How are you valuating SpaceX?
Given the IPO, I suspect they're hitting the wall with regards to new starlink signups, and SpaceX is done growing.
SpaceX has $6.6B adjusted EBITDA, which, at a premium multiplier would probably put it somewhere around 80-150 billion as a company.
Not just forcing it into. Forcing the funds to fight for it betting the stock rice higher and higher in a runaway style - the effect created by limited float and high valuation as the funds tracking indexes would try to get the amount reflecting the proportion of the valuation of the company vs. the whole tracked index valuation, and with such huge valuation the limited float leads to the price rise (similar to the short squeeze) and the higher the price on the float the higher the valuation, rinse and repeat...
Do you think people buying the SP 500 are forced to buy Apple? Dell? Workday?
I see headlines like "401k holders forced to by SpaceX" and think "WTF, that is crazy." Then I look at the article and it just says its being added to the SP500.
You may not like that it's being added to the SP500 but no one is saying you are forced to buy any other companies being added to it. I can't believe people are just running with this narrative as-if its logically consistent with what they believe. It's manipulation.
Unfortunately I have very little knowledge of the historical stock market and if this order of magnitude of bullshit valuation has ever occurred before.
>> In space no one can hear you scam
When it comes to dealing with the abuse of power by those who hold power, the question is not "who's allowing them to do this?", it's "who's going to stop them?".
I think we're still a ways away from CEOs admitting that AI actually can't cut the cost of human capital in half.
On the contrary, I think it certainly can. In the sense that productivity per person can be doubled. You could fire half your workforce and do nearly the same output.
Trouble is, everyone who does that will get outcompeted by everyone who didn't fore their workforce, and instead doubled their output.
We've seen it before with factories and computerization.
a) SpaceX is currently trading at ~>1.5T in secondary markets
and
b) most of what the market is reacting to is the _chance_ that SpaceX goes on to become one of the largest companies in the world.
Remember the reaction when Facebook IPOed? It was hilariously overpriced (at the time, on paper, based on existing revenues) and yet here we are. A 1% chance of earning a trillion dollars is worth 10B - SpaceX can more accurately be thought of as a 10% chance of earning 10T rather than a nominal everyday business.
The AI IPOs are broadly in the same ballpark, and if they IPO at less than the last private valuation (a real possibility absent a perfect setup) that triggers a whole bunch of other messes.
The window to get all these things closed before it all comes crashing down is closing, hence the sudden rush to IPO.
To be clear, the Space X prospectus seems to claim it IS an AI IPO.
Then there’s all this other hype and nonsense tacked on to make a franken-company that’s just making a circus of the core story.
In the short term the market is a popularity machine but in the long term it is a weighing machine.
Any tips?
The original “revenue thesis” was that SpaceX, with landing orbital rocket boosters, can undercut all competitors and essentially have a monopoly on payload-to-orbit, and that their lower prices would massive increase the market.
Seems a fine business.
But then a couple years ago they say “actually with this brand new technological edge we can spin up a monopoly on an entirely NEW industry, Space Internet” and within a short timeframe they’ve got billions in revenue off this entirely new service.
It’s hard to predict the future but if Starlink is the last “new space industry” that spacex has borderline-exclusive access to, I’ll be shocked.
The valuation is speculative, yes, but they have such an incredible cost advantage in a nascent space that id be hard pressed to bet against them.
It’s reminiscent of everyone claiming Uber could never succeed, citing the size of the existing taxi market. TAM can change radically when costs move down orders of magnitude, in ways that are hard to predict.
Michael Burry says neither SpaceX nor Anthropic is worth $1T
If the bait and switch of xAI quotas continue, I would not expect their inference services to succeed.
Before getting SuperGrok I had a premium subscription.
After forking over $300 payment (annual) for SuperGrok, my quota was drastically cut immediately. As soon as I paid. This is for premium ($8 / month) much higher quota. Much. Versus $30/month, much lower quota and going lower to the extreme even as xAI has surplus inference capacity to sell to Anthropic. To talk numbers: 35 videos every 90 minutes in premium versus after paying $$ around 30 videos per DAY in “Super” lol Grok. Granted a paltry 10 or so (it varies) of the videos are higher resolution than premium but that doesn’t matter beca premium had unlimited up scaling, now gone. I’ve complained. Silence.
