Space Exploration Technologies (NASDAQ: SPCX) reported its first financial update as a publicly traded company (for the second quarter) on Aug. 4 amid high expectations. The company's shares rose before it released its earnings report. Unfortunately, the **** e company's results disappointed the market, sending the stock sharply lower and extending the losses from recent weeks. **** eX stock is down 20% from its IPO price and 52% from its all-time high. However, even at current levels, the company's shares aren't attractive, in my view. Here are three reasons why I am not buying the dip yet.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
SpaceX's second-quarter results weren't bad. The company's revenue soared 92% year over year to $7.8 billion, while it cut its net loss nearly in half, landing at $541 million for the period, versus the $1 billion reported in the prior-year quarter. However, there are some worrying signs. Notably, **** eX is spending a small fortune to capitalize on what it perceives as a massive opportunity in artificial intelligence (AI). During the second quarter, **** eX's capex within its AI business was $15.8 billion, more than doubling quarter over quarter. It was also more than six times the capex in its two other operating segments combined.
Management says it will continue to spend heavily on AI over the next few quarters. That's a problem for the company's near-term performance. The market is punishing other corporations that are also spending heavily on AI, even when they generate significantly more revenue and earnings than **** eX and also boast attractive opportunities in this market. Perhaps the spending is justified and will eventually transform **** eX's business. But it's unlikely that we will see a significant return on investment from **** eX's AI-related spending over the next year, which leads me to believe that the stock may fall further and offer investors who believe in its vision an even more attractive entry point.
SpaceX is acquiring Cursor, an AI start-up, for $60 billion. One noteworthy aspect of this deal is that it is an all-stock transaction. Translation: **** eX is diluting existing shareholders by issuing new shares to fund this acquisition. It may be worth it in the long run if Cursor can improve **** eX's AI business, but this transaction may put downward pressure on the stock over the next year or so, especially if many of these new shareholders decide to cash out.
#SpaceX
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
SpaceX's second-quarter results weren't bad. The company's revenue soared 92% year over year to $7.8 billion, while it cut its net loss nearly in half, landing at $541 million for the period, versus the $1 billion reported in the prior-year quarter. However, there are some worrying signs. Notably, **** eX is spending a small fortune to capitalize on what it perceives as a massive opportunity in artificial intelligence (AI). During the second quarter, **** eX's capex within its AI business was $15.8 billion, more than doubling quarter over quarter. It was also more than six times the capex in its two other operating segments combined.
Management says it will continue to spend heavily on AI over the next few quarters. That's a problem for the company's near-term performance. The market is punishing other corporations that are also spending heavily on AI, even when they generate significantly more revenue and earnings than **** eX and also boast attractive opportunities in this market. Perhaps the spending is justified and will eventually transform **** eX's business. But it's unlikely that we will see a significant return on investment from **** eX's AI-related spending over the next year, which leads me to believe that the stock may fall further and offer investors who believe in its vision an even more attractive entry point.
SpaceX is acquiring Cursor, an AI start-up, for $60 billion. One noteworthy aspect of this deal is that it is an all-stock transaction. Translation: **** eX is diluting existing shareholders by issuing new shares to fund this acquisition. It may be worth it in the long run if Cursor can improve **** eX's AI business, but this transaction may put downward pressure on the stock over the next year or so, especially if many of these new shareholders decide to cash out.
#SpaceX
3 months ago
