SpaceX is set to release its first-ever quarterly earnings report as a publicly traded company on Tuesday after the market closes, covering the second quarter of fiscal 2026. The stock has already fallen by half from its post-IPO peak, wiping out over $500 billion in market value, and it touched a new all-time low on Monday. The core issue is that the company's valuation is almost entirely tied to Elon Musk's personal vision—including space-based data centers, Mars colonization, and AI competition—rather than current financial metrics. With a price-to-sales ratio exceeding 70, massive quarterly cash burn, and debt far surpassing its cash reserves, the investment thesis is highly speculative.

Revenue for the second quarter is expected to reach $6.81 billion, a significant sequential increase from the first quarter's $4.7 billion. Analysts project an adjusted EPS loss of $0.24 and adjusted EBITDA of approximately $2 billion. However, the real focus is on capital expenditures, which are forecast to surge from $48.7 billion this year to $118.4 billion by 2028, while total debt is expected to balloon more than fivefold over the same period. This has sparked intense concern about whether the massive investments in AI infrastructure will generate solid returns.

SpaceX's stock has been under severe pressure since its debut on June 12, with the company's market cap evaporating by over $500 billion, a harsh blow to retail investors who rushed into the rocket company. The stock has fallen for four consecutive weeks, dropping more than 50% from its intraday high. This marks one of the most disappointing early performances for a high-profile IPO since Facebook's 2012 listing, though Facebook's total market cap after its first day was about $100 billion—roughly one-fifth of what SpaceX has lost. The backdrop for this earnings report is also shaped by recent events: Tesla's earnings two weeks ago were criticized by Wall Street due to rising costs, negative free cash flow, and Musk's cautious stance on expanding its Robotaxi service. Last week, major tech companies concluded their quarterly updates, with investors heavily focused on AI spending. For SpaceX, the situation is more complex than for its trillion-dollar peers. Most of the investment logic is a bet on Musk and his mission to build data centers in space and eventually colonize Mars, while the company also tries to develop AI services competitive with Google, OpenAI, and Anthropic. Unlike other mega-cap tech stocks, SpaceX, currently valued at $1.4 trillion, is not supported by current financial indicators. Its price-to-sales ratio based on trailing twelve-month revenue is over 70, the business burns billions each quarter, and its debt is nearly double its cash holdings.

Where to focus

The primary short-term pressure comes from insider selling. The end of the lock-up period on August 6 will release hundreds of millions of shares held by insiders—roughly three times the current tradable float—meaning up to about 20% of shares could hit the market. Investors fear this additional supply will keep the stock under pressure. Meanwhile, short sellers have already profited significantly from the decline. According to Matthew Unterman, head of research at S3 Partners, short sellers have accumulated about $8.3 billion in paper profits since the IPO. He notes this is "one of the most aggressive and fastest short-selling setups we've seen ahead of a first earnings report after a major IPO." In the options market, a more unusual dynamic is playing out. Data shows that for options expiring on August 7, call open interest is 656,309 contracts, while put open interest is just 199,910, suggesting a seemingly bullish sentiment. However, the most striking feature is the massive position of over 450,000 calls at the $330 strike price—three times the current stock price. Market veterans interpret this not as a pure bullish bet, but as a hedge by short sellers against the risk of a short squeeze. If the earnings report surprises to the upside, causing a sharp rally, these cheap options provide a final layer of protection. Looking at longer-dated options, the distribution is more balanced. For far-month contracts, call open interest is 1,907,393 and put open interest is 1,856,722, for a total of 3,764,115 contracts, with the put/call ratio recovering to 0.97, near neutral levels. Based on option pricing using at-the-money straddles, the market expects SpaceX's stock to move about 14% after earnings, implying a price range of roughly $94 to $126. Despite the gloom, some analysts see opportunity. New Street Research analyst Ben Harwood believes the current level is an attractive entry point for long-term investors, citing "immense growth runway" and that SpaceX has "one of the widest moats in the market today." The firm has a price target of $165. The stock closed at $108.37 on Friday.

