Comment by manquer
6 months ago
>float a fairly small issuance
SpaceX are widely reported to be planning to raise $75Billion in new capital. It may seem small a % for the valuation target. However that is about 3 times previous highest raise of $29B when Saudi Aramco went public few years back. The market simply may not be that deep[1]
There is a good chance this one becomes the Wework of this decade. The valuation, amount being raised, cooling interests in AI, and middle eastern capital changing priorities, interest rate outlook for the rest of the decade. These are all strong head winds to overcome even when not raising the largest ever amount in an IPO.
That is not say that it is destined to fail, Elon is excellent salesman of vision when fundamentals are weak, There is no better proof than Tesla P/E .
It is by no means clear this would be successful or not. The valuation, funds being raised, future growth potential are all not based on just SpaceX core businesses which would have been an easy sell.
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[1] i.e. it could be still under-subscribed even if everyone buys into the vision, growth projections, is comfortable with valuation gets fully onboard including retail.
Even in this best case scenario SpaceX would have to sell at the lower end of the target range or go even lower and still end up being short matter what, because there could simply be not enough money in the market.
I think you have to temper the skepticism a bit though.
SpaceX has dramatically lowered the cost of launching things into space. They are still the leader here. They can put a kg into orbit cheaper than anyone, even heavily subsidized state operations (EU and China).
Their order book continues to be full. Every single launch vehicle they roll off the line was pre-sold years ago, including its re-use flights.
I agree that Elon is their biggest potential problem and a big risk but their launch business is sound and wildly successful. If you believe access to space will be a growing segment of the economy in the future it isn't exactly a bad investment.
I remember all the people putting Tesla down when they IPO'd. I bought $4k of stock (all I could afford at that time). Sold $100k of it a few years ago, still have the other half worth near $220k. Their numbers at IPO time were garbage and it wasn't clear they would even survive. Then they started shipping hundreds of thousands then a million cars.
YMMV, consider all sides and make your own judgement. Just be careful about trusting the anti-SpaceX case. Even if everyone is technically correct about them it can still be a huge miss not to invest! The future is not static and if they can put the raised capital to productive use the IPO could end up being a fantastic deal. And FWIW I also agree the largest immediate risk is they are over-valued. Only time will tell on that front.
> Their order book continues to be full.
In 2024 66% of their launches were for Starlink. So it’s not quite correct to suggest there’s a vibrant external market for their product, a lot of it is sort of self dealing.
Starlink is incredibly profitable though.
It's not like they're subsidizing some experimental internal project. Starlink is the majority of their profits and growing fast.
> it’s not quite correct to suggest there’s a vibrant external market for their product
There is a very large demand for launch services. SpaceX balances launching customers and launching Starlink. It's not like they give every launch slot to customers and then launches Starlink whenever there's an opening they couldn't fill.
There's a vibrant external market for satellite Internet service.
This is missing the point of their valuation. SpaceX will internally use their launch capabilities to build industries that no one else can. Starlink is already their main revenue stream. Starship will open up new realms of possibilities.
Tesla IPO'd at 1.7B and is worth 1.4T today. Giving you the benefit of doubt since it would be closer to a 1000x gain rather than the 100x gain that you didn't buy right at IPO, I will point out that there's a world's difference buying in at 1.7B, because there's still room for the stock to 1000x, but there's not much gain to be had buying in at 1.7T valuation.
Even the most highly company in the world Nvidia is less than 3x that valuation, so it's not a good comparison with Tesla's IPO.
As I mentioned at the end, if the pitch was just for the launch (and starlink) it would be an easy sell.
The problem is launch market is not worth 1.5+ trillion though, you need much more than just starlink and all the satellites today to justify that .
You and other early investors who had the opportunity to get in early may come of well in this and it was a good bet then.
However it is hard to see why rest of us should get in at $1.5T, the downside risks are far more than upside potential at this price .
At current launch numbers it may not be worth 1.5+ trillion but valuations aren't about current, they're about discounted future cash flows.
It seems logical that there could/will be far more demand for launch if the price were lower. Prices are quite extreme currently, a standard 3U cubesat (loaf of bread size) is $300k and that's just for orbit.
There could be lots of startups that want to try robotic space mining but launch costs just make that mostly impossible currently so there are only a select few. It's like valuing the Dutch East India company based on the trade volumes in 1603. Of course people are not going to be buying much pepper or nutmeg if it costs them weeks of labor, but build lots of reusable ships, and with each voyage, more people can afford your pepper and nutmeg until it's a common household item.
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I am sure Elon can launch some type of space based directed energy beam and use it to intercept missiles and drones.
Not one more cent should be given to that man.
I think you have to temper the glazing a bit though.
These people and their endeavors are thoroughly, irredeemably corrupt. It’s nice you got a taste, but their impact on society has been calamitous, and will take decades to recover (if at all).
>There is a good chance this one becomes the Wework of this decade.
It's very different from WeWork which was basically just subletting office space with beer taps. At least SpaceX had done significant stuff with the rockets and Starlink.
The comparison was not about the strength of the business, it was about how the attempt to IPO and the original S-1 was the trigger for more realistic price discovery for Wework
My comment was that it is possible that by trying/becoming public SpaceX also will go through that same process once their numbers become available.
> excellent salesman of vision when fundamentals are weak
Wow that was a polite way to say that