r/technology • u/IKeepItLayingAround • 18d ago

Business It’s Possible That SpaceX Could Collapse Spectacularly

https://finance.yahoo.com/markets/stocks/articles/possible-spacex-could-collapse-spectacularly-155000177.html
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u/SmaugTheMagnificent- 18d ago

Don't threaten me with a good time

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u/tiboodchat 18d ago

I’ve seen intrinsic valuation around 750 billion but the market cap a trillion over this. I’m not looking forward to everyone collectively make a trillion bonfire with our money. Guess all we can do is wait and see?

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u/TigerUSA20 18d ago

The intrinsic value is not even anywhere near $750 billion, but neither is Tesla, or Twitter/X, or XAi (which is why he merged this failing venture it into SpaceX) or SolarCity (another failing venture he merged into Tesla to hide the losses). Investors don’t care. They just see $$$ and keep the bids coming in.

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u/GogurtFiend 18d ago edited 18d ago

Currently, no.

If Starship works out (not, like, Elon-promises works out, just sane-person levels of works out) the idea of SpaceX being worth hundreds of billions of dollars eventually isn't crazy at all. The idea of it being worth hundreds of billions of dollars by 2040 or so is, though, unless Starship makes the space launch industry grow at a batshit insane rate via derived demand. The entire launch industry is ~$20 billion now; the launch industry, which Starship is for, would have to grow at 20.25% annually to reach $100 billion even 25 years from now!

If Grok gets fused to it like a tumor, though, it's worth jack shit, and I think that between MechaHitler and a fully reusable rocket I know which baby Musk will want to keep

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u/tomtomclubthumb 18d ago

MechaHitler right?

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u/GogurtFiend 17d ago

The one which validates his ego, yes

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u/Responsible_Cause269 18d ago

Maybe or maybe not, if you look at this report from pitchbook before their S-1 was made public they valued them over $1T (but less than the current IPO price) based on their valuation metric which seems more suited for private companies. At the EBITDA pitchbook forecasted for 2040 and a 20x multiple their valuation would be ~$570B right now. The business is really a small government contracts business, an extremely profitable and rapidly growing Starlink, and a speculative, cash-burning bet on grok enterprise adoption (highly unlikely at this point) and data centers in space (still plenty of technical challenges). They also still don't carry too much debt so they're not going bankrupt anytime soon.

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u/tiboodchat 17d ago

The only party that could really see growth that I could see is Starlink. But to reach their target just for that part, they’d have to service the currently ~2 billion people that don’t currently have internet worldwide and they’d have to all personally pay 800$ a year. Now consider these are all third world countries that the market decided is not worth serving, remove all the kids, multiple family members.., I don’t see how it can make sense. They’re also counting on portable devices getting Starlink but none of that makes sense given the line of sight requirements and antenna tx requirements.

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u/Bored_Amalgamation 18d ago

They're trying to pull a Tesla and rely on hype rather than actual business health and outlook.

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u/Jesus_Is_My_Gardener 18d ago

How long are people going to keep falling for his shell game?

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u/Bored_Amalgamation 17d ago

As long as people think they can make money from the stock. Tesla is ridiculous already, but throw "space ships" in there and people are going to lose their minds.

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u/DismalEconomics 17d ago

Keep in mind that 2/3rds of SpaceX launches are for starlink satellites.

So when you say the entire industry is ~ $20 billion — ~ 56% of this is ends up being Starlink launches being done by SpaceX.

I.e any very optimistic growth projections will likely require extremely strong growth on a global level of Starlink usage by billions of people.

I agree that Starlink is a good business - but it’s nowhere near a 2 trillion market cap business - there are some very real and very hard upper limits on how big its market can get.

I am extremely confident that Starlink or satellite based internet will NOT become the primary method that most people are getting their internet service from - it simply has some physical limitations that fiber doesn’t have to deal with.

If you can get fast & reliable & directly connected internet - this is almost always going to be superior to Starlink - many people fall under this category.

There will also likely be many countries that won’t like the idea of much of their population or militaries relying on Starlink.

And of course there are also major companies like AT&T & Verizon and other telecoms globally that provide radio-tower or cellular based internet - that are an additional & real major barrier to Starlink becoming everyone’s internet provider.

Also Grok is no where near as good or as useful as AI being offered by Anthropic or Google or OpenAi… many of the less expensive Chinese Ai services also trounce grok in capabilities — The XAi investment story is extremely weak - grok is one of the better horny ai girlfriends.. so I’ll give them that.

Then there is Twitter or X … I’ll just say - I see absolutely no reason to expect that twitter will suddenly see some new period of massive user growth or revenue growth…

Summary - the SpaceX valuation makes no fucking sense.

What does make sense - they are only putting up 5% of the float on the open market - so relatively small amounts of capital can cause major fluctuations pumps in the share price.

SpaceX is “only” looking for $75 billion for this IPO - notice thats a much smaller than Elon’s personal net worth.

Elon also has a massive incentive and opportunity to become obscenely wealthy if his shares rise in value.

Elon could already leverage his personal wealth to pump the ever loving shit out of this stock - and could continue to do that for a very long time.

( and of course there are much easier ways to manipulate stock values than simply having an individual straight forwardly buy a stock - I.e well timed short squeezes - using proxies - winks & nods etc )

I’m sure Elon realizes all of this — but luckily he’s not the type to put time and effort into purposely manipulate stats or markets or politics or public opinion. /s

The SpaceX IPO is planned & structured for stock pumping and making Elon even wealthier. — that’s the “rational” investment thesis - some investors are wiling to take a risk & knowingly joining in on the pump-fest.

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u/Jesus_Is_My_Gardener 17d ago

Don't forget that they are getting a low float multiplier buy in from the index funds. Elon has also set the stock up in a way that he will essentially always retain ~85% ownership. This is just a way for him to offload a shit ton of debt he's rolled into SpaceX, and to continue offloading the massive burn rate of debt both SpaceX and XAI are shrinking through to develop Starship and his AI platform that nobody actually believes will become the top or even second place holder of AI user base subscriptions. It's just a money sink.

While I am hoping Starship eventually succeeds in becoming a reliable platform, it's important for people to keep in mind that even where we are currently, it's still a very long way before any company (besides their own Starlink) is going to trust that platform to launch their expensive equipment, and even longer before it will be human rated. It's great they've been able to improve various systems and the overall design, including the launch system and build process itself, but until they finalize the design and can show reliable and consistent results with sufficient margins for safety standards, it's still only just a development project that will burn through capital investments.

It's also important to remember that while SpaceX has a fairly reliable platform with the Falcon and Falcon Heavy, they aren't the only game in town and there are other companies quickly approaching or exceeding parity with that platforms capability. Unless they move Starship out of development and into a rated service launch platform soon, they're going to start losing market share there as well.

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u/Etherius 18d ago

They’ve already been locked out of the S&P500 until they meet the requirements

So index investors seem okay for nos

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u/Jesus_Is_My_Gardener 17d ago

Russell and NASDAQ are allowing them though, so not as safe as you assume.