SpaceX Tells IPO Investors That Grok's 'Unhinged' Mode Is, Officially, A Risk

21 May 2026

In its IPO filing, SpaceX warned investors that Grok's "Spicy" and "Unhinged" AI modes pose significant reputational and regulatory risks, including ongoing investigations over allegations that Grok was used to generate sexualized imagery of apparent minors and several class action lawsuits. These risks emerged after SpaceX acquired Elon Musk's xAI startup in February, with the company setting aside $530 million for potential litigation losses. SpaceX's AI division, which includes X and xAI, recorded an operating loss of over $6.3 billion last year, though subscription revenues for Grok and X are growing steadily.

SpaceX has filed paperwork for a planned public offering, and buried inside the required risk disclosures is something you don't see every day: a rocket company formally warning investors that its chatbot's 'Spicy' and 'Unhinged' modes might get it into serious trouble.

The filing, submitted this week, flags Grok's low-guardrail modes as potential sources of regulatory heat and reputational damage. These are features explicitly designed to produce racier, less filtered content, including explicit imagery and voice responses. SpaceX lists the associated risks with admirable frankness: potential nonconsensual imagery, harassment, misinformation, intellectual property violations, and content that regulators might find exploitative. That's quite a list for a product Elon Musk routinely describes as a feature, not a bug.

The company is already feeling the consequences. SpaceX disclosed it is under active investigation in the US and other countries over allegations that Grok was used to generate sexualized imagery of apparent minors. It's also defending itself against multiple class action lawsuits. As of December, the company had set aside $530 million for potential litigation losses, some of which are tied directly to xAI.

All of this stems from SpaceX's February acquisition of Musk's AI startup xAI, a deal that pushed the company's private valuation past $1 trillion while simultaneously importing a substantial pile of legal and regulatory baggage. The filing repeatedly describes xAI's mission as building 'truth-seeking artificial intelligence.' Whether launching AI modes called 'Unhinged' with minimal safety filters constitutes truth-seeking is left as an exercise for the reader.

To be fair, risk disclosures in IPO filings are legally mandated and often written to cover every imaginable scenario. Not all of these risks will materialise. But some already have. SpaceX notes that regulatory action has previously resulted in loss of access to certain markets.

On the user numbers: Grok and X together claim around 550 million combined monthly users as of the end of March, with roughly 117 million using Grok's AI features each month. For context, OpenAI says ChatGPT has over 900 million weekly users. SpaceX's AI division is growing, but it's not growing fast enough to matter yet.

The financials tell a mixed story. The AI unit posted an operating loss of more than $6.3 billion last year. Revenue from the division reached $3.2 billion in 2025, up around 22 percent year-on-year, partly driven by stronger ad sales on X. Then, in Q1 this year, ad revenue dropped by $100 million. SpaceX calls that a temporary blip caused by an overhaul of advertiser tools. Maybe.

Subscriptions are a brighter spot. Revenue from Grok and X subscriptions grew by $365 million last year and added another $177 million in just the first quarter of 2025. SpaceX reported 6.3 million active paid subscribers at the end of March, split between 4.4 million on X and 1.9 million on Grok. In the US, Grok starts at $10 a month and X Premium at $3.

There's also a significant revenue line tucked in from Anthropic, which has agreed to pay $15 billion a year for access to SpaceX's data centres. That deal does a lot of heavy lifting.

A coalition of nonprofits warned earlier this week that xAI's safety record could actively harm SpaceX investors. The IPO filing suggests SpaceX's own lawyers would not entirely disagree.