SpaceX hits $100B valuation after secondary share sale(cnbc.com)
cnbc.com
SpaceX hits $100B valuation after secondary share sale
https://www.cnbc.com/2021/10/08/elon-musks-spacex-valuation-100-billion.html
145 comments
For many years I've really wanted to buy (and hold) SpaceX shares. Such a shame it's not on the public market...
I assume that Elon's struggles with Tesla short sellers have factored into the decision to keep SpaceX private. I don't blame him. They had the honor of being the most shorted company in the world. I believe it is fair to assume that a portion of Tesla's bad press can be traced back to some of these short sellers.
As of a few days ago, Tesla has their lowest short interest to date. https://www.bloomberg.com/news/articles/2021-10-04/tesla-sho...
As of a few days ago, Tesla has their lowest short interest to date. https://www.bloomberg.com/news/articles/2021-10-04/tesla-sho...
Elon has long said that the goal of SpaceX is to colonize Mars, and that he did not want to go public because shareholders would happily drop the idea of colonizing Mars in favor of a more profitable one.
Why would this be different with private share owners who don't work for the company? In the end, all investors want to make profit, no?
Because you can choose who you sell shares to as a private company and even more, you can restrict those people from selling shares to others that you do not approve of.
Generally you can then pick and choose who holds shares and ensure they are of like mind, or possibly even stipulate it as a condition.
SpaceX and a lot of space industry, kinda like IT, seems to capitalize on the like mindedness/idealization and enthusiasm of many that want to work in aerospace.
And I have heard the churn and burnout is real as a result.
I personally have avoided startups and other types of jobs that would require more....time investment and dedication. I know thats not how everone sees it, but for me, my job is a means to an end and that end is family and fun/recreation, not colonizing mars or being a part of the next great innovation, tech or otherwise. As a result its clear I'm not cut out for a place like Spacex or even Amazon (and thats assuming I am even quick enough to hold such a gig). I like my nights and weekends and work/like separation too much.
SpaceX and a lot of space industry, kinda like IT, seems to capitalize on the like mindedness/idealization and enthusiasm of many that want to work in aerospace.
And I have heard the churn and burnout is real as a result.
I personally have avoided startups and other types of jobs that would require more....time investment and dedication. I know thats not how everone sees it, but for me, my job is a means to an end and that end is family and fun/recreation, not colonizing mars or being a part of the next great innovation, tech or otherwise. As a result its clear I'm not cut out for a place like Spacex or even Amazon (and thats assuming I am even quick enough to hold such a gig). I like my nights and weekends and work/like separation too much.
Numerous high fives to you. Too few people willing to say that they aren’t interested in riding rockets and changing the world and instead just want to make money to support their families and enjoy life.
There are plenty of people like that; most of the world actually. You’re just hanging out on a site basically target at people that want to ride rockets.
People who want to go into "passion" careers are easily exploited. They'll put up with more shit because of their idealism/passion and there's usually more of them than there are jobs, so when they burn out they can be easily replaced.
I have no first hand knowledge of this, but my understanding is video game development is a good example of this: the pay and working conditions are far worse than similar software engineering roles in other industries, because so many video game enthusiasts want to grow up to make games.
I have no first hand knowledge of this, but my understanding is video game development is a good example of this: the pay and working conditions are far worse than similar software engineering roles in other industries, because so many video game enthusiasts want to grow up to make games.
Game development, pilots, and non-profits. The majority of people who enter those industries are self-selected and are passionate enough about their jobs that they will put up with a lot of abuse.
Unless you are an executive on a nonprofit, then it is of paramount importance that you are paid handsomely because otherwise your irreplaceable leadership skills won't be retained.
Executives at non-profits tend to be pretty underpaid compared to similar executives at similarly sized for-profits. It just sounds outrageous because executive pay is just that high.
Is it exploitation when those people choice themselves where to go AND the same people know they had other options. Its not like SpaceX couldn't get job anywhere else.
The "private shares" don't have anywhere near the voting rights that people would typically expect from an IPO.
>Elon Musk’s trust holds 54% of the outstanding shares of SpaceX and has 78% voting control of the outstanding stock.
https://www.rankred.com/buy-spacex-stock-worth/
And the reality is: what does he have to gain by going public? He's found no shortage of private investment. I see a ton of negatives to being public and almost no downside.
>Elon Musk’s trust holds 54% of the outstanding shares of SpaceX and has 78% voting control of the outstanding stock.
https://www.rankred.com/buy-spacex-stock-worth/
And the reality is: what does he have to gain by going public? He's found no shortage of private investment. I see a ton of negatives to being public and almost no downside.
> The "private shares" don't have anywhere near the voting rights that people would typically expect from an IPO.
I mean, no one can outvote Zuck in FB, or Page/Brin in Google, Setting up public shares with (effectively) no voting power (unless Brin and Page disagree) turns out to be trivial
I mean, no one can outvote Zuck in FB, or Page/Brin in Google, Setting up public shares with (effectively) no voting power (unless Brin and Page disagree) turns out to be trivial
It is not enough to "just" earn some positive return, since all that says is that the shares have a non-zero price.
The value of the shares is the capitalization of all the future profits. The estimation of all of that goes into the stock price -- if investors think the profit will be higher, the share price is bid up in expectations of those future profits, so that for the next investor, they will not get any more risk adjusted profit than if they bought any other stock. Similarly if the expectation of profits declines, then the shares are repriced lower as well so that the for the next investor they are indifferent between SpaceX and any other stock.
This means there is big money to be had by unlocking value -- e.g. buying up the shares, changing the focus of the company to something even more profitable, and then selling the shares at the higher level. This is essentially the price of going public.
Yes, on the one hand you can convert future profits into present cash and make the investors absorb all the risk. But on the other hand, you just sold your company to the market and so have to cede control. Shareholders can elect a new board, replace you, make changes to the corporate bylaws, etc. Shareholders now own the company.
