Elon Musk, the founder of SpaceX, has announced that investigations into the sexual content generated by the artificial intelligence (AI) chatbot Grok could lead to major market losses for the firm. The announcement was made in an S-1 regulatory filing as the company plans an initial public offering (IPO) worth $1.7 trillion this summer. The regulatory document was released around the time SpaceX hosted analysts at its Colossus supercomputer facility in Memphis, Tennessee.
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Regulatory Probes Raise Risks of Market Restrictions
SpaceX’s S-1 document revealed that regulators worldwide are actively investigating its subsidiary, xAI, and how its chatbot Grok is used to create and distribute harmful content. The company specifically pointed to allegations that Grok was used to generate non-consensual explicit images and sexualized content involving minors.
Although it remains uncertain whether the regulatory action will affect the entire company or only its AI operations, Musk noted that these investigations have exposed SpaceX to lawsuits and could lead to financial penalties and government actions. These may also include restrictions or complete loss of certain markets based on similar occurrences in the past.
This disclosure is part of the standard regulatory requirements under U.S. securities law, which require companies to outline potential risks to investors ahead of an IPO. Although the warning does not guarantee that these risks will happen, it raises concerns about potential effects on SpaceX’s future performance.
Global Scrutiny Intensifies Over Grok and Broader AI Content
A group of researchers involved in the case reported that Grok had generated around 3 million explicit images of women and minors. These images were circulated in late 2025 and early 2026, triggering investigations by regulators in several regions, including Canada, the U.K., Brazil, California, and France.
Notably, Musk reportedly ignored legal summons from prosecutors investigating claims of algorithmic abuse, fraudulent data collection, and the distribution of harmful content. At the same time, U.S. lawmakers have called on Alphabet (GOOGL) to remove Grok and X from its App stores, due to similar allegations.
In response to these allegations, xAI said that it introduced safeguards to prevent its chatbot from generating explicit content of real humans in compliance with local laws. However, reports showed that the chatbot has recently generated such content, even when users indicate a lack of consent.
What Day Will SpaceX Go Public?
SpaceX is set to become the largest IPO in history once it goes public this year. The private company is estimated to reach a valuation of $1.75 trillion or even $2 trillion. Recent reports also suggest that SpaceX may be targeting a June listing, with plans to raise about $75 billion in the IPO. Other major companies set to publicly debut in 2026 include top AI rivals such as OpenAI and Anthropic.
