Space Exploration Technologies‘ (SPCX +15.83%) second-quarter earnings have come and gone, sparking much intrigue among investors.
SpaceX posted strong revenue growth and a narrowing of its operating loss compared with past quarters. However, huge capital expenditures of roughly $18.4 billion in the quarter drove the stock down during the day following earnings.
Still, much of the interest beyond the numbers came from SpaceX’s earnings call, where Wall Street analysts sought further insights into the company’s future from CEO Elon Musk and the rest of the senior management team. Among other tidbits, Musk said this could be the most underappreciated part of SpaceX’s business.
SpaceX CEO Elon Musk. Image source: White House.
Manufacturing on the moon
What SpaceX has already accomplished is a tremendous technological achievement, whether you think about what the company is doing with artificial intelligence or its low earth orbit satellite internet network, Starlink.
But if you’ve read SpaceX’s registration statement, the company has even greater ambitions that seem straight out of a science fiction novel or television show. For instance, Musk’s compensation package and incentives are partly tied to efforts such as establishing large-scale settlements on Mars and mining asteroids.
This ties back to a potential area of SpaceX that Musk believes is underappreciated: robotics. Now, robotics is not a new concept, and many believe it could be the next major innovation, particularly regarding humanoid robots, which Musk’s other company, Tesla, is actively developing.
Space Exploration Technologies
Today’s Change
(15.83%) $18.19
Current Price
$133.11
Key Data Points
Market Cap
Day’s Range
$114.53 – $133.48
52wk Range
$104.83 – $225.64
Volume
242.1M
Avg Vol
124.1M
While they may be used differently than at Tesla, Musk sees robotics at SpaceX in the form of all of the company’s satellites, which power Starlink and could, in the future, support orbital data centers for AI compute.
Musk said that all of SpaceX’s satellites can be thought of as robots:
They’re autonomous, and they do not need servicing. In the sort of what may seem the far future but will come faster than you think, using robots on the Moon to scale up manufacturing on the Moon, which I know sounds like super sci-fi right now — but it’s going to happen — will enable us to build the mass accelerator on the Moon. If you have a mass accelerator on the Moon, and you have solar and radiator production on the Moon, you can — I know this sounds totally nuts — but you can probably scale to 1,000x the economy of Earth in terms of intelligence launched to space. Probably maybe even a million times. We are going to land a lot of tonnage on the Moon. We’re going to build the factories on the Moon. The robots will be helpful with that.
SpaceX’s president and chief operating officer Gwynne Shotwell added that she expects robotics to dramatically increase demand for connectivity and therefore for Starlink, which Musk believes will deliver the majority of the world’s internet one day.
Investors should try to stay grounded
When an entrepreneur as accomplished as Musk starts talking about building factories on the moon, it can be easy to get carried away and go all-in on the stock. But investors should do their best to stay grounded. While Musk may very well accomplish what he says, it will be quite difficult for retail investors to figure out what is and isn’t technologically possible.
After all, Musk has been talking about humanoid robots and fully autonomous self-driving at Tesla for years. While he’s certainly made progress, I don’t think it’s quite there yet, and who knows what timeline it will be accomplished on, if ever.
Investors should continue to keep SpaceX positions smaller and more speculative for now. Continue to gather information and let the lock-up provisions expire over the rest of the year before buying more shares.
