SpaceX shares extended their gains after the bell on Tuesday, rising further in after-hours trading having already closed 9.4% higher at $125.33, as the company's first set of results as a public company came in ahead of Wall Street's expectations.
It was the best session for the stock since mid-June, and a rare moment of relief for investors who have watched the shares slide since the record listing.
The relief came from the top line.
SpaceX, the reusable rocket maker and satellite operator controlled by Elon Musk, reported second-quarter revenue of $7.81 billion, comfortably above the $6.93 billion analysts had forecast.
That marks a sharp acceleration from the $4.69 billion booked in the first quarter, growth of roughly two-thirds in three months.
The loss was also far shallower than feared, at nine cents a share against expectations of a 26-cent loss, a figure the company said was not directly comparable to the consensus estimate.
Set against a net loss of $4.9 billion last year and a further $4.28 billion loss in the first quarter, a narrowing loss is the number the bulls wanted to see.
Starlink still carries the company
The engine of the business remains its connectivity arm, built around the Starlink satellite internet service.
Starlink was the only profitable segment last year, generating income of $4.42 billion on revenue of $11.39 billion, some 61% of the company's total sales.
Its growth has been rapid, with subscribers reaching 10.3 million across 164 countries by the end of March, more than double a year earlier, and the company said in June the figure had since passed 12 million.
The concern is margins rather than volume, because cheaper international pricing and a newly introduced $10 monthly fee to rent terminals point to a business straining to keep profitability climbing as it scales.
Analysts had pencilled in around $3.83 billion of connectivity revenue for the quarter, with the segment detail behind Tuesday's headline number due to be picked apart on the earnings call.
The AI question
The other half of the story is the reason SpaceX bled so much cash last year.
The company merged with Musk's xAI in February, pitching a vision of building data centres in space, and the artificial intelligence unit has since become its largest source of losses.
Analysts expected the AI segment to contribute around $2.18 billion of revenue, but with a first-quarter operating loss of roughly $2.5 billion, faster sales mean little unless the losses grow more slowly.
Investors were watching for evidence of monetisation, and the company has one marquee contract to point to, a deal to supply Google Cloud with computing capacity worth $920 million a month.
Whether SpaceX can land further deals of that size in the second half is central to justifying the price the market has put on the business.
The buildout is not cheap, with quarterly capital spending estimated near $13 billion and free cash flow expected to run at around minus $1.9 billion.
That includes ambitions such as Terafab, a large AI chip plant planned for east Texas alongside Tesla and Intel.
The launch business, and Starship
The original rocket business remains a smaller and still loss-making piece of the whole.
The space segment was expected to bring in around $835 million, dwarfed by connectivity and dependent on large contracts from Nasa.
Attention on the launch side has shifted to Starship, the giant next-generation vehicle that deployed a new batch of satellites on 24 July, with Musk signalling the company will attempt to catch the upper stage with its launch-tower arms on the next flight.
Success there would underpin the cheaper, higher-volume launch cadence the entire growth story assumes.
The overhang that will not go away
For all the beat, the number hanging over the stock is not in the results at all.
On 6 August, two days after these figures, the first tranche of SpaceX's post-listing lock-up expires, freeing up to 911.5 million insider shares to be sold.
That potential supply is roughly triple the current tradable float, and equates to around a fifth of the company, a wall of stock the market may struggle to absorb.
Short sellers have positioned heavily around the event, and the shares remain below the $135 price at which the company floated in June, despite Tuesday's bounce.
The results gave management a case to make, and the beat on revenue and losses answered some of the doubts about whether the business is scaling faster than it is burning cash.
The lock-up will answer a different question entirely, which is whether the market can take the strain when insiders are finally free to sell.
