SpaceX (SPCX.US) Stocks and Bonds Diverge Sharply! Aggressive Expansion Plan Increases Debt Risk Premium as Credit Spread Widens by 9 Basis Points

According to Zhitong Finance APP, despite SpaceX (SPCX.US) significantly outperforming Wall Street expectations in its third quarter results—leading to the company's share price surging over 12% on Wednesday—its bonds were sold off by investors. As SpaceX announced plans to continue heavy investments in artificial intelligence (AI) computing power, satellite broadband, and mobile communications, concerns arose in the bond market that the company might further increase its debt in the future, thereby adding to its financial burden.

On Wednesday, the risk premium for SpaceX bonds rose significantly, continuing the trend of rising credit risk that was reflected earlier in the week in the credit derivatives market. During US stock trading hours, the credit spread for SpaceX's bonds with a 6.6% coupon rate due in 2046 widened by 9 basis points to reach 264 basis points. This indicates that investors are demanding a higher premium as compensation for holding the company’s bonds, reflecting increased perceived risk.

Meanwhile, according to data from ICE Data Services, the five-year credit default swap (CDS) spread for SpaceX widened by 0.8 basis points to approximately 232.6 basis points, reversing its previous narrowing trend.

Credit default swaps are generally regarded as important market indicators of corporate credit risk. A wider spread means a higher cost for investors to purchase protection against default risk, and also reflects growing concerns in the market about a company’s future debt repayment ability and financing pressure.

It is noteworthy that SpaceX's CDS spread rose consistently for most of October and repeatedly reached new monthly highs, indicating that bond investors are increasingly focused on its capital expenditure plans.

In contrast to the bond market’s cautious attitude, however, SpaceX’s stock investors responded positively to the latest financial report.

According to SpaceX’s financial report released on Tuesday, the company achieved a net profit of $4.4 billion in the third quarter ending September 30, far exceeding Wall Street’s expectation of $1.88 billion. Meanwhile, revenue soared 161% year-over-year, also surpassing analyst forecasts. The strong profit and revenue growth fueled a 12.44% surge in SpaceX shares on Wednesday. The company now has a market value exceeding $2 trillion, making it one of the most watched AI infrastructure investment opportunities in the global capital markets.

However, despite strong performance, the signals regarding capital expenditure from SpaceX’s management during the earnings call have sparked a different interpretation in the bond market. SpaceX CFO Bret Johnsen stated on Tuesday that the company is actively investing in three areas it believes offer the highest long-term returns, including its Super Intelligence AI computing sector, as well as Starlink's satellite broadband and mobile communications businesses.

Johnsen emphasized that while the company plans to accelerate investments, it intends to maintain its investment-grade credit rating. Nevertheless, management’s positive stance on increasing future investments has still stoked market concerns that SpaceX may further raise its debt levels.

In fact, SpaceX has already raised significant funds through the bond market. In June this year, the company raised $25 billion through multiple bond issuances, becoming a key source of capital for supporting its business expansion.

In addition, media reports earlier this month stated that SpaceX is in talks with banks and investors to raise about $40 billion for procuring AI chips from Nvidia (NVDA.US). This suggests that as SpaceX continues to build out its AI computing infrastructure, its future financing needs could increase further.

Johnsen stated during Tuesday's earnings call that the company is currently in discussions with several debt capital providers to support its rapidly growing business. He emphasized that SpaceX still has various debt financing channels available and is evaluating how these resources can support the company’s future development.

For bond investors, the key issue is not SpaceX’s current strong profitability, but whether the company’s substantial future capital expenditure needs will cause its debt level to rise rapidly, potentially impacting its credit status further.

This concern is not unique to SpaceX, but is spreading throughout the entire large technology company bond market. As global tech giants continue to expand investments in AI infrastructure, the market expects another wave of large-scale corporate bond issuance in the future.

Data shows that so far this year, global corporations have raised over $450 billion in debt financing to support AI-related investments, more than doubling the total related financing of $200 billion seen in all of last year. This means that AI-related debt financing this year has already surpassed twice last year’s figure.

At the same time, as investors expect tech companies to further ramp up financing efforts following third quarter earnings releases, credit risk indicators for some large technology firms have hit new highs this week.

With continued growth in supply on the bond market, investors are now demanding higher risk premiums to compensate for the rising risks brought by increased future financing needs and heavier debt burdens.

For SpaceX, the divergence between the stock and bond markets reflects how investors are assessing its rapid expansion strategy from different perspectives. Equity investors are more focused on the revenue and profit potential brought by fast-growing AI computing operations, while bond investors are more concerned with the scale of capital expenditures, future financing demand, and the company’s ability to maintain its investment-grade credit rating.