Why Grok Could Be a Reason to Stay Away from the SpaceX IPO

After a blockbuster IPO, Elon Musk’s Space Exploration Technologies Corp. (SPCX), more commonly known as SpaceX, is looking at further growth. However, its xAI unit (that houses X and Grok) might become a roadblock in that growth path. 

Market intelligence firm Sensor Tower has found that while Grok’s user base has grown significantly since its launch last year, it is experiencing a slight decline, with MAUs down 5% quarter-over-quarter (Q2 quarter-to-date). Grok’s downloads are currently down 22% year-over-year (YOY) in the second quarter of 2026 (QTD, April-May). Analyst Kara Lee also pointed out that a dip in X usage might be concerning for the company. 

About SpaceX Stock

SpaceX, headquartered in Starbase, Texas, is a leading aerospace company that designs, manufactures, and launches advanced rockets and spacecraft. The company operates the Falcon 9 and Falcon Heavy rockets and is developing the fully reusable Starship system for missions to Earth orbit, the Moon, Mars, and beyond. 

SpaceX also operates Starlink, the world's largest low Earth orbit satellite constellation, delivering high-speed broadband internet globally. The company conducts launches from Kennedy Space Center, Cape Canaveral, and Vandenberg, while building rockets at its Hawthorne facility and testing at McGregor, Texas.

The company went public after the biggest initial public offering (IPO) ever. The stock closed its first trading day near $161, valuing the company at about $2.10 trillion. The stock opened at $150, but soon rose in ranks, reaching an intraday high of $176.52. 

On a forward-adjusted basis currently, SpaceX’s price-to-sales ratio stands at 73.02 times, which is considerably higher than the industry average of 1.22 times. 

SpaceX Revenue Grew as Starlink Drives Expansion

For the first quarter of this year, SpaceX recorded $4.69 billion in revenues, up 15.4% YOY. This increase in the top line was primarily due to higher revenue from its connectivity segment, as the company’s Starlink Subscriber base continued to grow. 

Moreover, SpaceX reported an increase in revenue from its AI segment, driven by higher X and Grok subscriptions. However, the top-line growth was slightly offset by a decrease in revenue from its Space segment, driven by fewer Launch Services missions due to the timing of government contract work.

However, SpaceX is also incurring a lot of costs as a relatively new company with large overheads. For the first quarter, its total costs and expenses grew by 64.3% YOY to $6.64 billion. Its net loss climbed 709.8% annually to $4.28 billion. For Q1, SpaceX had a capital expenditure of $10.11 billion, which is a giant leap from the $4.14 billion recorded a year earlier. 

Notably, SpaceX has stacked cash. The company’s main liquidity sources include operational cash flows, cash and cash equivalents totaling $15.85 billion as of March 31, short-term marketable securities totaling $7.82 billion, and borrowings under credit facilities. The company had $1.50 billion in remaining borrowing capacity under the SpaceX Credit Facility as of that date.

What Do Analysts Think About SpaceX Stock?

Ahead of the IPO, analysts at Oppenheimer initiated coverage of SpaceX with an “Outperform” rating and a $195 price target. Oppenheimer believes SpaceX could use its ground-based computing experience as a stepping stone to achieve significant scale and cost benefits. Meanwhile, New Street initiated coverage of SpaceX ahead of its IPO with a $165 price target, though it did not assign an official rating. 

On the other hand, CFRA analyst Keith Snyder initiated coverage of SpaceX with a “Sell” rating and an $115 price target. CFRA analysts cited execution concerns. Analysts believe that although SpaceX has created one of the most remarkable technology platforms globally, the current investment thesis demands investors bet on multiple challenging scenarios simultaneously. The firm is primarily concerned about the company’s reliance on Starship, which is still in the process of transitioning from development to commercialization.