SpaceX warned investors as AI features like Grok’s “Spicy” and “Unhinged” modes, which allow the chatbot to generate raunchy images or voice responses with fewer security filterscould expose the company to regulatory scrutiny and reputational damage, according to a filing submitted Wednesday as part of the company’s planned IPO.
In December, SpaceX set aside $530 million for potential legal losses, some of which could come from ongoing complaints filed against its AI unit over sexualized images generated by its Grok chatbot.
Revelations show how SpaceX took new financial and reputational risks in acquired xAI, Elon Musk’s artificial intelligence startup in February, a deal that boosted the rocket maker’s private valuation to more than $1 trillion. In the filing, SpaceX repeatedly states that xAI’s mission is to develop “truth-seeking artificial intelligence.” In practice, this often meant launching AI features with minimal guardrails. While Grok’s free nature is often touted by Musk as a selling point, it has landed xAI in hot water with regulators.
Disclosure of potential business risks is a common and legally required part of IPO filings, and some of the concerns highlighted by SpaceX may never materialize. The company is one of several chatbot makers that are being closely scrutinized by regulators as governments grapple with the societal impacts of generative AI tools.
SpaceX revealed in its filing that it is currently under investigation in the United States and other countries over allegations that Grok was used to create sexualized images of apparent minors. The company also noted that it is a defendant in several ongoing class action lawsuits and that future “misuse” of its AI products could expose it to more regulatory sanctions, “including loss of access to certain markets, which has occurred in the past.”
Some of SpaceX’s AI products, including Grok’s Spicy and Unhinged modes, are “designed to generate output that is more candid, direct, or less reserved or irreverent,” the filing notes. “Because these modes may be more irreverent and harsher than our standard offerings, they pose increased risks, including reputational damage, generation of potentially explicit content and misinformation or misleading results, potential non-consensual or exploitative images, intellectual property infringement, or content that could be considered exploitative, harmful, harassing, abusive, or discriminatory. »
SpaceX also disclosed to investors that Grok and X had about 550 million monthly users combined as of March 31, according to the filing. Of these, 117 million use Grok’s AI features every month. In comparison, OpenAI claims that ChatGPT has more 900 million weekly users.
Whether the risks posed by Grok and Earlier this week, a group of nonprofit organizations warned that xAI’s poor security record could become a liability for SpaceX investors.
SpaceX’s AI unit, which includes X and xAI, weighs heavily on the rest of the company, with an operating loss of more than $6.3 billion last year. Advertising, data and subscription sales are growing, but not at a rate that would quickly make the division profitable. One bright spot for SpaceX’s AI efforts is its deal with Anthropic, which has agreed to pay $15 billion a year to access company data centers.
The AI division’s revenues reached $3.2 billion in 2025, an increase of approximately 22% from the previous year. SpaceX attributed part of that rise to increased ad sales on X. But in the first quarter of this year, ad sales fell by $100 million. The company described the drop as a temporary problem caused by an overhaul of its advertising tools.
The company’s service activities are doing better. Grok and X subscription revenue jumped $365 million last year and $177 million in just the first three months of this year. SpaceX did not disclose the number of subscribers to each of the services. In the US, Grok starts at $10 per month and X Premium starts at $3 per month.
