Confusion Arises Over SpaceX and Anthropic Partnership

Elon Musk has stirred some unease among potential investors regarding SpaceX’s partnership with Anthropic. This comes after he shared information on social media that seems to contradict details in the company’s recent IPO filing.

Just last week, SpaceX applied for an initial public offering, but discrepancies already emerged over a crucial deal with the AI startup, Anthropic. This inconsistency has led many to question the reliability of the financial information being disclosed as the firm moves towards its record-setting public offering.

Earlier this month, SpaceX made headlines by announcing it would lease idle computing power from its Colossus 1 data center in Memphis to Anthropic. According to the IPO prospectus, Anthropic is set to pay SpaceX $1.25 billion monthly until May 2029 while also ramping up production capabilities at reduced fees during May and June of 2026. The prospectus mentions that either party may terminate this agreement with prior notice of 90 days.

However, Musk’s recent post on social media presented a different version of the deal. He described it as a “180-day lease, then mutually cancelable with 90 days’ notice,” which sharply contrasts the longer commitment suggested in the IPO filing. There’s no mention in the prospectus of the possibility for the deal to end within only a few months.

This discrepancy is crucial for investors trying to ascertain SpaceX’s value. If Anthropic follows through on those payments during the proposed three-year timeline, it could provide a significant revenue boost, considering SpaceX’s total revenue is projected to hit $18.7 billion by 2025. In contrast, a shorter-term lease would yield considerably less financial benefit and would also introduce a new competition for SpaceX, positioning it against newer cloud service providers.

Commenting on this situation, Eric Talley, a corporate governance professor, pointed out the oddity of the conflicting messages. He questioned which version might be misleading and indicated that this ambiguity could confuse potential investors trying to accurately gauge SpaceX’s worth.

This turmoil emerges at a challenging time for SpaceX, as some investors have already expressed reluctance to engage in what would be the largest IPO in history for a business valued over $1 trillion and consistently generating billions quarterly.

Skepticism regarding the disclosures about the Anthropic deal isn’t the only concern surrounding SpaceX’s IPO. Analyst Franco Granda has noted several gaps in the prospectus, revealing key omissions related to subscriber cancellations, the economics tied to the Falcon 9 rocket, and specifics about the AI segment. Important details concerning subscriptions and utilization of computing power deployed were also noted as lacking.

The valuation of SpaceX’s AI branch presents its own challenges for investors. Musk founded xAI in 2023 to go head-to-head with OpenAI. Earlier this year, he placed a $250 billion value on xAI after merging it with SpaceX, establishing a combined valuation of approximately $1.25 trillion. Notably, SpaceX’s capital outlay hit $10.1 billion in Q1, more than double from the previous year, with a significant chunk directed towards xAI. This division reported an operating loss of $2.5 billion in that quarter.

By leasing its processing power to Anthropic, SpaceX has acknowledged that its own AI models aren’t generating sufficient demand to fully utilize its infrastructure. Musk, in a recent update, explained that the company wishes to keep the option to end the contract if needed. He reassured that SpaceX would ensure Anthropic has an adequate exit strategy, saying they might need the computing capacity back if demands escalate.

On a more positive note, some analysts view the Anthropic deal favorably. Cathie Wood from Ark Invest commended Musk for monetizing the costly computing infrastructure built for xAI, predicting that the deal could pivot SpaceXAI from considerable losses to potential profits, estimating annual revenue could soar between $5 billion and $6 billion.

As AI continues to play an increasingly pivotal role in the economy, with numerous AI companies eyeing multi-trillion dollar IPOs, the landscape remains vibrant yet fraught with uncertainties.