Grok’s delay at the federal level is hindering SpaceX’s IPO growth narrative.

      Downloads have decreased from 20 million in January to 8.3 million in April, and the paid conversion rate is only one-fifth that of ChatGPT. The $0.42-per-agency GSA deal is now on hold, while SpaceX has leased the Memphis Colossus 1 cluster to Anthropic for $1.25 billion a month.

      SpaceX’s S-1, filed on Tuesday, relies on an AI-revenue line that Grok is no longer evidently fulfilling. Grok is not gaining traction in Washington, and on Thursday, the situation became a concern for Wall Street. According to Reuters, Elon Musk's xAI chatbot has struggled to secure federal-agency adoption for its September 2025 GSA OneGov agreement, unlike competitors OpenAI and Anthropic, who are moving forward with operationalization.

      This concern arose just three days after SpaceX submitted its S-1 prospectus, which positions the AI-revenue line as crucial for what could become the largest IPO in history. The consumer metrics are even more alarming, with Grok downloads falling to around 8.3 million in April from over 20 million in January. The paid conversion rate, as reported by Reuters, is approximately 0.174% among surveyed U.S. consumers and workers in Q2 2026, compared to over 6% for ChatGPT.

      The growth trajectory that initially supported Grok’s projected 2025 IPO has reversed in the last four months. The GSA OneGov agreement that Musk signed in September is particularly noted by Washington observers. Announced by the GSA in late September 2025, the $0.42-per-organization, 18-month deal aimed to make Grok 4 and Grok 4 Fast available to all federal agencies at a minimal cost.

      Public Citizen has approached the OMB twice to suspend Grok's federal use due to accuracy and bias issues, citing outputs described as racist, antisemitic, and factually incorrect. Senator Elizabeth Warren has also raised concerns with Defense Secretary Pete Hegseth regarding the Department of Defense granting Grok access to classified systems despite worries from the NSA and GSA.

      The commercial aspect of the compute-side trade adds to the narrative's urgency. SpaceX has leased the Memphis Colossus 1 data center, a 220,000-Nvidia-GPU, 300-megawatt facility that served as Grok’s main training environment, to Anthropic for $1.25 billion monthly through May 2029.

      The straightforward implication is that with Grok’s consumer demand waning, xAI possesses more computing capacity than needed, and leasing it to Anthropic—whose Mythos model has started to supplant Grok on the federal procurement list—provides a timely way to monetize the excess ahead of the SpaceX IPO.

      The financial scenario presented in the SpaceX S-1 makes this trade essential, showing xAI incurred $6.4 billion in operational losses against $3.2 billion in revenue for 2025, with revenue growth of about 22%, significantly lower than that of OpenAI, Anthropic, and Google DeepMind.

      The situation is further complicated by the fact that the Anthropic deal involves xAI providing compute resources that Grok was originally trained on to its own competitor. Musk's AI portfolio appears to be "falling apart," partly due to the compute-monetization trade indicating to potential public-market investors that demand for the underlying product cannot sufficiently utilize the capacity that Musk created for it.

      SpaceX's upcoming roadshow, scheduled to start in the next two weeks, will serve as a critical test to see if institutional buyers are willing to support the AI-revenue-line forecast in light of the federal adoption stall and decline in consumer interest that Reuters has highlighted.

      Additionally, Musk's recent portfolio challenges have heightened the stakes. xAI's promised $420 tax-return commitment to employees has surpassed the expected payment timeframe, while procedural rulings against him in the Delaware court concerning the OpenAI litigation continue to accumulate.

      So far, SpaceX has not publicly addressed the Reuters article based on available reports. The prospectus does not separate Grok-specific revenue from the overall xAI figures, leaving institutional investors to interpret the federal-adoption delays against the overall AI revenue growth projection.

      The next significant indicator will be the expected S-1 amendment prior to the roadshow launch, where any updates regarding Grok adoption would serve as the initial formal indication of whether xAI is ready to provide specific numbers on the demand from consumers and federal agencies, as brought to light by Reuters.