Computing Supply Contract Signed with Reflection AI
Securing Long-Term Revenue Stream in AI Infrastructure Business
SpaceX Shares Down 12% Intraday
Elon Musk’s SpaceX is set to enter the corporate bond market for the first time immediately after its initial public offering (IPO), embarking on large-scale fundraising. At the same time, the company is expanding its footprint as an AI infrastructure provider by signing multi-billion-dollar computing contracts with artificial intelligence (AI) startups.
According to The Wall Street Journal (WSJ) on June 22 (local time), SpaceX plans to raise at least 20 billion dollars (approximately 31 trillion KRW) through its first-ever corporate bond issuance. SpaceX held a call with investors on this day, and the bond pricing and issuance could take place as early as June 23.
This bond issuance comes right after SpaceX raised over 85 billion dollars (about 131 trillion KRW) through its IPO. According to WSJ, the funds raised will primarily be used to repay a bridge loan obtained from banks earlier this year. Any additional funds raised will be used for general corporate operations.
SpaceX has received an ‘investment grade’ rating from major credit rating agencies. Moody’s has assigned SpaceX a ‘Baa1’ rating, while S&P Global has given it a ‘BBB’ rating, according to WSJ. This indicates that SpaceX is now being seen not only as a high-risk growth company but also as a major blue-chip bond issuer.
However, credit rating agencies consider SpaceX’s AI business to be its greatest uncertainty. In a recent report, S&P evaluated SpaceX’s rocket business as “solid” and analyzed that its satellite internet business is “well-positioned.”
In contrast, the AI business is seen as the most risky among the company’s three divisions due to massive upfront investments and an unclear path to monetization. High capital expenditures could also lead to negative free cash flow for SpaceX through 2029.
Computing Supply Deal Signed with AI Startup ‘Reflection AI’
Meanwhile, Bloomberg reported that SpaceX has signed a multi-billion-dollar computing resource supply contract with AI startup Reflection AI.
This contract reflects SpaceX’s efforts to expand its business of selling data center computing capacity to AI companies. According to Bloomberg, in the weeks leading up to its Wall Street debut, SpaceX also signed data center computing capacity rental agreements with Google and Anthropic.
Starting from July, Reflection AI will pay 150 million dollars (approximately 230.7 billion KRW) each month to SpaceX’s AI division, SpaceX AI, through 2029. The company will use SpaceX’s ‘Colossus2′ data center hardware located in Memphis, Tennessee. Both parties also retain the right to terminate the contract with 90 days’ notice.
Reflection AI is an open AI model development company founded by two former Google DeepMind researchers. Investors include Nvidia, among others, and the company is reportedly in discussions to raise 2.5 billion dollars (about 4 trillion KRW) at a valuation of 25 billion dollars (about 39 trillion KRW).
For SpaceX, these AI computing contracts offer the advantage of creating a new long-term revenue source. Bloomberg noted that although Musk has struggled in the AI development race, SpaceX is growing its business of selling computing capacity to AI companies by securing large-scale semiconductor and data center infrastructure.
The challenge lies in the heavy investment burden. According to WSJ, S&P projects that SpaceX’s high capital expenditures could keep its free cash flow negative through 2029. As a result, the company is expected to raise additional funds through equity and debt issuance. SpaceX’s immediate move into the bond market following its IPO demonstrates this demand for capital.
Meanwhile, SpaceX’s stock price plunged more than 10% during the session, marking its largest drop since listing. Amid mounting profit-taking pressure after the post-IPO surge, the planned corporate bond issuance of at least 20 billion dollars and the burden of AI infrastructure investment are believed to have heightened investor caution.
This content was produced with the assistance of AI translation services.
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