Musk could have issued just a small number of shares and kept the rest himself, to maintain control, but still you are opening the door to a lot of public scrutiny, the need to have shareholder agreements and to not intentionally take steps that would mislead shareholders or violate the agreement, lest you face shareholder lawsuits. Bottom line, if you want to sell your future profits to the market, you can do that, but then you lose control. If keeping control is more important, then it's better to stay private.
The value of the shares is the capitalization of all the future profits. The estimation of all of that goes into the stock price -- if investors think the profit will be higher, the share price is bid up in expectations of those future profits, so that for the next investor, they will not get any more risk adjusted profit than if they bought any other stock. Similarly if the expectation of profits declines, then the shares are repriced lower as well so that the for the next investor they are indifferent between SpaceX and any other stock.
This means there is big money to be had by unlocking value -- e.g. buying up the shares, changing the focus of the company to something even more profitable, and then selling the shares at the higher level. This is essentially the price of going public.
Yes, on the one hand you can convert future profits into present cash and make the investors absorb all the risk. But on the other hand, you just sold your company to the market and so have to cede control. Shareholders can elect a new board, replace you, make changes to the corporate bylaws, etc. Shareholders now own the company.
Musk could have issued just a small number of shares and kept the rest himself, to maintain control, but still you are opening the door to a lot of public scrutiny, the need to have shareholder agreements and to not intentionally take steps that would mislead shareholders or violate the agreement, lest you face shareholder lawsuits. Bottom line, if you want to sell your future profits to the market, you can do that, but then you lose control. If keeping control is more important, then it's better to stay private.
How did short sellers actually impact the company's operation? Or was the damage entirely to his ego and his desire to reach milestones so he could vest.
Chanos, the lead short seller here, manufactured a crisis of confidence that made a crucial capital raise difficult. This proved fatal to SolarCity — and also impacted SpaceX, as holder of SolarCity bonds. In 2018, the same playbook from Chanos nearly cratered Tesla.
Here’s a timeline and analysis from a trader:
https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...
Here’s a timeline and analysis from a trader:
https://teslamotorsclub.com/tmc/threads/elon-musk-vs-short-s...
... The concept of a car company purchasing a flailing solar company that happened to be owned by the same individual is probably worth of some eyebrow raising. So, I am not sure "manufactured" is the right term here, regardless of the motivation of the people involved.
(I have no vested interest here)
(I have no vested interest here)
Elon had roughly the same % of both companies both separately and together, so it's not clear to me how its a big advantage financially for him.
From a strategy standpoint - a no brainer to purchase what is now energy - he knew all the people there, was already working there, had a big stake there, and they may play an important role in his green energy plan.
For everyone saying he should have bought some chinese solar co - he's focused ons speed, and getting up to speed on a new solar company - why?
Secondarily, how are those solarcity or tesla shareholders doing? How is tesla energy doing? You got to be able to take some risks as the boss, that's why he is there. And no question he takes risks.
From a strategy standpoint - a no brainer to purchase what is now energy - he knew all the people there, was already working there, had a big stake there, and they may play an important role in his green energy plan.
For everyone saying he should have bought some chinese solar co - he's focused ons speed, and getting up to speed on a new solar company - why?
Secondarily, how are those solarcity or tesla shareholders doing? How is tesla energy doing? You got to be able to take some risks as the boss, that's why he is there. And no question he takes risks.
Tesla is a battery company with a vertically integrated product line.
Agreed on that point. A failure mode we're all familiar with -- more dependency arrows, more problems!
But why did Vivint and Sunrun succeed when SolarCity failed? Sunrun apparently had a similar business model and economics. The linked analysis raises this question, although I don't know enough about the solar industry to say whether this is reasonable to ask, or fundamentally an apples-to-oranges comparison.
But why did Vivint and Sunrun succeed when SolarCity failed? Sunrun apparently had a similar business model and economics. The linked analysis raises this question, although I don't know enough about the solar industry to say whether this is reasonable to ask, or fundamentally an apples-to-oranges comparison.
SolarCity is still alive and well as Tesla Energy.
Yeah, I haven’t pulled the trigger, but they’re by far the best $/watt I’ve seen.
Short sellers have a vested interest in seeing a company fail. So spreading FUD absolutely happens whether it is Tesla or any company being shorted.
It can definitely have an impact on the viability of a company
Has nothing to do with ego.
It can definitely have an impact on the viability of a company
Has nothing to do with ego.
Short sellers make it harder to raise capital and force CEOs to show more short term progress.
Short sellers have an enormous incentive for the company they short to fail and they will do anything (legal or sometimes otherwise) in order to negatively affect stock price.
It turns out when a company has multiple entities with significant resources trying to make it fail, it sometimes negatively affects the shorted company.
It turns out when a company has multiple entities with significant resources trying to make it fail, it sometimes negatively affects the shorted company.
There were people in Palo Alto and Fremont literally harassing employees trying to get them to confess that Elon is lying. Multiple Tesla test vehicles were run off the road.
Tesla filed multiple restraining orders against people dedicated to unveiling the company's "fraud".
There was very much a human cost to all of the FUD the short sellers were spreading.
There was very much a human cost to all of the FUD the short sellers were spreading.
They don’t unless they fabricate news that drives their cost of capital up in a significant way (they were never successful in doing so). “Fighting” short-sellers is something generally only seen with CEOs committing serious fraud so the wall st careerists were all but certain Tesla was a fraud by behavioral pattern recognition that had been working for entire careers. They were wrong, of course, but Elon’s focus on “shorts” was a hugely massive waste of his attention and completely unnecessary. The way you “fight” shorts is by executing and ignoring them.
Short sellers can also lobby the government for policy changes and enforcement actions that harm the company they've shorted.
I understand that so-called "activist" shorts will send private investigators and paparazzi after CEOs, manufacture sexual harassment charges, and all kinds of really dirty stuff.
TSLA is the defacto method of investing into “Elon”, which would include Space X. It’s why the price of the stock is so hard to rate. If Space X went public I’d bet we’d see a TSLA sell off.
You're getting downvoted but I can attest that I did exactly this. It's a completely nonsensical investment to be fair.
