SpaceX warned prospective investors in May 2026 that AI features including Grok’s “Spicy” and “Unhinged” modes could expose the company to regulatory scrutiny and reputational damage, according to an IPO filing submitted Wednesday. The company has set aside $530 million for potential litigation losses, some of which may stem from ongoing complaints related to sexualized imagery generated by its Grok chatbot.
The filing comes after SpaceX acquired Elon Musk’s AI startup xAI in February, a deal that pushed the rocket company’s private valuation above $1 trillion. By taking on xAI, SpaceX also inherited its legal and regulatory exposure. SpaceX disclosed that it is currently under investigation in the United States and other countries over allegations that Grok was used to create sexualized imagery of apparent minors. The company is also named as a defendant in several ongoing class action lawsuits.
Grok’s Spicy and Unhinged modes are described in the filing as designed to generate “more candid, direct, or less reserved or irreverent outputs.” SpaceX acknowledged these modes “present heightened risks, including reputational harm, the generation of potentially explicit content and misinformation or deceptive outputs, potential nonconsensual or exploitative imagery, intellectual property infringement, or content that could be viewed as exploitative, harmful, harassing, abusive, or discriminatory.”
SpaceX’s AI division, which includes X and xAI, recorded an operating loss of more than $6.3 billion last year. Grok and X together count approximately 550 million combined monthly users as of March 31, 2026, with 117 million using Grok’s AI features each month. One financial offset for the division is a deal with Anthropic, which has agreed to pay $15 billion annually for access to SpaceX’s data centers.
Disclosing business risks is a standard legal requirement in IPO filings, and SpaceX noted that some of the concerns outlined may never materialize. However, a group of nonprofits warned earlier this week that xAI’s safety record could become a liability for SpaceX investors.
Source: WIRED