SpaceX Just Revealed Its Finances. Is It a Warning Sign to Stay Away?

SpaceX plans to go public next month under the ticker SPCX, and the company just gave investors a first look at its financials. While the space company claims it has the "largest actionable total addressable market in human history" at $28.5 trillion, its actual numbers aren't exactly pretty. As such, investors will have to weigh current reality against future potential.

SpaceX's largest business is Starlink, its satellite internet service, which grew revenue by 31% to $3.3 billion in the first quarter and generated $11.4 billion in revenue in 2025. It has also been its only profitable segment, generating $4.4 billion in operating income last year. This is a nice recurring-revenue business, with the company having consistently grown its subscriber base over the past several years. It's gone from 2.3 million users in 2023 to 8.9 million at the end of 2025, and that jumped to 10.3 million in the first quarter of 2026, showing its strong momentum.

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Its space segment, which includes its rocket launch and payload business, generated $619 million in revenue in Q1, down 28%. It delivered $4.1 billion in revenue last year and an operating loss of $657 million. While it operates at a loss, it has given its Starlink business a nice competitive edge by quickly launching its satellite network.

SpaceX's most divisive business is xAI, which includes its social media site X (formerly Twitter), its large language model (LLM) offering Grok, and wholesale AI compute infrastructure. One of the company's big ambitions is to start building data centers in space powered by solar, thus reducing energy costs given near-continuous sunlight. xAI's Q1 revenue rose 13% year over year to $818 million, while it generated $3.2 billion in 2025 revenue and a $6.4 billion loss.

Overall, the company's Q1 revenue rose 15% to $4.7 billion, while it produced a loss attributable to shareholders of $4.9 billion. It is burning through a lot of cash. It generated $1 billion in operating cash flow, but its free cash flow was negative $9.1 billion. In 2025, it spent $12.7 billion in capital expenditures (capex) in its AI segment, more than triple its other segments. It then upped the ante in Q1, spending $7.7 billion of its $10.1 billion in capex on its AI segment.

Should investors buy the upcoming IPO or stay away?

SpaceX was originally envisioned as a space exploration company, and the later pivot to Starlink has turned out to be a good move. The company's merger with xAI, though, has completely shifted the narrative before its upcoming initial public offering (IPO). xAI brought with it a company losing a lot of money and bleeding cash, with very high capital spending. It's also the business the company sees as the biggest opportunity, pegging its total addressable market at $26.5 trillion. That compares to $1.6 trillion for Starlink and $370 billion for its space business. Meanwhile, the vision of colonizing Mars appears to be off the table.

SpaceX is currently targeting a $1.75 trillion valuation when it goes public, which would be a record. That's a huge valuation -- 93.5 times trailing revenue -- for a money-losing company that produced just $18.7 billion in revenue in 2025 and is capital-intensive.

While Starlink is a nice business, it will face increased competition in the coming years, with Amazon poised to undercut it on price with Amazon Leo. xAI, meanwhile, is a second-tier LLM company, and X has seen its ad revenue decline since it went private. That means, for the stock to work long-term at its proposed valuation, it will need to deliver a big payoff from its ambition for a data center in space, which has some engineering challenges that need to be overcome first.

While founder Elon Musk will undoubtedly make a lot of outrageous promises, this is not a stock I'd want to own out of the gate.

Geoffrey Seiler has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.