SpaceX
SpaceX’s first orbital Starship begins assembly as steel heat shield passes tests
SpaceX CEO Elon Musk says that the company’s South Texas workforce has already begun to fabricate the first orbital-class Starship prototype, while Hawthorne engineers and technicians are in the midst of performing small-scale testing of the vehicle’s unprecedented stainless steel heat shield.
To be assembled out of hexagonal tiles of (presumably) stainless steel, Starship’s metallic heat shield will be one of the most crucial aspects of the orbital spacecraft, particularly with respect to ensuring that it’s extraordinarily easy to reuse. To survive extreme interplanetary-velocity reentry conditions at Mars, Earth, and beyond and remain in a functional, flight-ready condition after landing, SpaceX will need to implement the world’s first orbital-class, large-scale metallic heat shield with an immature technology known as transpirational cooling.
By quite literally drilling tiny holes (pores) into heat shield plates at the hottest parts of Starship’s hull, transpirational cooling effectively allows a large portion of the heat of reentry to be wicked away by the flash evaporation of a liquid, typically water. For SpaceX’s Starship, it’s likely that the coolant of choice would be either liquid water or liquid methane, the former of which offers better cooling per unit of mass at the cost of added plumbing complexity and spaceship mass, while the latter would make use of the same propellant fueling the ship at the cost of worse cooling per unit of mass. Either way, SpaceX will be heading into unproven territory, demanding extensive ground and flight testing to first ensure that the concept is truly viable and then to verify that it can be made as reliable and reusable as it simply has to be.
Tests like those shown on March 17th by Musk indicate that SpaceX is indeed deep into the process of extensive and often destructive testing, something the company has proven to be exceptionally good at. It’s unclear if the above test of Starship’s hexagonal heat shield tiles – likely made out of a variant of 300-series stainless steel – involved tiles with active or passive cooling, but Musk suggested that the hot-spots created with spin-forming torches reached temperatures as high as 1650 Kelvin (2500ºF/1400ºC. Unlike the ablative heat shields SpaceX is familiar with building and operating through its Crew and Cargo Dragon spacecraft, a stainless steel heat shield would be expected to almost entirely resist erosion (i.e. ablation) during extremely high-velocity reentries of at least 12-14 km/s (~31,000 mph, Mach 40+).
Update on the fairing and the unknown “2nd fairing” pic.twitter.com/5PMBYyBDAi— Austin Barnard? (@austinbarnard45) March 16, 2019
Meanwhile, Musk also confirmed that SpaceX has decided to skip constructing a replacement nosecone/fairing for Starhopper, a functional Starship prototype that will be used to conduct extremely short hop tests like Falcon 9’s development-era Grasshopper and F9R test articles. Over the last several weeks, SpaceX technicians have been rapidly assembling what was initially assumed to be the replacement fairing Musk had previously suggested would be built. Instead, the duo of stainless steel barrel sections – relying on steel much thinner than the heavy-duty stuff used to build Starhopper – are apparently the beginnings of the first orbital-class Starship prototype, said by Musk to be aiming for flight-readiness as early as June 2019 around two months ago.
While still an extraordinarily ambitious target for a vehicle that has yet to conduct any integrated hops or flight-tests in any form, the fact that SpaceX is began the process of building the first orbital Starship in late February could actually give the company’s engineers and technicians a fighting chance to complete Starhopper testing and Starship assembly over the next 90-100 days.
If stacked atop each other, the two new steel sections in work would likely stretch a solid 20-30 meters (65-100 ft) tall. Meanwhile, the first orbital-grade tank domes and/or conical nose section is also in the process of being welded together out of smaller segments, already fast approaching something ready to be installed inside the steel barrel sections.
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SpaceX’s massive investment in AI will make it a big winner, Argus Research said after the company’s successful earnings call last week.
The firm also upgraded shares to a Buy from Hold and set a $160 price target.
SpaceX (NASDAQ: SPCX) is currently recovering from its heavy AI infrastructure investments, as it spent nearly $16 billion in Q2 alone. The company did this primarily by monetizing high-demand GPU compute capacity at a much faster pace than traditional data center economics would suggest.
Company CFO Bret Johnsen said that SpaceX would be able to pay back anything on new deployments within a year.
There are plenty of ways the company can do this:
Leasing excess compute capacity through contracts
SpaceX has already built Colossus and Colossus II, largely for its own model training. However, much of that capacity is already rented out to third parties. It already has major deals with Anthropic, Google, and Reflection AI. These partnerships are adding billions per month to SpaceX’s spreadsheet.
High utilization driven by industry-wide scarcity
The demand for advanced AI training and inference capacity continues to exceed what is available for use. SpaceX can fill new racks quickly after they come online, so the capital deployed converts into revenue with minimal idle time.
Additionally, management and outside observers have described the new compute capital as behaving more like a cost-of-goods-sold than traditional multi-year capex, especially because of this rapid monetization pattern.
Capacity has already scaled from ~0.4 GW a year to 1.4 GW annually by the end of Q2. There are targets of more than 2 GW by year-end.
High incremental margins on the rental business once capacity is online
GPU cloud providers often operate at strong gross margins. SpaceX can monetize capacity that was already partially built or can be added efficiently. This means that incremental EBITDA margins on the rental revenue are usually high. This accelerates cash recovery relative to the gross capital outlay.
