SpaceX stock drops to a new low and loses $1T in value in a month(businessinsider.com) |
SpaceX stock drops to a new low and loses $1T in value in a month(businessinsider.com) |
I know Dwarkesh Patel was interviewing Elon and brought up the fact that power cost for data centers is only 20%. The number I could find is 7-18%? GPUs are the majority of the cost. I don't think Elon responded directly to that.
There's the argument that licensing to build these things is cheaper in space. But earth has a lot of space in the middle of nowhere that no one would object to. That seems cheaper than space.
And the heat dissipation argument against it seems like a good one but I don't know if it's actually just a small engineering problem that can be solved cheaply or more fundamental.
On the plus side, you could say there is better connectivity in orbit. But if you're running inference, you'd probably want to talk to the same server that has your context cached. As it whips around earth, your latency would vary a lot, right?
I'd love it if someone could point me to a better analysis. It's an interesting question in general. Not just because one of the highest valued companies in the world is based entirely on its feasibility.
This video points out that even if you take the most unrealistically optimistic value of every variable, it still doesn't make sense:
"The Space Data Centers Situation is Insane" https://www.youtube.com/watch?v=_qpdUNMt2yg
Good coverage of the relevant problems are here https://peraspera.us/realities-of-space-based-compute/
Perhaps an understated one is chip obsolence. With a terrestrial datacentre you replace chips when they're uneconomical due to how much faster alternatives are or when they reach end of life; with an orbital datacentre you replace them on fixed cycles depending on how much propellant you launched with.
But nobody doubts you can build them, it's just hard to imagine a scenario in which a terrestrial equivalent isn't cheaper, more flexible and more reliable. Actual good reasons for adding compute capacity in space are, ironically, the latency: for some edge cases like autonomous control systems that matters more than the attractive unit economics of sticking computers in a building.
Still, the economic case for ODCs [eventually] is more compelling than the case for the value of that revenue stream to SpaceX exceeding current US GDP in the not too distant future...
The first is a subtle implication that the share price of SpaceX is dependent on the short term feasibility of data centers in space. I don't think it is. Its more dependent on public sentiment and hype, which is detached from the truth and can have its focus directed elsewhere as the company engaged in many activities. I would also argue that the company's culture matters more than any engineering specifics, especially with how diverse their assets, competencies and offerings are. Maybe you didn't mean to infer this though.
Second, if intelligence is something like electricity, in that it's fungible and translates fairly universally into value, then it's safe to assume civilization will pursue expanding it endlessly (and will never have that demand satiated) like a force of nature. If this is true, would we rather have 1000x or 1,000,000x the data centers we have today within earths atmosphere or out in space somewhere? Personally, at that scale I would prefer them far away. (Not even in LEO)
There is no core physics reason why AI data centers in space can't work. It's just really hard engineering. Kind of like what reusable rockets looked like 10 years ago... All the experts were nay-sayers.
Short term, who knows, SpaceX could struggle financially and be a terrible investment today. I have no idea. It seems overpriced to me now and it did at IPO. But on a 10 or 20 year investment horizon, it looks a lot more interesting. I don't own shares but maybe dollar cost averaging in at some point isn't a bad idea especially if the price comes down further and as part of a diversified portfolio.
SpaceX is not a growth stock. The launch business is limited and circular with Starlink, Twitter is a loss and xAI's hardware rental business is being entered by Meta and others.
38 comments - https://news.ycombinator.com/item?id=48948435 - "Short sellers notch $8.7B profit as SpaceX shares dip to IPO price" - reuters.com | 71 points | 3 hours ago
281 comments - https://news.ycombinator.com/item?id=48933344 - "SpaceX stock erases all its gains and slides below IPO price in intraday trading" - latimes.com | 306 points | 1 day ago
603 comments - https://news.ycombinator.com/item?id=48920181 - "SpaceX bond worth 10% less than issue price – heading for junk bond status" - ft.com | 561 points | 2 days ago
98 comments - https://news.ycombinator.com/item?id=48639057 - "SpaceX sheds $400B in market value as debut rally hits reverse" - ft.com | 77 points | 24 days ago
66 comments - https://news.ycombinator.com/item?id=48634931 - "SpaceX Drops 14% in One Day, Price Now Below IPO Launch" yahoo.com | 62 points | 24 days ago
21 comments - https://news.ycombinator.com/item?id=48598558 - "The average SpaceX buyer post-IPO is almost under water after two-day slide" - cnbc.com | 40 points | 28 days ago
Bonus:
149 comments - https://news.ycombinator.com/item?id=48604186 - "Americans express unease over SpaceX's influence on retirement savings" - theguardian.com | 253 points | 27 days ago
94 comments - https://news.ycombinator.com/item?id=48576113 - "With Wall Street’s help, you’re about to be forced to buy stock in SpaceX" - paulkrugman.substack.com | 114 points | 29 days ago
For what possible reason would a failed rocket launch affect the fortunes of an electric car company?