Do not, do not, subscribe to xAI services.
Index funds track an index mechanically. If you run an S&P 500 fund, you have to mirror the S&P 500. If a company gets added to the index, every fund tracking the index must buy it to match the index -- there is no discretion. Pension funds hold a lot of index funds.
So the causal chain is that pension funds track indexes, indexes have to buy the companies in the index, SpaceX got a fast path to the indexes. SpaceX will launch and pension funds will buy the stock, presumably propping up the stock price.
It would take a lot for pension funds to undo this and would be the opposite of index investing.
in theory, people that do this for a living know this? shouldn't they all be raising the red flags on this, as opposed to say just people on hackernews?
What I object to is all the rule changes by NASDAQ to essentially fix the IPO so massive pension funds and index funds are forced to invest in it. There have been multiple submissions about this but in short small floats are normally prohibited for index inclusion (not anymore), the trading days required for price discovery have been dropped to almost zero, the voting share structure would be an issue, the insider lockouts have been fixed and on it goes.
There should be extra scrutiny for a trillion dollar company.
SpaceX does have the Falcon 9, which is the completely dominant launch platform and first-stage reusability gives it an almost unbeatable advantage. Starlink has a lot of potential if satellite handsets can get small and cheap enough to compete with 5G effectively. Obital data centers are bullshit. Starship is going to be a significant drain on finances and the program as a whole faces significant headwinds.
The big problem is xAI. It's a significant drain on SpaceX (costing allegedly $1B+/month). SpaceX would be a better company without it. But it's only there to rescue Elon from his disastrous Twitter purchase and the xAI investors from Elon's first bailout (of himself).
There's almost no point in trying to figure out what a valuation should be because in many cases, nobody cares. Tesla is the posterchild for that.
This has not been the case for a long time.
What do you suppose is BTC's correct valuation? How about TSLA?
If the market can’t actually detect crooks and charlatans until long after they have stolen investors money, its ability to be “correct” is worthless.
Has this type of phenomenon been studied or formalized in any way by economists? I mean specifically how a cult of personality develops around a single individual causing the market to lose its shit. Or the increasing meme-ification of financial instruments.
These are both uniquely 21st century phenomena. But I'm not familiar enough with finance / economics to know what to read up on to understand what is going on.
SpaceX is on a whole new level of bullshit. I think all these guys know how to do is double down. If the hype isn't working, its not stupid and big enough, so you start talking about transhumanism and singularity and other BS in your SEC filings.
There are MAJOR rule changes made to allow them to do this (90 day wait-time reduced to 5 days, financial stability requirements lowered or removed), which is why automated rules like that were created ("oh, if they make it to X, they were already vetted for Y, Z").
A lot of people are throwing a lot of trust and reputation on the bonfire to make this happen.
I looked into the how the rule-changing works. NASDAQ is what's called a Self-Regulating Organization ("SRO") in the legislation so it has a lot of power. Were it a government agency, it would be more difficult. Technically, the SEC has to approve all rule changes by SROs but in this administration in particular, that's just going to be a rubber stamp. By the way here's a speech the head of the SEC previously gave about deregulation of capital markets [1].
I was also curious if Loper Bright had changed anything here but it appears not. The sstatuory language here is clear rather than intentionally or unintentionally ambiguous.
So the funds can technically challenge any such rules. They have standing. But the bar is difficult and I don't see it happening.
But if this goes badly, what I think you'll see is changes in governance by pension funds that'll be reflected by Vanguard and Blackrock, which is "index-like" funds that have stricter governance with rules closer to what was the case before these rule changes were rammed through. I could be wrong. I hope I'm not.
[1]: https://corpgov.law.harvard.edu/2026/04/22/speech-by-chair-a...
Pensions have strong and weird investment rules, and you have no control over what they do other than law. This makes them generally a worse investment (but if you live longer than average they are great anyway) so a 401k is better for most.
