SpaceX recently disclosed potential risks related to AI features, specifically the "Spicy" and "Unhinged" modes of its Grok chatbot, in its IPO filing. The company has reserved over $500 million to cover potential litigation costs stemming from allegations that Grok has produced sexualized images.
Investors were informed that these AI features, which allow for the generation of explicit content with fewer safety measures, could lead to regulatory scrutiny and damage to the company’s reputation. This has become increasingly crucial as SpaceX navigates the complexities of AI regulation and societal impact.
As of last December, SpaceX allocated $530 million in anticipation of litigation losses connected to Grok. The company’s acquisition of Elon Musk’s AI startup xAI in February has introduced significant financial and reputational challenges, especially as xAI’s efforts to create "truth-seeking artificial intelligence" often involve launching features with minimal safety precautions. This freewheeling approach has raised alarms with regulators.
The risks highlighted in the IPO are part of a typical disclosure process, although many expressed concerns about the implications for SpaceX’s future. The company is facing investigations in the U.S. and abroad over allegations related to the generation of inappropriate imagery by Grok. Additionally, ongoing class-action lawsuits and fears of future misuse could lead to further sanctions.
SpaceX reported about 550 million combined monthly users between Grok and its social media platform X, with 117 million specifically utilizing Grok’s AI capabilities. Despite the growth in user engagement, SpaceX’s AI unit recorded a massive operating loss of more than $6.3 billion last year. Revenue from ads, data, and subscriptions is growing, but not at a sufficient rate to reverse the losses quickly.
However, the AI division did see an increase in revenue, reaching $3.2 billion in 2025—a 22% rise from the previous year—largely attributed to ad sales on X, despite a significant recent drop caused by overhauls in advertiser tools. Subscription services for Grok and X also saw revenue jumps, indicating some positive trends amidst ongoing challenges.
As SpaceX prepares for its IPO, the questions surrounding the potential risks posed by Grok and its operational losses will be significant factors for investors to consider.