My theory was less "invest in Elon" and more that there are a few different scenarios (on decade+ timescales) where either Tesla acquires SpaceX or vice-versa. Seemed like the most practical way to possibly own SpaceX shares one day - even if the probabilities are slim.
It's a nicely hedged bet though. Because worst case, I've just invested in some (not much) TSLA stock.
My theory was less "invest in Elon" and more that there are a few different scenarios (on decade+ timescales) where either Tesla acquires SpaceX or vice-versa. Seemed like the most practical way to possibly own SpaceX shares one day - even if the probabilities are slim.
It's a nicely hedged bet though. Because worst case, I've just invested in some (not much) TSLA stock.
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I would like to buy shares too, but not if an IPO would mean SpaceX changing into something substantially different and less good than they are now. I don't know that there has to be an inherent conflict between meeting shareholder expectations and being a positive influence on the world, but empirically it seems that few companies are able to do the latter at the same level post-IPO.
It's sad. Elon has said he would have SpaceX to be public because it forces short termism on a company. I'd happily buy shares on the understanding the company wouldn't even report (let alone report a profit) for a decade. But that's the nature of public markets, I guess you have to set the rules based on the average idiot CEO and the average idiot Speculator...
> I guess you have to set the rules based on the average idiot CEO and the average idiot Speculator
Idiot CEOs are a self-correcting problem. The rules are there because of smart scoundrel CEOs scamming idiot Investors.
Idiot CEOs are a self-correcting problem. The rules are there because of smart scoundrel CEOs scamming idiot Investors.
SpaceX isn't going to go public anytime soon. Elon has said though that he wants to spin off Starlink and take that public in the next few years.
I think many would buy shares in NASA - even if it was some token no return souvenir/donation/sponsor a mission kinda share issue.
Back in 1940s, if you wanted to support the war effort, you bought war bonds.
The highway down my parent's house was supported by muni (state-level bonds). I bought bonds to support a hospital in Detroit (and made lots of money on that!!). Etc. etc.
Look up muni-bonds: they support highways, bridges, hospitals, and other infrastructure. I don't know if there's any for NASA specifically, but plenty of options if you actually want to invest in the country itself.
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The main downside is that they're tax-free, which means their interest rates are set such that they assume you're a millionare. So if you're paying anything less than the top-tier tax bracket, you're kinda wasting money on a risk/reward basis. That is to say: if "normal bonds" are getting 4% right now, all the munis would be priced at you'd get roughly 2.52%, assuming the top tax bracket of 37%. All bonds have a level of risk that's graded on a sliding scale: AAA bonds are the lowest risk (and lowest %rate), and C being the lowest.
Funny how that works? You write the laws so to favor muni-bonds by making them largely tax free, and then suddenly the free-market takes away the advantage lol.
The highway down my parent's house was supported by muni (state-level bonds). I bought bonds to support a hospital in Detroit (and made lots of money on that!!). Etc. etc.
Look up muni-bonds: they support highways, bridges, hospitals, and other infrastructure. I don't know if there's any for NASA specifically, but plenty of options if you actually want to invest in the country itself.
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The main downside is that they're tax-free, which means their interest rates are set such that they assume you're a millionare. So if you're paying anything less than the top-tier tax bracket, you're kinda wasting money on a risk/reward basis. That is to say: if "normal bonds" are getting 4% right now, all the munis would be priced at you'd get roughly 2.52%, assuming the top tax bracket of 37%. All bonds have a level of risk that's graded on a sliding scale: AAA bonds are the lowest risk (and lowest %rate), and C being the lowest.
Funny how that works? You write the laws so to favor muni-bonds by making them largely tax free, and then suddenly the free-market takes away the advantage lol.
> Funny how that works? You write the laws so to favor muni-bonds by making them largely tax free, and then suddenly the free-market takes away the advantage lol.
The advantage is still there, it just goes to the municipalities issuing the bonds (where it gets passed on to taxpayers).
The advantage is still there, it just goes to the municipalities issuing the bonds (where it gets passed on to taxpayers).
I guess that's true.
As someone who'd like to buy more munis however, I'm frustrated that I don't get a "piece" of the tax-savings. But you're right, the perspective is about reducing the %rates that cities / states pay, not about increasing the $$$ in my pocket as an investor.
As someone who'd like to buy more munis however, I'm frustrated that I don't get a "piece" of the tax-savings. But you're right, the perspective is about reducing the %rates that cities / states pay, not about increasing the $$$ in my pocket as an investor.
Owning Starlink shares is the closest you might get, but its IPO is still a few years away.
Fidelity has several funds with some SpaceX exposure.
https://www.mrmarvinallen.com/what-fidelity-funds-hold-space...
https://www.mrmarvinallen.com/what-fidelity-funds-hold-space...
You're not wrong, but the exposure is around 0.039% last time I looked into it. Plus you have to own a bunch of Uber, too.
Google (Alphabet) owns a big chunk of SpaceX, maybe around $7B worth now? Given their market cap of 1.856T, that ends up being ~ 0.38% SpaceX.
Google (Alphabet) owns a big chunk of SpaceX, maybe around $7B worth now? Given their market cap of 1.856T, that ends up being ~ 0.38% SpaceX.
I've made this comment before, but I have always wondered if there are enough linearly independent SpaceX-holding funds to construct a SpaceX-matching derivative product using only publicly traded securities.
Not an expert, but I think one problem would be the redemption fees from needing to rebalance this portfolio of mutual funds
If only real life were as frictionless as arbitrage theory.
[deleted]
Sadly that means having to put your money in a mutual fund which one may or may not want to for various reasons
Baron Partners owns a good chunk of SpaceX as well. Especially useful if you're buying from an account that can only purchase funds.
https://finance.yahoo.com/quote/BPTRX/holdings?p=BPTRX
https://finance.yahoo.com/quote/BPTRX/holdings?p=BPTRX
Unfortunately that fund holds around 40% of its capital in TSLA alone and only ~5% in SpaceX, so not a very good choice for investment. It also uses leverage. Great choice if you believe in Elon, not so great choice if you have any semblance of risk management.
