SpaceX Lists Grok’s ‘Spicy’ AI Mode as IPO Risk Factor

SpaceX has flagged the potential risks tied to Grok’s “Spicy” and “Unhinged” AI modes in its IPO filing, warning investors that these features could invite regulatory scrutiny and damage the company’s reputation. The filing, submitted Wednesday as part of the planned initial public offering, notes that the chatbot’s ability to generate raunchy images or voice responses with reduced safety filters poses significant liabilities.

By December, SpaceX had already reserved $530 million for potential litigation losses, some of which may stem from ongoing complaints about sexualized imagery produced by Grok. This disclosure highlights the financial and reputational burdens SpaceX assumed when it acquired Elon Musk’s AI startup, xAI, in February. That deal pushed the rocket maker’s private valuation past $1 trillion. In the filing, SpaceX repeatedly describes xAI’s mission as developing “truth-seeking artificial intelligence,” but in practice, this has often meant launching AI features with minimal guardrails. While Musk touts Grok’s freewheeling nature as a selling point, it has repeatedly attracted regulatory heat.

Disclosing potential business risks is standard and legally required in IPO filings, and not all of the concerns SpaceX lists will necessarily come to pass. The company joins a growing list of chatbot makers under regulatory review as governments worldwide grapple with the societal impact of generative AI tools.

SpaceX also revealed in the filing that it is 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 a defendant in several ongoing class action lawsuits. Future “misuse” of its AI products could lead to more regulatory sanctions, “including loss of access to certain markets, which has occurred in the past.”

The filing explains that some AI products, including Grok’s Spicy and Unhinged modes, are “designed to generate more candid, direct, or less reserved or irreverent outputs.” Because these modes may be “more irreverent and harsher than our standard offerings,” they 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.”

As of March 31, Grok and X together had about 550 million monthly users, according to the filing. Of those, 117 million use Grok’s AI features each month. By comparison, OpenAI reports that ChatGPT has more than 900 million weekly users.

Whether the risks tied to Grok and X are worth the potential rewards is one of the key questions investors will face ahead of the SpaceX IPO. Earlier this week, a coalition of nonprofits warned that xAI’s poor safety record could become a liability for SpaceX shareholders.

SpaceX’s AI unit, which includes X and xAI, remains a drag on the broader company, posting an operating loss of more than $6.3 billion last year. While sales of ads, data, and subscriptions are growing, they are not increasing fast enough to quickly turn the division profitable. One bright spot is SpaceX’s deal with Anthropic, which has agreed to pay $15 billion a year for access to the company’s data centers.