For example, the Australian government has selected Project Kepler (now called Amazon Leo) to provide broadband services to the Australian Outback.
https://www.nbnco.com.au/corporate-information/media-centre/...
And geopolitical shenanigans in Ukraine with Musk and Starlink means that it may not be a reliable partner.
SpaceX was launching a modest % of the LEO constellation but after the Blue Origin failure, SpaceX is the only launch provider who can fill that gap and actually let LEO deliver on contracted time.
Please don't misunderstand me, I'm no Musk sycophant though I do love SpaceX and Starlink. I want us to have multiple providers of super cheap space launch capabilities and multiple diverse LEO satellite constellations (3-4 on a global scale makes sense I think?).
I'm sure BlueOrigin will get there some day and I'm sure LEO will get there too (maybe even in the 2028 window if they expand their SpaceX launch partnership).
> This has not been the case for a long time.
I think this comes down to a disagreement about what "long term" means. In finance, I would suggest a _lower_ bound on long term is 10 years. More comfortably, I'd suggest something like 20-30 years. This is long enough to ride out most depressions, and it is still fits within a persons working life-time. It also roughly matches the scale at which people should be planning for retirement and long-term care (imagine if you started your retirement planning just 10 years from retirement, it would be very difficult). So I think neither BTC's not TSLA's hype has reached long-term yet. They have been around long enough to meet some of these timelines, but the excessive hype really hasn't been so long -- maybe 5 years or so.
I don't think dominating an index to anywhere close to that degree is likely here, but I wouldn't be surprised to see some similar strategies being used. Changing the rules is already from the Nortel playbook: The Nortel Rule allowed index funds to have over 10% of their holdings in a single stock.
Completely. As if "We dominate the space launch and satellite internet markets" isn't enough, they're trying to tack on all this hypothetical stuff to inflate the valuation. Maybe some of it will come true in 50-100 years, but I'd bet a lot of it won't (c.f. https://en.wikipedia.org/wiki/List_of_predictions_for_autono...) because telling the future is hard.
It'll be a real shame if the core, cool engineering that's happening at spaceX gets compromised by all the shenanigans going on elsewhere.
> Musk advisers have reached out to major index providers seeking ways to secure earlier inclusion in market benchmarks to lift shares
> Advisers for the company, which recently merged with xAI, have reached out to major index providers, including Nasdaq, to discuss how SpaceX and this year’s other hot startups might join key indexes sooner than normal, according to people familiar with the matter.
> SpaceX hopes to skirt traditional rules in an effort to bring liquidity to its shareholders sooner as part of its planned IPO. SpaceX advisers have sought index policy changes that would fast-track its entry into major indexes for the company and benefit other highly-valued private companies, the people said.
This is simply not _companies being added to SP500, etc._ as you say. This is forceful change of the rules so these companies can reap benefits and it optics is that funds are being _forced_ to buy in.
After five days the index funds have to buy at the last price making it final.
In other words even if the vast majority of the market believes it's worth much less, they can force a high price and force basically everyone to hold it via retirement funds.
How long after their IPOs were they added to the appropriate indexes? Did the rules change specifically for them?
If it's an index fund, like the vast majority of pension/roth/etc funds, then yes, yes they are. It's literally the whole point of an index fund.
https://www.investopedia.com/terms/i/indexfund.asp
> For broad indexes like the S&P 500, it would be impractical or expensive for an investor to construct the right proportions in a portfolio. Index funds do the work by holding a representative sample of the securities. S&P 500 index funds, the most popular and oldest such funds in the U.S., mimic the moves of the stocks in the S&P 500, which covers about 80% of all U.S. equities by market cap.3
So while yes, people are parroting things they don't understand, so are you.
The real reason Tesla was remarkable, and why Musk bought into it, was that they released a mass-market electric car that didn't look and perform like a vacuum cleaner and that got an okay range for commuting. That was the value proposition. China can now exceed those design parameters at a wholesale price of about $8k USD.
I think the most likely scenario is that there eventually will be the changes you describe, but if not enough people squeal now, then it won't be until after a bunch of people lose their savings either because of this or some follow on scam that finds a way to take advantage of passive money.
OTOH, the changes may expose them to SpaceX before they could reasonably rebalance their holdings, even if they were to stop buying the affected indexes immediately.
