to MySpace, I have to delete it from my phone.

**Toby Howell** (1:28)
I'm not going to lie, totally missed the MySpace wave. It was always Facebook for me. But the site has been up to some interesting stuff over the last two decades. After it sold for $580 million back in 2005, it faded from relevance until a group, including Justin Timberlake, bought it for $35 million in 2011 They tried to relaunch it in 2013 Apparently, that lost $150 million, didn't go very well, and yet here they are trying to come back once more. And I think they have a shot. All they have to do is compete against Facebook again, as well as Instagram, TikTok, Xthreads, Blue Sky Reddit, YouTube, Snapchat, Twitch and Pinterest. They got it for sure. SpaceX is a very old company, started 24 years ago, but yesterday was its first earnings report ever. What did we learn about the house that Elon Musk built? Well, for starters, it's making billions of dollars, but it's spending even more. Q2 revenue came in at 7.8 billion, exceeding Wall Street's expectations by more than a billion. But the bill to generate that revenue was steep, 18.4 billion in CapEx, largely driven by its AI data center expansion. So if my math is correct, and check me because I was an English major, the company is spending more than twice what it makes in quarterly revenue. And yet Elon has never been one to let the reality of today stand in the way of the promise of tomorrow. He said on the call that SpaceX expects to reach one trillion dollars in annual revenue by 2030, a timeline that, according to Elon, has moved up a year. While it sounds lofty, SpaceX's finance head said that the company's annualized run rate should reach 100 billion dollars by the end of this year.
Where is all this revenue coming from? It's not its space business that lost money, nor its AI or social media arms. SpaceX's only profitable division is connectivity, which contains the satellite internet provider, Starlink. Musk said on the call that Starlink will provide most of the world's internet connectivity within 10 years. President Gwen Shotwell went a step further and said that the mobile service it plans to launch could take quite a few customers from companies like Verizon, AT&T and T-Mobile. How did the stock react to all this? In the lead up to the call, it had its best day in weeks gaining 9%, but dumped 7% in the immediate aftermath. Since peaking shortly after its IPO, the stock is down by over 40%, erasing more than $1 trillion from its market cap. Neal, after so long as a private startup, it was weird to just get a normal earnings report from the rocket maker slash AI lab slash internet provider slash social media company.

**Neal Freyman** (3:59)
It's really hard to wrap your head around SpaceX as a company. It's so sprawling. It does so many different things. So it's very nice to categorize this into just three different segments. Space, which is its launch business, think Starship Connectivity, think Starlink and Telecom, and AI, which is XAI, data centers, things like that. Yeah, Space made $962 million in revenue. Connectivity, $4.3 billion. It's really putting the team on its back. AI, $2.56 billion. Connectivity is the only profitable one.