Presumably someone could take other positions to hedge away all of the other holdings in the fund so that (to a first order approximation) their only exposure is SpaceX, right?
(I only know the basics of investing)
(I only know the basics of investing)
Honestly I'll be happy when it becomes available for mobile installations let alone their IPO. I know it's mostly aimed at land-based installations where the fixed infrastructure is poor, but they'll be making boat dwellers of various kinds very happy!
What's the current best alternative for boat dwellers?
Depends on the type of boat and what you're doing on it. Personally I'm moving onto a sailing yacht next year and I'm planning on being quite nomadic, I'm installing masthead 4G and WiFi aerials and sticking to marinas and anchorages I know for certain have decent coverage until Starlink becomes available for installations like these (I think it might be a while before you can rely on them - the saltwater might be an issue even when they do have mobile coverage). While your options are currently very limited once you're out of line-of-sight radio range from the land, doing your day job on passage as well as having a watch would be pretty difficult anyway for practical reasons so I'm just timing my movements to coincide with annual leave and weekends. My aim is to see the world but slowly and steadily!
If you're on a canal boat or something along those lines you've got a lot better 4G coverage depending on what country you live in. Having said that, none of the canal boat dwellers I've spoken to have worked in tech and most of them commuted into cities so their need for fast and reliable internet wasn't as strong. I imagine permanently moored houseboats have decent WiFi links as well, though I've never really looked into that kind of thing.
If you're on a canal boat or something along those lines you've got a lot better 4G coverage depending on what country you live in. Having said that, none of the canal boat dwellers I've spoken to have worked in tech and most of them commuted into cities so their need for fast and reliable internet wasn't as strong. I imagine permanently moored houseboats have decent WiFi links as well, though I've never really looked into that kind of thing.
Considering they are already in the process of certifying mobile terminals, I would say late 2022 for larger boats and planes. 2023 for something you or I could buy for RV/Boat use.
That's not bad at all! I do wonder how they're going to make the tranceivers rugged enough for the wet and salty environment your average sailing yacht is found in, and I suspect the motion of the waves makes aiming the dish a challenge. I suspect the speed will drop as soon as the boat goes upwind and starts heeling!
That's already built in, I think.
My reading of this news[0] is that they're using much larger phased arrays that sit flat on the deck/roof. 100% electronic steering.
Granted, that's speculation on my part based on a decade of military satellite operations. Starlink stated that they are larger, higher gain, lower power usage, and won't shoot below 25 degrees azimuth. That says to me a 2-4x surface area, lays flat, phased array panel.
I wouldn't expect much drop in speed, even in the worst waters, except for rain fade and if the roll of the boat causes a satellite to go out of sight to the dish. In those scenarios, I think most people can live with Netflix being barely functional.
0: https://arstechnica.com/information-technology/2021/08/starl...
My reading of this news[0] is that they're using much larger phased arrays that sit flat on the deck/roof. 100% electronic steering.
Granted, that's speculation on my part based on a decade of military satellite operations. Starlink stated that they are larger, higher gain, lower power usage, and won't shoot below 25 degrees azimuth. That says to me a 2-4x surface area, lays flat, phased array panel.
I wouldn't expect much drop in speed, even in the worst waters, except for rain fade and if the roll of the boat causes a satellite to go out of sight to the dish. In those scenarios, I think most people can live with Netflix being barely functional.
0: https://arstechnica.com/information-technology/2021/08/starl...
Probably an vsat with an appropiate domed dish. Your latency will be high, but I think you can get unlimited data plans at reasonable downlink speeds.
You'll need a fairly large boat to host the satellite dome I believe, and they aren't cheap.
You'll need a fairly large boat to host the satellite dome I believe, and they aren't cheap.
Starlink on non-huge boats is going to be a bit of a struggle for a while. Since the "dishes" are actually phased array antennas they absolutely chew through energy. They take >100W continuously, which is out of the realm of most midsized to smaller boats.
Yeah, it is rather power-hungry but I'll likely be on shore power most of the time I'm using it. For the times I'm not, I've budgeted for much more battery capacity than a typical yacht would need as part of the liveaboard conversion work.
What? 100 watt solar panel is
> 100-watt panels vary in size based on their efficiency and design, but typically measure around 47 x 21.3 x 1.4 inches.
Says google. Add four of those and some lead acid batteries and you should be able to get 100 watt 24x7. Or only 200 watts of solar if you are ok with not using 24x7
> 100-watt panels vary in size based on their efficiency and design, but typically measure around 47 x 21.3 x 1.4 inches.
Says google. Add four of those and some lead acid batteries and you should be able to get 100 watt 24x7. Or only 200 watts of solar if you are ok with not using 24x7
Lie about your accredited status and purchase said shares
I'm sure a large part of HN's audience legitimately qualifies. The majority of FAANG engineers are accredited investors. $200k income per year is the threshold and a college hire at Google can make that these days. Facebook's median compensation is $240k (across all roles, not just engineering).
Unfortunately even an accredited investor can't purchase SpaceX shares because they are not available. You have to be a really big investor to buy shares directly from SpaceX in one of their funding rounds. You can't purchase shares from employees because of trading restrictions. Your options are limited to participation in consortiums or funds and these tend to have really bad terms.
