Three weeks ago, we wrote A Supply Tsunami Is Coming. The article discussed why the world’s largest technology companies are choosing equity versus debt to fund their AI infrastructure buildouts. Simply, at 5% interest rates, issuing stock carries no interest expense, no refinancing risk, and no margin pressure. Alphabet raised $80 billion in equity. Meta and Amazon are planning similarly large offerings. SpaceX (), which just conducted its record-sized IPO, just did the opposite.
Late last week, SPCX fell more than 10% after announcing plans to issue debt to finance its AI development. Given the strong demand for its IPO, if there ever was a moment to issue equity, it is now, with investor enthusiasm running hot and a minimal 5% float keeping SPCX equity supply scarce.
So why did SPCX choose debt over equity? We think there are three possibilities:
- Valuation discipline: If SPCX management believes the stock is cheap, then issuing equity means selling ownership at a price they consider too low. Debt is currently expensive but has a finite life, while equity dilution at the wrong price is permanent.
- Float management: SPCX’s 5% public float is keeping the stock elevated. Issuing new equity grows the float, potentially lowering the price, which would not bode well for its original investors waiting for their sale lockout periods to end.
- Cash burn: Could the xAI cash burn be accelerating faster than the IPO proceeds can cover? Cash on hand fell from $24.75 billion to $15.85 billion in the last quarter. If that trajectory continues, debt issuance may be less a strategic choice and more a financial necessity.
SPCX’s AI segment posted a $6.4 billion operating loss in 2025, with losses accelerating in 2026. Equity issuance makes sense for companies with strong balance sheets and significant positive cash flows. SPCX is certainly not in that camp. Today’s Tweet of the Day shows the markets are aware of SPCX risks.
Credit Card Delinquencies Rise
Consumers are becoming delinquent on credit card payments at a rate not seen since the aftermath of the 2008 financial crisis. 13.12% of credit card balances are now 90 or more days delinquent, up sharply from 8% just one year earlier. Total credit card debt stands at $1.25 trillion. Consumer financial stress is not isolated. Auto loan delinquencies recently hit a record, and student loan delinquencies reached their worst level since the pandemic payment pause ended.
While the data is concerning, context matters. Credit cards account for only about 7% of total household debt, far less than mortgages. Moreover, the percentage of all household debt 90 days delinquent is 3.4%, in line with pre-pandemic norms. Household debt service as a share of disposable income remains below pre-pandemic levels, and liquid net worth is near a three-decade high.
The takeaway is two-tiered. A relatively small but growing group of already-struggling consumers is sinking deeper into delinquency, while roughly half of all cardholders pay their balances in full every month and avoid the problem entirely. This is not a consumer collapse, but most likely a continued widening gap between households managing fine and a subset falling behind.