Bond Update: SpaceX 2Q26 Earnings - Mixed Signals, Caution Advised

SpaceX, founded by Elon Musk, completed its historic IPO in June 2026 (raising approximately USD 85.7 billion in net proceeds) and subsequently issued USD 25 billion in five tranches of senior unsecured notes. The group released its first quarterly report since the IPO in August, providing bondholders with a complete financial perspective for the first time, which we will break down below.

SpaceX's revenue increased, but profitability remains constrained

SpaceX's revenue for the first half of 2026 was USD 12.5 billion, a significant YoY increase of 53.7%. While the revenue figures appear strong, a closer look at the segments reveals a mixed picture.

Connectivity (Starlink) was the only segment generating operating profit: first-half revenue was USD 7.6 billion (up 49.1% YoY), with an operating profit of USD 1.7 billion. Although the number of users reached 12 million, doubling YoY, the average revenue per user (ARPU) decreased from USD 85 to USD 66, reflecting that the growth was achieved by sacrificing price for volume.

AI (Artificial Intelligence) saw the fastest growth but also incurred the highest costs: revenue was USD 3.4 billion (up 231% YoY), mainly from new cloud computing power contracts; however, it recorded an operating loss of USD 3.7 billion. The adjusted EBITDA for this segment has turned positive to USD 4.7 billion in the financial statements, but the added depreciation and amortization costs represent future economic costs for computing equipment with relatively short asset lifespans.

Space (launch services) revenue was USD 1.6 billion, the only one of the three segments to record negative growth. This was due to increased R&D expenses for the Starship rocket, which led to an operating loss of USD 1.2 billion. Profitability is expected to remain hampered in the short term.

SpaceX has ample cash reserves, but massive free cash outflow cannot be ignored

SpaceX holds a large amount of money market funds, resulting in cash reserves of approximately USD 100 billion. This translates to a net cash balance of approximately 60.6 billion yuan against total liabilities of USD 39.5 billion (including finance leases). However, the debt structure warrants closer examination. Among the liabilities is approximately USD 13.4 billion in "other financing," which the quarterly report explains represents liabilities for AI infrastructure assets recorded under "non-sale-leaseback accounting" and "generally secured by specific machinery and equipment." This type of financing increased from USD 4.6 billion to USD 13.4 billion within six months, essentially representing secured debt with priority over unsecured notes. In other words, if future financing is secured or structured off-balance sheet, the relative repayment order for unsecured note holders may be diluted.

Furthermore, the group's operating cash flow for the first half of the year was USD 3.5 billion, capital expenditure reached USD 28.5 billion (of which AI accounted for USD 23.6 billion), and free cash outflow was approximately USD 25 billion. Quarterly capital expenditure increased from USD 10.1 to 18.4 billion, showing an accelerating trend. The group's operating cash flow only covers about 12% of its capital expenditures. Although management has emphasized that the existing funds are sufficient to support operations for at least the next 12 months and that it has reserved an additional USD 5 billion in unused credit facilities, investors should be aware of the huge cash drain generated by its business.

Bond Investments

While SpaceX has net cash, its quarterly report also revealed that two of its divisions are still operating at a loss and have negative free cash flow, indicating that its cash flow generation abilities are still uncertain. Therefore, we believe that investors should carefully weigh the yields of its bonds against the aforementioned risks taking into consideration their risk and maturity tolerance (see Table 1).

Table 1: SpaceX USD Bonds

Bond	Tenor	Net Ask YTM
SPCX 5.350% 15Jul2031 Corp (USD)	4.9	5.8%
SPCX 5.650% 15Jul2033 Corp (USD)	6.9	6.1%
SPCX 5.875% 15Jul2036 Corp (USD)	9.9	6.5%
SPCX 6.600% 15Jul2046 Corp (USD)	19.9	7.4%
SPCX 6.650% 15Jul2056 Corp (USD)	29.9	7.4%
Data Source: Bondsupermart Data As Of 1 September 2026

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.