Why focus on Starship

The bullish case for SpaceX typically starts with Starship, the company's next-generation rocket designed to be fully reusable and capable of launching newer, more powerful V3 satellites into orbit. If Starship succeeds, the company says it can lower the cost of sending cargo or people into space, allowing SpaceX to rapidly expand its Starlink constellation and satellite communication services. SpaceX's connectivity business is currently its only profitable segment. While the earlier Falcon rocket established SpaceX as a top global launch provider, the launch business is still losing money. Starship is expected to offer several times the payload capacity of Falcon, creating more sustainable economics for customers in research, defense, and communications, while potentially making space tourism a real industry. The importance of Starship was clearly outlined in SpaceX's IPO prospectus. The company wrote: "If Starship fails to achieve full reusability or rapid turnaround, we could face higher per-launch costs, delays in deploying our large constellation (including orbital AI computing projects), slower revenue growth, increased overall capital needs, and damage to our brand and reputation." SpaceX also stated in the filing that it expects Starship to "begin delivering payloads to orbit" in the second half of this year. However, progress has been uneven. On July 24, SpaceX conducted the 13th test flight of its roughly 400-foot-tall rocket from Starbase in Texas. The Super Heavy booster separated from the Starship spacecraft about two minutes into flight and splashed down in the Gulf of Mexico. However, SpaceX said in a post-launch statement that the landing was not perfect. The booster "attempted to reignite its engines for the landing burn," but only some engines ignited, leading to a "hard splashdown." The latest update shows SpaceX is preparing to attempt, for the first time on its next flight (Flight 14), to catch the Starship upper stage (the ship) with the launch tower's "Mechazilla" mechanical arms. Musk himself confirmed: "Unless we find issues after the mission data review, SpaceX will attempt to catch the ship with the tower on the next flight." Deutsche Bank analyst Edison Yu estimates the target window for Flight 14 is late August or September, and notes that even if the ship only achieves partial reusability, Starlink V3 satellites can be deployed via Starship.

AI strategy and the 'Muskonomy' effect

Following earnings reports from Alphabet, Meta, Microsoft, and Amazon in recent weeks, SpaceX's AI strategy and capital expenditure needs will come under intense scrutiny. Investors are particularly focused on the progress of Cursor, the AI programming startup SpaceX agreed to acquire for $60 billion, a deal expected to close in the third quarter pending regulatory approval. With Musk's AI efforts making limited progress against competitors like OpenAI and Anthropic, SpaceX has shifted to renting out spare data center computing capacity to generate revenue. The company previously signed an agreement with Google to provide AI computing power for $920 million per month. Anthropic will use the full capacity of its Memphis Colossus 1 data center, and there is a separate agreement with Reflection AI. The Grok chatbot has secured large contracts, including with the U.S. Department of Defense, but has also sparked investigations and lawsuits in Europe and the U.S. over its image editing tools, which could be used to create deepfakes. Additionally, the potential impact of "Muskonomy" is emerging. Sources say Musk is still pushing for a merger between SpaceX and Tesla. For Bernstein analysts, Starship is the most important factor for SpaceX to justify its valuation. In a note to clients on Friday, the firm listed three other key issues the company needs to address: semiconductor supply, regulatory processes, and computing capacity. SpaceX needs a large number of processors for its data center satellites to build orbital data centers. Each Starship launch requires FAA approval. Meanwhile, after merging with Musk's xAI in February, the company is trying to become a leader in AI and must continuously build computing power in a resource-constrained environment. Following the recent earnings reports from Alphabet, Meta, Microsoft, and Amazon, SpaceX's AI strategy and capital expenditure needs will be heavily scrutinized. Investors are especially eager to learn about plans for Cursor, the AI programming startup SpaceX agreed to acquire for $60 billion, with the deal expected to close in the third quarter pending regulatory approval. As Musk's AI efforts have made limited progress against OpenAI and Anthropic, SpaceX has shifted to renting out spare data center computing capacity to generate revenue while continuing to develop models and services. The Grok chatbot has secured large contracts, including with the U.S. Department of Defense, but has also sparked investigations and lawsuits in Europe and the U.S. over its image editing tools, which could be used to create deepfakes. Despite these challenges, Bernstein analysts still recommend buying the stock and have a price target of $239 ahead of Tuesday's earnings. They wrote: "We believe the quarterly results themselves are not important. What matters is the level of confidence management shows in the company's growth trajectory." Cantor analysts are even more optimistic about SpaceX's prospects. In a report last week, they stated: "We believe that as the company demonstrates the profitability of hosted computing, clarifies the geographic distribution of capital, and clears the initial lock-up headwind, earnings can significantly alleviate some of the pressure. We think SPCX is approaching a bottom before the report." They cited two examples: just days before the record IPO, SpaceX signed an agreement with Google to provide AI computing power for $920 million per month, and earlier, Anthropic announced it would use the full capacity of SpaceX's Colossus 1 data center in Memphis, Tennessee. SpaceX also has a separate agreement with Reflection AI to provide computing capacity. These factors are among the reasons Cantor analysts remain optimistic and maintain a $246 price target.