Unfortunately even an accredited investor can't purchase SpaceX shares because they are not available. You have to be a really big investor to buy shares directly from SpaceX in one of their funding rounds. You can't purchase shares from employees because of trading restrictions. Your options are limited to participation in consortiums or funds and these tend to have really bad terms.
trading restrictions are discretionary and also circumventable
grease some palms if you have to, the consequences aren't always/necessarily your problem
the restrictions are either contractual and discretionary by the issuer, and/or the secondary sale is the issuer's regulatory problem but the accredited-only status can absolve
grease some palms if you have to, the consequences aren't always/necessarily your problem
the restrictions are either contractual and discretionary by the issuer, and/or the secondary sale is the issuer's regulatory problem but the accredited-only status can absolve
Can you explain why? Maybe I'm missing a lot here, but what is spacex going to do to justify a valuation of, say, $200m over the next 20 years? If starlink succeeds it might be able to capture probably no more than 5% of the Isp market, which will probably correspond to around $50bn of revenue in a year in a couple of years. The satellite launch market is currently around $5bn a year, I think, or spacex currently has revenues of that amount and I've heard Musk say that he expects that part of their revenue to roughly top out at that amount. Even if that industry, say, doubles in the next 20 years, that's not that much revenue to warrant a >$200bn valuation. Most of the other potential revenue sources are all in theory highly lucrative, but I would seriously doubt that spacex would see any significant revenue from a colony on the Moon or on Mars in our lifetime, though I might just lack the imagination. Can you explain why you would want to own this company?
Spacex is a highly speculative company with extremely large capital requirements, a strong track record of success, and some of the biggest moats of any company around.
If you believe that the launch market could increase by 10x if costs fall by 10x then a 50 Billion/year revenue is achievable within 5-10 years. Satellite internet is a direct bet on this outcome by betting that Spacex could capture substantial portions of the ISP market.
Ultimately as an investor you have to buy into this hypothesis to invest, and success will only occur if you invest a few 10s of billions. Therefore SpaceX will have a valuation in the hundreds of billions less all shareholders immediately dilute themselves. It probably helps that there are a large number of hundred billionaires interested in Space exploration.
If you believe that the launch market could increase by 10x if costs fall by 10x then a 50 Billion/year revenue is achievable within 5-10 years. Satellite internet is a direct bet on this outcome by betting that Spacex could capture substantial portions of the ISP market.
Ultimately as an investor you have to buy into this hypothesis to invest, and success will only occur if you invest a few 10s of billions. Therefore SpaceX will have a valuation in the hundreds of billions less all shareholders immediately dilute themselves. It probably helps that there are a large number of hundred billionaires interested in Space exploration.
It's not that I believe SpaceX isn't a great company, it's just that I think their potential markets lack the size to justify such a valuation.
They're on track with their Mars mission program, and the side effect of the vehicles they're building - and predicted drop in kilogram-to-orbit price tag - will be opening up the whole cislunar space for industrialization. Think in-orbit mining, resource processing and manufacturing. Optimistically, the potential market will explode in size, and ultimately (say, in a century) will be greater than the whole economy of Earth today. So, if you're bullish on space exploration and exploitation, then SpaceX's market has no limit in sight.
You are discounting the potential military contracts that SpaceX will be awarded.
How large is that market? And how much is it expected to grow?
Defense spending as a whole is north of $700 billion a year. But the Space launch market is obviously much smaller, but it is expected to increase at a pretty fast pace.
> The Global Space Launch Services Market size was estimated at USD 12.86 Billion in 2020 and expected to reach USD 14.92 Billion in 2021, at a Compound Annual Growth Rate (CAGR) 16.29% from 2020 to 2026 to reach USD 31.84 Billion by 2026.
https://www.yahoo.com/lifestyle/space-launch-services-market...
> The Global Space Launch Services Market size was estimated at USD 12.86 Billion in 2020 and expected to reach USD 14.92 Billion in 2021, at a Compound Annual Growth Rate (CAGR) 16.29% from 2020 to 2026 to reach USD 31.84 Billion by 2026.
https://www.yahoo.com/lifestyle/space-launch-services-market...
Including basically everything invested in space, not just launch, the pie is about $330B/yr now according to this:
https://www.airspacemag.com/daily-planet/cislunar-space-next...
Who knows what growth would be like with much cheaper launch but I'm hoping high.
https://www.airspacemag.com/daily-planet/cislunar-space-next...
Who knows what growth would be like with much cheaper launch but I'm hoping high.
Something that isn't well covered is the rocket motor supply chain. Prior to SpaceX there hadn't been a US manufacturer for heavy lift booster engines since the 90s. Undoubtedly SpaceX is the recipient of DoD funds to build that supply chain and research pipeline for both missile and lifting purposes.
Thomas Watson thought there was a market for maybe five computers in the whole world. Now computing devices outnumber humans. There's no guarantee that there will be a similar explosion in the size of the orbital (and eventually deep space) markets but it's not a large leap to believe that lower cost of access to space will open up many new opportunities that we haven't even imagined yet.
As part of this, there is no inherent reason to believe that 5-20k rocket rides/interplanetary transit wouldn't rapidly become a major lifestyle/luxury item similar to jetset lifestyles of the 50s/60s.
There are a large number of interesting economic opportunities from resource extraction to supersized science experiments and energy production once we're out of the gravity well at reasonable economics.
There are a large number of interesting economic opportunities from resource extraction to supersized science experiments and energy production once we're out of the gravity well at reasonable economics.
The military contracts that a company whose CEO has huge ties to China is expected to get?
I realize the US security and military apparatus has gladly been turning a blind eye to Musk's ties with the CCP, but at some point reality imposes itself on you. You can only ignore it for so long, much to the chagrin of the Trump and Biden administrations.
I realize the US security and military apparatus has gladly been turning a blind eye to Musk's ties with the CCP, but at some point reality imposes itself on you. You can only ignore it for so long, much to the chagrin of the Trump and Biden administrations.
Boeing has huge civilian aircraft sales to China, that's also leverage. The focus on SpaceX and only SpaceX gives you a clue as to where this "issue" came from.
They’re aiming to reduce the cost/kg to orbit by 2 orders of magnitude. I imagine that that will open up a lot of opportunities that weren’t feasible before, so I wouldn’t rely too much on the current size of the launch market.
Starship is a launch platform that makes possible a space economy.
Think space stations, lunar outposts, mining and manufacturing.
Think space stations, lunar outposts, mining and manufacturing.