I don't know what to think about data centers in space. It's hard to see how it could be cheaper than terrestrial. Plus, if you actually have to service any of those space assets, it's going to cost a fortune.
Asteroid mining doesn't make sense to me unless you are going to use those mined resources in space somehow, and that seems far off.
I think you may be underestimating a little here. Even in places with reasonable wired availability, the convenience of being able to slap a dish on top of your house and get pretty good internet ~anywhere for ~not too much is pretty valuable.
I agree with everything you said about SpaceX's tech, but it's also been saddled with xAI and Twitter.
I thin some of us were betting against a return to the bad old days of race to the bottom for labor, but the gig economy sure kicked the shit out of that hope. But it sure helps those "employment" numbers!
And then meanwhile the whole thing got merged with the corpse of Twitter and the failed xAI. With the latter nobody can quite explain why it continues to employ extremely overpaid 20 year olds when it has meanwhile pivoted to selling energy to its biggest competitors, an absolute turd of a business.
Also, a common misunderstanding of orbital mechanics (probably amplified by otherwise great cinematography, but poor physics depictions movie Gravity) is that after a collision things move to higher orbits and thus remain up there forever / change planes and affect other satellites. But that's not how it works, the orbit gets elongated, but the periapsis remains the same (or slightly lower), so the things / parts / pieces still re-enter the atmosphere. And the satellites are grouped in rings, with different inclinations, making it extremely hard to reach one from the other.
Also also, space is like really really big. Plenty of space (hah) to put lots of rings of satellites and coordinate between themselves up there. The operators are the first ones who care about it, and they're slowly improving the existing systems, in both tracking (and access to tracking) and automated collision avoidance. Having 10k sats up there makes you good at keeping them separated.
People also don't talk about different orbits. We can use higher low earth orbits if lower orbits are blocked.
Also, it is possible to clean up debris. The low cost launch means lower cost cleanup. My understanding is that big objects are most dangerous cause they would cause a lot of debris.
If a 1 to $1.5t IPO that was fast tracked onto the S&P500 and then hoovered up a bunch of index fund money becomes a dud, the organic rebalance is going to start with a full reassessment of if index funds and the S&P can be TRUSTED.
Its very possible it will be more than a blip, although to be fair if it isn't it's going to be the sort thing you aren't going to dodge.
Yes a -1% day should be nothing to a long term holder. Yes they're buying the market; if the market is wrong they shouldn't really have any recourse. But one can also understand that a -1% day that accrues ~entirely to the benefit a small group, who appear to have engineered that outcome has much more emotional valence than a typical down down. It doesn't feel like a bad day on the market, it feels like a heist.
https://www.defianceetfs.com/xmag/ ("XMAG, the first ETF designed to provide investors with exposure to the S&P 500, excluding the “Magnificent 7” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla). XMAG offers a unique opportunity for investors to access the broader market while reducing concentration risk in these dominant tech stocks.")
https://www.aboutschwab.com/mss/story/how-investing-and-gamb... ("Investing and gambling can both be fun. But they are not the same.")
(none of this is investing advice, educational purposes only)
VOOG has returned 18.28%/yr over 10 years vs 15.63%/yr for VOO, a meaningful gap driven almost entirely by Mag 7 dominance. XMAG has no 10-year track record.
That’s the way indexes roll. I don’t invest in indexes for this reason.
There is a separate structural issue with indexes that is being ignored here. Indexes were never really designed to accommodate companies going public so late with high revenue growth. A couple decades ago companies went public when they were so small that they could grow into the index. This reflects changes in the nature and structure of the capital markets, these new IPOs are just a manifestation of this reality.
Annoying they pushed it into the indexes, but like you said, we've also never had a company come out in the 1T range or even the x00B range. These indexes are supposed to represent the market and can't ignore a 1T market cap company for very long.
EDIT
One other thing to add, is that we still do not know what the stock will price at. It's already come down once, and as more information comes out it can continue to come down until it's finally priced the day before the first trading day.
The 10-year total return is 327%, and the 15-year average annual return is 14.4%.
Hard to beat.