SpaceX
SpaceX’s Starship, Starhopper prototypes continue slow and steady progress
The last few weeks of SpaceX’s work on Starship and Starhopper prototypes has been marked by less visible progress relative to the past few months. The changes that are visible, however, confirm that its Boca Chica engineers are working around the clock to complete the first orbital Starship prototype.
At the same time, it appears that SpaceX’s South Texas facilities are preparing for a rapid period of expansion and build-up. New work around the ad-hoc Starhopper pad has recently begun, while construction of a second concrete jig for concurrent prototype fabrication and what will likely be a more permanent hangar and control facility are also ramping up. Things have been quiet news-wise for SpaceX’s McGregor and Hawthorne facilities but there is reason to believe that Raptor production and testing is going smoothly.
And over at its pal’s place, the orbital prototype (and the build-up of another jig)
?@BocaChicaGal
Dedicated Updates: https://t.co/FYHRkwZ2dd pic.twitter.com/glg8Yr6oO6— Chris B – NSF (@NASASpaceflight) April 20, 2019
Starship Alpha
The most obvious visible progress made in April is centers around SpaceX’s first orbital Starship prototype, soon to begin its third month of active construction. As of mid-March, the shells of two large steel barrel sections – together about 18 m (60 ft) tall – were fully erected at the build site, with a handful of other sections in various states of welding. The height of those two cylinders has remained unchanged since then but it’s safe to assume that a ton of work has been going on inside them, invisible to anyone viewing from public perspectives since drones were effectively banned in March. In other words, the two pieces – most likely the barrel sections of Starship’s liquid methane and liquid oxygen (LOX) tanks – are likely being carefully transformed into actual propellant tanks.
There is also a good reason for their height differential: the larger (LOX) section is almost exactly a third larger than the small section (methane) in part because of the physical reality that Starship will need almost exactly 33% more LOX than methane by volume. Large propellant tanks – particularly those meant for cryogenic fluids and spaceflight applications – are often quite complex, with the vast majority of that complexity happening under the hood. The above render was made while SpaceX was still planning on carbon fiber tanks and also appears to be significantly simplified, but it still offers a small look at some of that complexity.
Aside from successfully completing thousands of welds throughout the assembly, a lot of the effort of building an advanced tank is put into plumbing – both internal and external – needed to load, unload, pressurize, depressurize, and generally manage cryogenic (i.e. super cold) liquid propellant. SpaceX decided to utilize a partial balloon tank design to keep the steel skins of its stainless steel Starship and Super Heavy as thin as possible, adding yet another level of internal work due to the need for stringers and longerons on top of baffles and hardware to mount COPVs or header tanks.
Adding further complexity to the internal structure of Starship is the presence of major aerodynamic surfaces and landing legs, both of which will need to survive extreme stresses if they are to function as intended. Those structures must be aerodynamically streamlined and attach to the outside of Starship’s hull, likely requiring significant structural reinforcements both inside the spacecraft’s nose and rearmost propellant tank.
Super Heavy?
SpaceX began construction of a second concrete fabrication jig just a handful of days ago. Effectively a copy of a jig occupied with the larger of the two barrel sections of the orbital Starship prototype, the simple structure acts as a mount and includes a large door that allows scissor lifts to get inside the steel structure. The new jig is being built directly adjacent to Starship’s smaller barrel section, suggesting that it could simply be a way to concurrently work on both the LOX and methane tanks. Given the inherent simplicity of a concrete jig, it could also end up being used to support the simultaneous assembly and integration of the first Super Heavy booster prototype.
Back in December 2018, SpaceX CEO Elon Musk indicated that the first Super Heavy prototype would start production in “spring” (i.e. NET April 2019). Musk has also indicated that Starship and Super Heavy will be simultaneously built both in Boca Chica, Texas and Cape Canaveral, Florida. In general, SpaceX is clearly beginning another round of expansion and improvement for its Boca Chica facilities, including the new concrete jig and an entirely new building on the same plot of land.
Starhopper
Last but not least is SpaceX’s Starhopper prototype. After completing an inaugural round of multiple wet dress rehearsals (WDRs) and two Raptor static fires/hops, SpaceX technicians removed the vehicle’s lone Raptor engine on April 8th. Starhopper has remained more or less inactive in the last two weeks, aside from some work going on inside the vehicle (per the open access hatch).
Without a Raptor engine, there is admittedly not a whole lot that SpaceX can do with Starhopper, aside from additional WDRs if the first handful of tests were not enough. Instead, some minor work has been going on around the Hopper’s ad hoc pad, mainly taking the appearance of dirtmoving. Without aerial views, its hard to tell what exactly is taking shape, but it’s safe to say that Starhopper is simply waiting for additional Raptors to be produced, tested, and delivered to Boca Chica. Once more Raptors are ready, it’s understood that SpaceX will move into multi-engine (likely 3+) hop tests, perhaps loosing Starhopper from its tethers.
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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.
SpaceX AI investment gamble will make it a big winner, firm says
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