I find myself excited about starship for other reasons. It seems like there is a large range of outcomes for the starship development program—maybe the difficulty of having an effective, durable, and serviceable heat shield really will kill the fully-and-rapidly-reusable goal. Even in that case, though, a stripped-down stainless steel upper stage could reduce the costs of access to Earth orbit such that space-based solar power or sunshades to buy us time to reduce greenhouse gas emissions become feasible, even if the dreams of humans in space/on the moon and Mars colonization don’t pan out (I’m skeptical of the value of those human space presence goals anyways).
Edit: I have no idea if the more modest capabilities of starship/super heavy justify the current valuation, but they at least seem like they would be useful capabilities to maintain.
Edit: I have no idea if the more modest capabilities of starship/super heavy justify the current valuation, but they at least seem like they would be useful capabilities to maintain.
True. Another thing that I keep thinking is that currently the first stages of the rockets are not reusable. Even if they have to build a new starship per flight, they can just reuse the boosters and still be miles ahead of anyone else, with a Saturn V sized rocket ready to launch.
Plus they can expand the real state in the ISS much cheaper by just docking and leaving it there.
Plus they can expand the real state in the ISS much cheaper by just docking and leaving it there.
Activist investors don’t always invest based on projected revenue. They consider it just to make sure the company is not a fraud. However, they don’t care about huge revenue. They care about goals like green energy, new technological frontier. Number of companies that have decent products in these spaces are not many, so supply and demand pushed their price to huge valuations that doesn’t make sense for other companies.
I think there is much more than the ISP market. Think about providing backhaul for WiFi/5G at festivals. Or connections to robotic farm machinery. Or IoT devices in remote areas. Or WiFi on aeroplanes, cruise ships, oil rigs.
military contracts
they are one of the most important companies in the world in terms of national security. Musk has said publicly they are talking to the military about making resupply anywhere on the planet possible within 1 hour. They are also multiples cheaper than any competitor in terms of getting things into orbit
https://futurism.com/the-byte/spacex-building-military-rocke...
they are one of the most important companies in the world in terms of national security. Musk has said publicly they are talking to the military about making resupply anywhere on the planet possible within 1 hour. They are also multiples cheaper than any competitor in terms of getting things into orbit
https://futurism.com/the-byte/spacex-building-military-rocke...
Great question. Unfortunately, I doubt you will get a detailed answer about valuation in this thread since already, there is a disregard about something called 'competition' and other unknowns in the market that many commenters have totally ignored other than they know that SpaceX is run by Elon Musk and would immediately buy shares on IPO day, whenever that happens.
One certainty is that those private investors involved are already set to take some of their profits on IPO day which means they will dump some of the shares to catch out the retail investors immediately rushing to purchase SpaceX shares at very high prices.
Not saying you shouldn't buy at all, but keep in mind that institutional investors are there to make money and will get their return on investment and can/will manipulate the stock to make even more.
One certainty is that those private investors involved are already set to take some of their profits on IPO day which means they will dump some of the shares to catch out the retail investors immediately rushing to purchase SpaceX shares at very high prices.
Not saying you shouldn't buy at all, but keep in mind that institutional investors are there to make money and will get their return on investment and can/will manipulate the stock to make even more.
Does anyone here have SpaceX shares?
I'm sure that there's at least one spacex employee with shares on hacker news!
I meant except for the employees, of course. That's not a terribly interesting case.
I looked into it on Sharespost/Forge but opportunities are rare, minimums are high, and the terms are really bad. Upfront fees, yearly fees, carried interest. SpaceX shares have trading restrictions so employees generally can't just go around selling them on the secondary market.
I picked some up a few years ago for a 20% premium (thankfully no other ongoing fees). I don’t expect it to outperform my other ventures, but it’s like a collectors item. Hard to part with as some one who watched Star Trek as a child.
So yeah if you wouldn’t sell after a 300% gain like me, maybe it’s worth paying a 50% premium (between the markup, carry, fees etc). but I am not buying more. It’s not like they give you priority bandwidth on starlink.
So yeah if you wouldn’t sell after a 300% gain like me, maybe it’s worth paying a 50% premium (between the markup, carry, fees etc). but I am not buying more. It’s not like they give you priority bandwidth on starlink.
Somehow I don’t think the public will get a chance to own any shares.
You could have bought shares via someplace like Equity Zen if you had enough capital (like a couple million, I believe). Wealthy people do it all the time.
The wealthy are not “the public”. At best, they are a subset. And a small one at that. So, you are actually saying “the privileged gets shares, and the public gets the shaft”.
Many FAANG junior engineers salaries qualify them as accredited investors. Definitely a small subset of the general population, but not particularly rare around here.
Someone in VC circles mentioned in passing that you can actually talk to SpaceX about an investment if it's in excess of several millions. Not sure of any other conditions though.
According to Jared Isaacman, he originally spoke to SpaceX with the goal of investing. It was only after he was turned down that the idea of being their first civilian customer came up. It was easier for him to spend ~$200m to fly to space than it was to buy shares.
When did you hear that? I might try to get a few people together to do it. Super long shot, but no harm in asking.
Several weeks ago. I'll ask for details, will post here if I hear anything back.
4 friends and I have been wanting to do something like this. Keep us posted.
Your best bet is probably to talk to a broker that deals in private stock (such as Zanbato), and they can bring you potential deals as they come up. Note that you’re exceedingly unlikely to be able to be a direct shareholder, the deals are in SPVs that hold only SpaceX, and they come saddled with fees, so you need to be prepared to pay a premium.
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Thanks, much appreciated!
Is there a path to by shares if you are a small fish but accredited investor?
I think it will be the first in history to hit 1T on IPO.
Is there any way to buy secondary shares of Space X? (or Stripe?)
Need a new word... centacorn? Centaur?
From the article:
"SpaceX’s new valuation makes it one of the rare private “centicorn” or “hectocorn” companies in the world"
"SpaceX’s new valuation makes it one of the rare private “centicorn” or “hectocorn” companies in the world"
It feels like they should be able to finish Starship for under $10B, then should be able to print extreme amounts of money.
I'm curious how the personal mission/ambition Elon has of SpaceX marries with fiduciary duty and shareholder expectations. If he is being honest, the true goal is "reach mars". There may not be money at the end of that tunnel.
