Comment by swingboy
8 hours ago
Apologies for the naivety, but, why is SpaceX valued so high? Starlink? Are rockets really a lucrative business? Don’t get me wrong, being able to send objects up into orbit is cool, but is it $1.8T cool?
8 hours ago
Apologies for the naivety, but, why is SpaceX valued so high? Starlink? Are rockets really a lucrative business? Don’t get me wrong, being able to send objects up into orbit is cool, but is it $1.8T cool?
No. Space is not lucrative or profitable. The SpaceX profit story rests entirely on Starlink. Starlink has a plausible moat servicing ships at sea and extreme remote areas. The big problem for Starlink is that they are trying to grow into a shrinking TAM, as terrestrial wireless expands with ever cheaper equipment ever farther into the countryside that Starlink is counting on for their TAM.
Elon's visions border on self parody. If I told you that humanoid robots were going to be digging tunnels for the Boring Company you'd have to stop and think if I was pulling your leg.
> No. Space is not lucrative or profitable
Yet.
To be clear, I don't support SpaceX specifically, but the amount of resources available to us from beyond our planet are quite literally infinite, only bounded by our ability to move fast enough to get it.
Comets that routinely pass by our planet have rare-earth metals in quantities that we don't even have on the planet at all. Hell, that's where our rare earth metals came from in the first place. Getting access to 100 million tonnes of platinum could totally change how we use the metal, right now it's most effective use is probably within catalytic converters to reduce emissions from cars.
Helium-3 and Deuterium in high quantities can be used as clean fusion fuel, basically clean atomic energy.
I struggle to see how these can't be lucrative in the long term.
I can't improve on how unlikely it is that any of that happens. Space is for exploration and the advancement of science, and to a certain extent engineering, if you don't mind the inefficiency of obtaining those advancements in engineering.
How many decades ago were people hyping space manufacturing? Where are the space factories? Where are the profits?
How does 100M tons of platinum safely deorbit? Is the idea to let it crash into the sea?
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Because of the Musk reality distortion field. The claim is that all data centers will move into space, and that SpaceX will completely own that market.
The datacenter thing is mostly just a meme that billionaires say because it makes them feel smart and gets them media attention, it doesn't seem to move stock significantly.
The actual distortion field is around Starlink. Which is the main product and the only one that's (nominally) profitable. It's the one all the hype centers around. xAI is barely even notable in the AI space.
This also makes it possible to judge the size of the distortion field, as Starlink is just an ISP, for which we have accurate valuations. And for what it concerns shareholders, a strictly worse one than a conventional ISP. Space infra is much more expenive than putting some glass in the ground, once.
Comcast is a behemoth of a company doing far more than just ISP. Worth a "mere" $90 billion. Charter Communications is a similarly sized "pure" telecom. Worth $20 billion.
Both of the above ISP companies have roughly 30 million subscribers. Starlink has 10 million. Yet they want $2 trillion at IPO.
A 20x to 100x overvaluation. And what do you get beyond an ISP?
* A private aerospace company that's not doing notably better than the space divisions of old aerospace. (Remember: Starlink is already accounted for so doesn't count here)
* An AI company that has so little demand it's currently handing a bunch of compute to Anthropic for such a deep discount the latter has claimed to become profitable.
* Twitter. Which is worth either $33b if you count Elon's internal buyout valuation, or $10b if you count realistic valuations.
While there is some hype around "The future of space!", the reality is that the long term growth for that is fairly dead in the current geopolitical climate. Nobody's saying it out loud yet but US Aerospace is being replaced. Fewer and fewer US launches will be bought. The EU is even building their own Starlink equivalent.
Starship is going to make whole entire industries viable that were not viable previously. It might even take a significant chunk of air freight which is going to be a big deal with rising oil prices.
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> The datacenter thing is mostly just a meme that billionaires say because it makes them feel smart and gets them media attention, it doesn't seem to move stock significantly.
A significant portion of their valuation is based on this. The spacex private stock price moved significantly based on this data center narrative.
> And for what it concerns shareholders, a strictly worse one than a conventional ISP.
This is ignorance. There is absolutely zero meaningful competition to Starlink in the maritime, aviation, and remote internet markets. 150mbps down with <80ms latency isn’t impressive in a city but it’s mind blowing on an airplane 1000 miles from land.
> The EU is even building their own Starlink equivalent.
No they aren’t. The only somewhat credible competitor so far is Amazon Kuiper(Leo) and they are still nascent.
You also forgot starshield.
