Water access is now a risk factor in SpaceX's IPO

SpaceX has added new language to its IPO filing that warns prospective investors about the company’s access to a potentially scarce resource: water. The company, which now includes Elon Musk’s AI play, xAI, wrote in anamended version of the filingon Monday that access to water — required to cool its data centers — is just as important as SpaceX’s ability to secure power, processors, and other critical resources. The addition comes amid an ever-evolving debate about how much water data centers use, and whether that usage is contributing to localized droughts that are being made worse by climate change. Deep in the “risk factors” section of SpaceX’s IPO filing, the company added language about water to a section about the challenges of scaling AI infrastructure. Previously, SpaceX focused on telling investors that its data centers were primarily constrained by access to “power at economically feasible prices,” along with long construction timelines and material shortages. The amended filing adds multiple lines about water access. SpaceX now tells prospective investors in the IPO that data center buildouts are constrained by the “availability of power and water at economically feasible prices.” The company goes on to say that “significant water resources may be required for cooling large-scale data center operations.” Water availability is such a concern that SpaceX says it has become a “critical consideration in data center site selection, development and operations.” SpaceX also says that “water scarcity, drought conditions, competition for local water resources, or regulatory restrictions on water use could limit our ability to obtain sufficient water for cooling, constrain data center cooling capacity, increase our costs, delay or limit expansion of our data center infrastructure, or require us to implement alternative cooling techniques that may be more costly or less available.” It’s not clear what inspired SpaceX to add this language about water to its filing, or why it was left out of the initial version. The company is in the pre-IPO period, during which the Securities and Exchange Commission (SEC) has been sending SpaceX “comment letters”seeking clarification or additional details about the filing. It’s possible that questions from the SEC led to this particular change, though we won’t know until those comment letters are made public in the weeks following the IPO. Adding more detail about SpaceX’s access to water was not the only change the company made in this first amended filing. SpaceX also revealed that it is setting aside up to 5% of the stock being sold in the IPO foremployees and friends of executives. SpaceX also added language that warns investors that the company mayissue a “significant” numberof shares in future transactions following the IPO — a hint at a potential merger with Tesla — which could create dilution for existing shareholders.