Common misconception — fiduciary duty does not necessarily mean a duty to maximize profits. In Musk’s case, he has repeatedly stated that Mars is the goal, and that shareholders who aren’t interested in that goal should get off the ride.
I'd really love to see an alternative history where A Friedman Doctrine: The Social Responsibility of Business is to Increase Its Profits was not so influential.
For anyone that's interested I'd really recommend just going back and reading the original piece, the regime of profits uber allis that we've lived under for decades is much stronger than even what he was arguing for in that piece.
For anyone that's interested I'd really recommend just going back and reading the original piece, the regime of profits uber allis that we've lived under for decades is much stronger than even what he was arguing for in that piece.
To boost profits you have to provide more value (in a competitive field). And "more value = social benefit" has been a decent approximation so far. It's not guaranteed to hold true in the future though.
A few enormous exceptions to the value = social benefit rule in recent times have been cigarettes, junk food, and the things that lead to superfund sites. We can't get so upset by cigarettes that we lump shelving manufacturers in with Phillip Morris, but we also can't get so excited about shelving that we lump Phillip Morris in with them.
I don't think that cigarettes can be easily labeled as not having a social benefit. Nicotine has cognitive enhancement effects and it seems to help people with some disorders manage them better.[0] The benefits are to the extent that nicotine has been considered as a treatment for ADHD.
Nicotine being generally available could have provided significant amounts of social benefits by allowing people to self-medicate. Current healthcare systems are absolutely not adequate for picking up the slack and that's if the healthcare system is even willing to treat those people (ADHD treatment in some European countries is tricky).
While it was certainly bad how much cigarettes were pushed and I do think this caused more harm than good, it still probably had benefits.
[0] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6018192/
Nicotine being generally available could have provided significant amounts of social benefits by allowing people to self-medicate. Current healthcare systems are absolutely not adequate for picking up the slack and that's if the healthcare system is even willing to treat those people (ADHD treatment in some European countries is tricky).
While it was certainly bad how much cigarettes were pushed and I do think this caused more harm than good, it still probably had benefits.
[0] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6018192/
Cigarettes look like a justifiable product at the level of "we roll leaves in paper," or "we give you a drug with side effects no worse than some other psychoactive drugs," but when you get in to the details of how it was actually done (carcinogens added above and beyond the smoke itself for the purpose of enhancing addiction, marketing designed around the well-known "trigger" stimulus response of relapsing drug users, denial of the effects to offload health liabilities to state insurance) it's no longer anything but an errant time in our history which will hopefully not be repeated. It is the prototypical example of the profit motive departing from the public good.
Sure, but if cigarettes weren't a thing then nicotine would probably be on the enormously long list of banned substances that you go to prison for possessing. The business is probably what kept it available for regular people. I think as smoking winds down there will be more talk of making nicotine illegal, because that's how our governments operate.
"We have to give millions of people lung cancer... to stop our irrational government from banning a relaxing drug" sounds like the plot of a villain from a 1980s Saturday morning cartoon.
It's not so much that this had to happen, but it's something that may have some social benefit. It's an unfortunate side of a society that accepts banning a wide range of things.
I'd argue the biggest glaring exception is advertising. I'd also add all kinds of rent-seeking behavior, a prime example of which are business models relying on abusing intellectual property regulations. And then you have a whole laundry list of business models and tricks that are socially negative but yield nice profits - various incarnations of "razor and blades" model, or the distressingly common in appliances sector - and now in computing hardware too - practice of replacing parts of a product with lower-quality substitutes in subsequent batches, without changing the SKU.
My own opinion is that profits and social value have become mostly misaligned a few decades ago already.
My own opinion is that profits and social value have become mostly misaligned a few decades ago already.
Arguably you could go back to the unsanitary meat packing plants of America's industrial revolution to find the first widely known US example of business doing things that they shouldn't to make more money. Someone with more knowledge of world history could go back farther.
Sometimes yes absolutely, but there are social goods that it's not efficient to capture or represent in the form of profits. The most extreme examples are national militaries and policing, but there's also fire services and arguably health care.
I know that last one is controversial in the US, but I'm a Brit and a conservative voting one at that, and over here and in Europe generally it really isn't at any significant level.
Some enterprises, particularly general social services and infrastructure just work very well as charitable trusts, or non profits. This has been shown to be effective for hundreds of years. Then for-profit enterprises can work alongside them to mutual benefit, such as medical products companies working along with health services. It's just a matter of which model works best in practice in a function, ideology be hanged.
As we're on the subject of SpaceX the NASA model worked very well for a while, but ran into the ground with the Shuttle. Now we seem to be back with a productive synergistic relationship between public and private functions.
I know that last one is controversial in the US, but I'm a Brit and a conservative voting one at that, and over here and in Europe generally it really isn't at any significant level.
Some enterprises, particularly general social services and infrastructure just work very well as charitable trusts, or non profits. This has been shown to be effective for hundreds of years. Then for-profit enterprises can work alongside them to mutual benefit, such as medical products companies working along with health services. It's just a matter of which model works best in practice in a function, ideology be hanged.
As we're on the subject of SpaceX the NASA model worked very well for a while, but ran into the ground with the Shuttle. Now we seem to be back with a productive synergistic relationship between public and private functions.
Except if you find a business plan where you increase profits by emitting CO2 which doesn't have a direct cost associated with it, or make people angrier so they look at more ads, or take bets where if you win you get money, and if you lose you get bailed out by the government.
There's been plenty of failures of profit seeking as a social good that may have been avoided if companies felt a duty to society beyond profit seeking.
There's been plenty of failures of profit seeking as a social good that may have been avoided if companies felt a duty to society beyond profit seeking.
"more value = social benefit" -- only if you ignore externalities, it seems to me. If companies had to pay for their environmental impact alone, much of the S&P500 would be wildly unprofitable. Leaving aside social externalities which are harder to quantify...
To boost profits you need to extract more value, regardless of whether you provide more.