Parallel monetization of its own AI software and applications
Beyond pure infrastructure rental, SpaceX also generates revenue from Grok through subscriptions and usage, from X through ads, data, and other related services, enterprise APIs, and the planned integration of the Cursor coding tools acquisition.
These application layers ride on the same compute infrastructure and provide additional high-margin streams that could offset build-out costs. AI-segment revenue overall rose sharply to about $2.6 billion in Q2, according to Motley Fool. This was driven primarily by the infrastructure contracts, but the software side is also partially responsible.
Efficient, large-scale deployment and vertical integration advantages
SpaceX has emphasized the rapid construction of power and cooling infrastructure and favorable cost-per-megawatt economics relative to industry benchmarks in some disclosures.
Combined with its ability to scale capacity aggressively and the fact that many contracts start generating revenue within months of capacity coming online, the effective payback compresses dramatically compared with more conventional multi-year data-center projects.
SpaceX’s dominant near-term recovery path will turn the AI clusters into a hyperscale-style compute rental business for other leading AI companies while still using a portion for internal models.
Elon Musk
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
Elon Musk again denies a Tesla China split as new SpaceX merger speculation resurfaces quickly.
Elon Musk restated that Tesla has no plans to separate its China business from the rest of the company, responding to a new round of merger speculation from ARK Invest.
On the firm’s “Brainstorm” podcast, Cathie Wood’s team, including chief futurist Brett Winton and research director Nick Grous, argued a Tesla and SpaceX combination remains likely, with an announcement possible before the end of the year even if the deal itself would not close that quickly. Winton called Tesla’s Shanghai operations a “small ish wrinkle” for a merger rather than a real obstacle, since SpaceX’s national security work with the U.S. government sits uneasily next to Tesla’s manufacturing base in China.
Musk pushed back on the framing directly. “China is awesome. I strongly encourage people to visit,” he wrote on X. He also repeated language he first used in late July, when the Wall Street Journal reported that Tesla executives had been told to prepare for a possible spinoff, sale, or closure of the China business ahead of a SpaceX tie up. Musk called that report “absurdly fake news” at the time, adding that a separation had “never even come up in a discussion ever,” a line he echoed again this week.
The repeated denial has not settled the underlying question, because Shanghai’s role in Tesla’s business is exactly what makes a merger complicated. Gigafactory Shanghai still ships more than half of Tesla’s global deliveries and functions as the company’s main export hub for Europe and Asia. Teslarati previously reported on Musk’s initial denial, and the merger conversation itself has been building since SpaceX’s IPO gave it public shares to use as acquisition currency.
Wedbush’s Dan Ives has pegged the odds of a Tesla SpaceX merger at 80 to 90 percent by early 2027, and ARK’s prediction of a year end announcement adds another data point to that timeline, even as Musk keeps rejecting the specific mechanics reporters have described. Neither position rules out the other. Musk can deny a China spinoff was ever discussed while analysts still expect some form of combination to move forward, since ARK and Ives are both describing convergence at the corporate level, not necessarily the internal restructuring the Journal described in July.
For now, Tesla’s China business remains intact, and Musk’s comments this week make clear he has no interest in publicly walking that position back, no matter how often the merger question resurfaces.
SpaceX stock did the opposite of what most of Wall Street expected this week, when the day designed to be its most dangerous turned into a rally, and the rally kept going.
Thursday marked the first major lockup expiration since SpaceX’s June IPO, making roughly 911.5 million insider held shares eligible to trade for the first time, more than doubling the company’s public float. Analysts and short sellers had spent weeks bracing for a flood of selling, especially after the stock fell 13 percent following its first earnings report as a public company on Tuesday. Instead, shares rose 6.1 percent Thursday to close at $114.92, and by Friday they were trading near $129, up more than another 12 percent on the day.
SpaceX shorts get warned by Musk ally, echoing Tesla’s early struggles
The setup made the outcome notable. Short interest had climbed to roughly 34 percent of the float heading into earnings, among the highest of any large cap stock, with about 95 percent of available shares to borrow already on loan. CEO Elon Musk warned short sellers twice in the weeks before the lockup, writing on X that “the survival probability of firms who maintain a significant short position in SpaceX over time is very low,” then following up on the morning of earnings with “I try to warn them, but they just double down.”
When the newly unlocked shares hit the market and the selloff never showed up, some of that short position appears to have started unwinding. TipRanks reported that options activity shifted toward bullish strategies like put selling and risk reversals following the rally, with roughly $600 million in options premium trading Thursday alone. Retail buyers also stepped in during the earnings dip, according to Vanda Research.
The fundamentals behind the stock have not changed much in a week. SpaceX’s revenue nearly doubled year over year to $7.8 billion, with Starlink subscribers doubling to 12 million and the company’s AI segment growing 247 percent. What spooked investors on Tuesday was the spending side. Capital expenditures jumped to more than $18 billion for the quarter, up from $2.8 billion a year earlier, with AI investment alone rising from $749 million to $15.8 billion. Wall Street remains split on whether that spending is building infrastructure SpaceX needs or outrunning what the business can currently support, a debate Teslarati has tracked since shares first came under pressure.
None of that resolves the bigger question hanging over the stock. Thursday’s release was only the first of nine staggered lockup tranches, with roughly $800 billion worth of additional shares scheduled to become eligible through October, and Musk’s own stake stays locked until next June. If this week is any indication, the market is treating that supply as something it can absorb rather than something to fear, at least for now.
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