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I find it amusing to read comments like these, because they remind me of the massive awareness gap between people who understand SpaceX's product line, and those who don't.
In your world, you only see and interpret SpaceX's existing products. You then see SpaceX's eye-watering valuation, and then are confused where this comes from.
Meanwhile, people who understand SpaceX's product line, and the implications these products in five or ten years, can analyze the situation more accurately.
I can tell you are in the unaware group, since you don't mention nor analyze two of SpaceX's world-changing products (Starship and Starlink Mobile).
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This sounds amazing until something needs replacement. Until data centers on earth has a 99.99% (or higher) level of autonomous operation with very minimal requirements to maintenance and part replacements, they're not sending anything into orbit...
It sounds amazing for 14yo boys who are not specifically into hard sci-fi.
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I also sounds amazing until you remember how hard it is to cool something when your only option is radiative cooling.
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Starlink already operates this way. You don’t replace parts, you launch new sats.
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Where did they say that all data centers will move into space? I thought the claim was that it's going to be more and more feasible and profitable to have DC's in space.
Elon Musk is saying this together with Dyson Sphere and Mars colonisation.
In his FCC filling he also mentions DCs:
https://docs.fcc.gov/public/attachments/DA-26-113A1.pdf
And yes its absolutly wild.
His Scifi ideas are probably a min of 100 years too early.
And while he doesn't even need his own compute (renting out colossus 1 and 2), he thinks we will send server racks full of expensive hardware into space in no time.
Why?
Because his Space-X Trillion evaluation doesn't make sense if he doens't has payload for Starship.
So how much payload do we send to space? Actually not that much, starlink itself is the biggest change by far. So he builds Starship which he needs for starlink v3 but what then? Yeah Datacenter in space...
I truly do not understand why anyone believes anything Musk says anymore.
could it be that those people don't actually believe him and just appreciate the genuine shit-show he puts up enabling them to laugh at people who get sad about what he says, and their eagerness to believe
One must also consider the proximity between musk and the trump administration, the market pricing this proximity is the market pricing power, access and aligning its interest with the blatant collusion between political power and business in the US.
That or the good ol’ « dump it on retail » scheme
According to SpaceX's own documentation more than 80% of their value comes from xAI and their data centers. Starlink is where they are making the money, but they are pouring it into AI.
Starship makes space access 1000x cheaper than before, with cost-to-orbit under $10 / kilogram. Also much larger payloads become possible. That's an insane economic unlock, because space contains unlimited amounts of resources and energy. Space-based manufacturing, building space hotels, mining asteroids etc. becomes viable. Larger satellites and probes for commercial or scientific use becomes possible.
All this might not make sense in a standard business sense. Real profits might be decades away, who knows. Anyway, people are willing to throw their money at it, because they think it's important.
If they succeed in the long term, it'll easily be the most valuable company on Earth.
Valuable, sure. Most valuable on Earth? Ridiculous.
We know that xAI (with X) is struggling.
SpaceX is growing quite slowly. You could argue that Starship is likely to somewhat accelerate growth.
Starlink is doing well but also growing somewhat slow.
A more rational valuation would be 900b-1000b.
The rest is Musk and FOMO.
Starship is currently a money pit.
People betting that the price will go up because they think other people are doing the same thing.
Monetary policy in the US is too loose and has been for years
As long as you can offload your bag to the next sucker the value will be high.
Most shareholders don't really care about the company they have shares in.
Big picture: Nice-sounding economic theories claim that stock market valuations are rational, but those theories are mostly bullshit. As soon as the actual humans in the real-world stock market get excited, or scared, or otherwise emotional, they mostly stop caring about all that stupid boring gotta-do-math "rational" stuff.
Yes, eventually, the humans have to sober up, and stock market valuations return to approximately what the economic theories say they should be. But the dangers of betting on that "eventually" are very well known: https://quoteinvestigator.com/2011/08/09/remain-solvent/
The earth is finite, and space, for all intents and purposes, is not, and expansion into it would thus be required to sustain any super linear growth of the economy. Well, and rockets are cool. Perhaps people would much rather invest in something with the veneer of furthering space exploration (and the promise of infinite riches) than buy into some crypto blockchain startup. And, its not as if other current valuations are sane.
SpaceX isn't opening space to everyone. They're are preparing for the select few to be able to escape once the earth is no longer sustainable due to their own efforts.
Actually given that the first colonists on Mars will live pretty miserable lives before dying early of radiation poisoning Musk and Co are trying to recruit other people to move there.
Musk, Thiel, Bezos etc. none of these guys have ever said they want to move there.