SpaceX definitely intends to increase its profits. It's management just thinks on much longer timescales than almost any other major business on earth.
Everything I've read is that spacex is trying to make humanity multi-planetary. That's not obviously profitable.
Right now they sell cargo launches, crew launches to LEO, Starlink subscriptions, and receive development grants/funding from NASA and the US military.
In the very long-term SpaceX will likely get to Mars and will get to make a claim for a significant amount of real estate and natural resources. Along the way I'm sure they will come up with many more revenue streams.
In the very long-term SpaceX will likely get to Mars and will get to make a claim for a significant amount of real estate and natural resources. Along the way I'm sure they will come up with many more revenue streams.
To sustain humanity as multiplanetary, we'll need to bootstrap a whole new economy - possibly two (the new location and in-space). There's a huge potential to make money in the process.
And they all pretend to agree with that goal, knowing full well that the goal can and will change when holders start to believe that the vision (and, if necessary, the visioneer) has served its purpose and it's time to earn.
They won't have to wait for that Martian end necessarily. Unless SpaceX is wrong about Starlink's global business potential, it's going to become one of the world's most valuable telecommunications services and SpaceX has repeatedly hinted that they're open to spinning it off.
But there's potentially an enormous amount of money along the way - first via taking satellites up and contracting with the US to take astronauts, then potentially providing infrastructure for space mining and heavy industry. There's also orbital tourism.
One way or another, space is going to end up being a valuable industry if only by virtue of the fact that access to space will be a critical national security issue - imagine if China monopolized access to space and could take down satellites at will.
One way or another, space is going to end up being a valuable industry if only by virtue of the fact that access to space will be a critical national security issue - imagine if China monopolized access to space and could take down satellites at will.
The motivations of modern day billionaires regarding space aren't any different than the motivations of 16th century explorers to the Americas.
Iron isn't worth much by the pound. But what if you could mine a solid chunk a few times the size of Everest?
Iron isn't worth much by the pound. But what if you could mine a solid chunk a few times the size of Everest?
Fun point with iron, but I’d probably start with the high purity platinum asteroids :-)
> There may not be money at the end of that tunnel.
I don't know, I find that very unlikely to be the case. If ever there was value in "being first", this is the mother load.
The closest analogy I can think of is the arrival of European powers in the New World. Sure, it's strange, inhospitable and downright dangerous, but even if you fuck everything up along the way and thousands of people die, you're still reaping outsized rewards.
Space is an order of magnitude more inhospitable than the Americas, but (a) so is our understanding of the technology and the universe and (b) humans don't actually need to be in Mars for humanity to effectively reach mars.
I don't know, I find that very unlikely to be the case. If ever there was value in "being first", this is the mother load.
The closest analogy I can think of is the arrival of European powers in the New World. Sure, it's strange, inhospitable and downright dangerous, but even if you fuck everything up along the way and thousands of people die, you're still reaping outsized rewards.
Space is an order of magnitude more inhospitable than the Americas, but (a) so is our understanding of the technology and the universe and (b) humans don't actually need to be in Mars for humanity to effectively reach mars.
What rewards though? Even with rapidly reusable rockets, I can't think of any resources on Mars which would be worth the cost of transporting back to Earth.
Maybe if asteroid mining becomes a viable business, Mars' shallower gravity well and higher orbit around the sun might give it a significant enough competitive advantage for bulk goods like fuel and water that may be needed in the asteroid belt. Still, that's a lot of "ifs" and "mights", for what is, even in the best-case scenario, very long-term venture.
Maybe if asteroid mining becomes a viable business, Mars' shallower gravity well and higher orbit around the sun might give it a significant enough competitive advantage for bulk goods like fuel and water that may be needed in the asteroid belt. Still, that's a lot of "ifs" and "mights", for what is, even in the best-case scenario, very long-term venture.
Even if it is, they have managed to build a profitable and sustainable business model on the way. SpaceX is the launch company everyone wants to use and the competition is at least a decade behind.
> If he is being honest, the true goal is "reach mars".
Its usually best to assume anything a corporate founder, executive, or PR rep says in public about the corporation, its mission, or their personal ambition regarding it is a calculated effort to promote the business interests of the corporation by shaping public perception, and only coincident with the truth to the extent that there is a likelihood that the truth happens to be convenient, or that falsehood or silence would be detectable and have adverse consequences.
Its usually best to assume anything a corporate founder, executive, or PR rep says in public about the corporation, its mission, or their personal ambition regarding it is a calculated effort to promote the business interests of the corporation by shaping public perception, and only coincident with the truth to the extent that there is a likelihood that the truth happens to be convenient, or that falsehood or silence would be detectable and have adverse consequences.
Privatizing Mars won't be profitable? Ever see Total Recall?
Starlink is presumed to be the main moneymaker which could justify a much higher valuation than 100B if their plans pan out
Musk has also said SpaceX will likely spin out and IPO Starlink. I think he also said he intends to use his wealth from Tesla, and therefore likely Starlink too, to fund his Mars ambitions.
There’s also quite a lot of opportunity of Starship is successfully “fully and rapidly reusable”. Point to point transport of cargo and potentially even humans, etc.
There’s also quite a lot of opportunity of Starship is successfully “fully and rapidly reusable”. Point to point transport of cargo and potentially even humans, etc.
Yes starship will open up a lot of opportunities, however the market is not large enough unless spaceX creates it themselves.
Falcon 9 already launches more than 50% of all Payload sent to orbit today.
They will have the launch airline or cargo service company too not just build starship and get regulatory approvals, promote, sell tickets/capacity and provide customer service etc.
All risky steps in a possible side use case for the starship program. Realistically none of this happening before mars missions start likely 2030s.
Falcon 9 already launches more than 50% of all Payload sent to orbit today.
They will have the launch airline or cargo service company too not just build starship and get regulatory approvals, promote, sell tickets/capacity and provide customer service etc.
All risky steps in a possible side use case for the starship program. Realistically none of this happening before mars missions start likely 2030s.