SpaceX’s S-1 filing has sparked immediate debate over what sits behind its reported valuation of more than $1 trillion. The company posted a loss of nearly $5 billion last year, and Starlink appears to be the only business generating profit. In a sharply critical take, The Verge called the offering “the ultimate form of financial nihilism.”
The filing lists SpaceX’s total addressable market at $28.5 trillion, with $26.5 trillion of that assigned to AI applications, excluding Russia and China. That framing suggests SpaceX is positioning itself as a company whose services could reach nearly every part of the global AI buildout. The scale of that claim has become one of the central points of criticism.
AI spending surged while losses widened
According to the filing, roughly two-thirds of SpaceX’s $13 billion in 2025 capital expenditures went to AI infrastructure. The result was an AI division with an operating loss of $6 billion on revenue of just $3.2 billion. Those figures have raised questions about how much of the IPO story rests on future projections rather than current performance.
The S-1 describes Grok as a truth-seeking AI model and one of the world’s most advanced frontier systems. But The Verge reported that Grok was distilled from other leading models rather than built entirely from scratch. Musk himself said in March that xAI was not well constructed in its early form and was being rebuilt from the ground up.
By early 2026, Grok had fallen to fifth place behind ChatGPT, Claude, Gemini, and DeepSeek. Its monthly active users dropped 12.5% in a single month to around 12.2 million. The report also said xAI had struggled to advance government contracts in Washington, weakening one of the filing’s key claims around AI and public-sector demand.
Launch business numbers also face scrutiny
Pressure is not limited to AI. Two days after the filing, on May 22, Starship V3 launched and reached space, but one engine failed and the booster exploded during return. The mission aimed to deploy 60 dummy satellites and managed to deploy only 20.
The filing says V3 can carry 100 metric tons to space, yet 60 satellites at 2,000 kilograms each would total 120 metric tons. Satellite industry analyst Chris Quilty labeled that mismatch “Musk math.” At the same time, first-quarter launch revenue fell by more than a quarter year over year, and the filing disclosed that SpaceX’s largest rocket customer is SpaceX itself.
Debt, governance, and legal exposure stack up
The risk section points to a company carrying close to $30 billion in debt. Before the IPO, SpaceX refinanced with a $20 billion bridge loan, paid a $1 billion prepayment penalty, and spent about $4 billion buying back stock in the same quarter. The xAI acquisition also created a technical default on a $1.5 billion credit line because of debt brought onto the balance sheet.
Environmental and governance issues are part of the picture as well. Musk bought another $2.8 billion in polluting gas turbines to power data centers, with the detail buried in footnotes, according to the report. SpaceX has been sued over the issue and allegedly used 46 units despite approval for only 15. On governance, Musk controls roughly 80% to 85% of the voting power, and arbitration clauses may restrict future securities fraud claims. The filing also describes three lease deals totaling $20 billion between a fund tied to director Antonio Gracias and SpaceX subsidiaries, with auditors refusing off-balance-sheet treatment for $9 billion of that amount.
The document further states that Grok is under investigation over sexually explicit images generated without consent, including content involving children. It also faces three lawsuits, with two seeking class-action status.
Index inclusion could shift exposure to passive investors
Nasdaq has approved a fast-track inclusion rule that would place SpaceX in the Nasdaq 100 within 15 days of listing. Passive index funds may need to buy roughly $7 billion of SpaceX shares in a single day, while 30% of the IPO is reserved for retail investors.
The Verge’s argument is that Musk is bringing loss-making AI and rocket businesses to market by tying them to Starlink, the only profitable engine in the group. Starlink generated more than $11 billion in revenue last year, but revenue per user has already fallen about 25% because of steep discounts. If losses at Grok and Starship keep rising, the cash flow supporting the valuation could come under pressure as well.