SpaceX
What SpaceX’s successful reuse of Dragon Spacecraft really means
Following Saturday’s auspicious launch and and first stage recovery, SpaceX’s Dragon spacecraft has successfully rendezvoused and docked with the International Space Station. Bringing with it more than 5,000 pounds of food, water, scientific experiments, and technology demonstrations, the company’s eleventh mission under their first Commercial Resupply Services contract is exceptional for a very unique and specific reason: the vehicle has flown before, bringing cargo to the ISS on SpaceX’s fourth CRS mission to the ISS. This accomplishment makes the Dragon currently docked at the ISS the only commercial spacecraft in human history to be launched into orbit more than once, continuing a tradition of auspicious firsts.
CRS-11 just after liftoff. Note the core designation “35” under the landing leg. (SpaceX)
Slightly more than two months after the first ever successful reuse of an orbital-class rocket, SpaceX now has two extraordinary demonstrations of success in favor of the company’s pursuit of democratizing affordable access to space. Reusability is and has been SpaceX’s method of pursuing that goal for at least a decade, with Musk publicly exhorting the potential benefits of rapid and complete reusability as early as 2007. It is almost a running joke within the community of aerospace and SpaceX fans that Musk will compare commercial airlines to orbital launch services at least once every time he is interviewed, but his point is and has long been clear. If all one has to do to run a transportation service is refuel after every trip, the price of a ticket or cargo transport drastically decreases. While many have slyly laughed or dismissed this goal in the past, often using the Space Shuttle as an example of the futility of reusability as a tool for cost reduction, it is quite hard to deny what SpaceX has accomplished so far.
The reuse of a Cargo Dragon is also arguably far more significant than it may initially appear. SpaceX has not provided any concrete information on the process of refurbishing the capsule, and it is entirely unclear if the “reuse” entailed much more than furnishing the CRS-4 pressure vessel and Draco thrusters with a new trunk, solar array, external shell. It is possible that, just like SES-10, the process of refurbishing a spacecraft for the first time resulted in little to no cost savings, and that this refurbishment took anywhere from several months to more than a year, with the CRS-4 capsule returning from orbit in late 2014. However, given the absolute rarity of reused capsule-type spacecraft, the data that engineers likely gathered throughout the process of refurbishing the Dragon would arguably make the whole process worthwhile even in the worst case scenarios described above. Hans Koenigsmann, Vice President of Mission Assurance at SpaceX, also noted in a press conference following CRS-11’s launch that the refurbishment of the capsule was somewhat uneventful, stating that the CRS-4 capsule had no unanticipated damage from the rigors of reentry and ocean landing and that SpaceX was already ready to consider using the capsule a third time. It’s likely that SpaceX will begin to rely more heavily on Cargo Dragon reuse as they refocus a majority of their manufacturing efforts on Dragon 2.
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- The CRS-4 Dragon just before capture. (NASA)
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- CRS-4 reentered in late 2014 and was recovered in the Pacific Ocean. (SpaceX)
SpaceX and Musk’s (in)famous ultimate ambitions are to make humanity a multiplanterary species, partly as a way to combat the extinction risks that an asteroid or comet strike pose, and partly because it is simply a staggering challenge that has the potential to make many humans “excited to wake up in the morning”. In order to make this happen, Musk saw that access to orbit was far too expensive for a colony on another planet to ever be sustainable, and that resuability was the only immediately obvious and accessible method through which the price to orbit could be decreased by several magnitudes. SpaceX is now almost routinely recovering Falcon 9 first stages when the mass of the payload allows it, and with a fifth and final version or “Block” of the vehicle optimized for rapid reuse set to debut later this year, Musk and others at the company have begun ruminating once more about the possibility of recovering and reusing the second stage of the Falcon 9. Benchmarked somewhere around 30% of the price of the vehicle, routine loss of the second stage effectively prevents the price of the Falcon 9 from dropping much below $20-30 million US dollars. While a nearly 50% or greater reduction in price would be an exceptional accomplishment, it is still far from from the multiple orders of magnitude reduction Musk hoped for when he set out to develop reusable rocketry.
A prototype of Dragon 2 being tested in an anechoic chamber. (SpaceX)
This is where the reuse of Dragon pops its head up. With second stage recovery now being considered theoretically and Dragon 2 (Crew Dragon) preparing to begin regular launches in either Q4 2017 or Q1 2018, SpaceX has a good deal of experience to gain from learning how to safely and rapidly recover and reuse vehicles reentering the atmosphere at orbital velocity. Compared to recovering the first stage, this is another endeavor entirely. The fastest speed at which a recoverable first stage can ever realistically reenter the atmosphere is currently capped at around 5200 mph (2300 m/s), and is usually much closer to 3000 mph. An orbital capsule like Dragon, however, enters the atmosphere from Low Earth Orbit (LEO) at around five times that speed, typically close to 16,000 mph. In the context of recovering the second stage of Falcon 9, one must consider that most of SpaceX’s commercial manifest is made up of geostationary satellites, which require more energy to reach a higher orbit, and consequently would require the second stage to survive even higher reentry velocities in order to be recovered.
Returning from Mars, as SpaceX’s Interplanetary Transport System would have to, results in even higher reentry velocities of at least 25,000 mph for a reasonably quick journey. This is the most important detail in explaining the true value of simply reusing a Dragon capsule as SpaceX has just now done. By taking its first steps towards routinely reusing truly orbital spacecraft, SpaceX is advancing their knowledge reusability in practice and consequently taking concrete steps to prepare themselves for the difficult challenges that lie ahead in their pursuance of enabling sustainable colonization of Mars. Dragon 2 (Crew Dragon) promises to eventually rid the refurbishment process of the many headaches that salt water intrusion undoubtedly creates by returning via supersonic retropropulsion to a landing pad, much like Core 35 did this past Saturday.
Looking slightly further into the future, SpaceX has already announced plans to launch two unnamed private customers in a Dragon 2 on what would likely be a circumlunar free return trajectory, or around the Moon and back. The reentry velocity would be very similar to the velocity required to return to Earth from Mars, and certainly much faster than any reentry from geostationary orbits of Earth. If SpaceX manages to successfully and reliably recover and reuse orbital vehicles reentering at such high velocities, then the company will have made extraordinarily promising progress towards achieving their central goal of drastically lowering cost to orbit and thus enabling humanity to gain footholds on other planets.
So, take this Dragon reuse as you will. It may well be a major step along the way to colonizing Mars, or it may simply be an exciting practical implementation of SpaceX’s philosophy of reuse. Either way, this is a Dragon that is certainly worth celebrating.
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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.
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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.
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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.
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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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Tesla has one big financial question to answer for investors: Morgan Stanley
SpaceX AI investment gamble will make it a big winner, firm says