Might even be able to write it off on their taxes as they'd be doing the planet a public service.
Clown show:
Raymond James - $800
Morgan Stanley - $300
Deutsche Bank - $255
JPMorgan - $225
Goldman Sachs - $205
Citi - $200
There is an enormous open short position in SpaceX now https://www.bloomberg.com/news/articles/2026-07-15/short-sel...
The float is going to triple in several steps with 900M employee stocks getting added to 550M issued in the IPO.
The thesis that larger pool will depress prices even if all other things remain same is quite sound, just like a small float inflates the price .
These events are merely triggers / focal points as would the quarterly results next month and various unlocking dates .
the traders are savvy they are just looking at different things and using company news to focus the price actions on .
Valuations are not based on business models or financial performance for the highly visible public companies, that has always been the case since earliest days of the modern market .
it is just vibes or to put it differently a strong belief/faith discounting every risk . Without that faith TSLA won’t trade at 350 PE with middling growth no new products currently scheduled . SPCX at $2T+, even for an AI company a lot - it is larger than valuations of both market leaders combined while having <5% share/revenue .
Maybe the faith will prove justified or maybe not, either way the price moves by sentiment alone not any actual business logic
That is exactly what Musk was counting on. Reality is boring and no fun. People want promises, stars and dreams.
A dip because of a scrubbed launch is a blip on the radar compared to the catastrophically bad ideas Musk is promising to implement. Data centers in space? That's just lunacy. A ridiculous idea from a ridiculous man.
Might have something to do with Musk making outlandish promises (AI datacenters in space) and the fact that most of the company's value is tied up in xAI, the shittiest AI provider.
* the obvious one is Elon - both valuations are largely propped up on belief in Elon. Whenever he falters, his companies that are speculation-based (all of them) will take a hit
* Elon pitched SpaceX as an AI company. Tesla needs better AI because they keep sending signals that they won't be at L5 anytime soon, and Tesla's valuation is still very speculative[0]at least in part due to the race to L5 autonomy. i.e. Tesla will need better AI , and SpaceX is that natural fit (on paper, at least, I'm not sure SpaceX has any useful AI for any use case, let alone self-driving).
[0] Tesla's PE ratio of is still 30x massively out of line with it's actual earnings and ~30x the American automotive industry.
China now insists that self-driving cars be "SAE level 3.5" if they let the driver take their hands off the wheel. "If the driver fails to respond within the specified timeframe or is physically unable to take control (e.g., due to unconsciousness), the system must automatically initiate a Minimal Risk Manoeuvre (MRM). This includes the ability to change lanes and park the vehicle safely in a location that does not obstruct traffic, while minimising risks to passengers and other road users."[1] That takes effect in China July 1, 2027. Mercedes Drive Pilot is close to this level. Tesla, not even close.
That's probably the right answer in the assisted self driving space.
[1] https://www.electrive.com/2026/02/26/china-introduces-new-re...
Once a company is listed, exchange rules prohibit adding super-voting shares, it has to be done prior to listing. In order to qualify for the S&P500 a company has to have a large enough market cap and be net profitable over an entire year in the market. It seems unlikely that SPCX will qualify for that bar in the foreseeable future.
However, a merger can combine both features into one company. TSLA recently rechartered in Texas, which makes it very hard for shareholders to sue. Presumably most of the TSLA shareholders today like Elon Musk, so they would be okay with the merger, and as mentioned above Elon has full control over SPCX. Since they are in totally different markets it is hard to see what sorts of anti-trust arguments even a hostile government (e.g. Europe or Democratic state level AG's) could convince a judge of. But he does kinda need the merger to seem like something of equal companies, not an acquisition of a failing company by a successful one, so that he can keep both of the features that he wants.
Also, the vibe is harshed, which is actually the most important factor for these kinds of wild valuations.
Put another way, the US spent $250b~ (inflation adjusted) dollars on the shuttle program, and we get much more output from SpaceX than we did for Shuttle.
The launch number is irrelevant. Starlink is SpaceX's largest customer and that is a problem. The revenue from launches is not great. The xAI fantasies are unproven.
Multiple launch vehicles and crew vehicles exist now, and more are on their way.
Taking tech from TRL1 to TRL9 with 2.5million moving parts in it is vastly different from coming up with another TRL9 design.
In days of yore you'd look at the fundamentals like:
- ability of the firm to service its debt
- profitability ratios
- revenue growth
- total addressable market
- competition
- market dynamics
etc.
You'd also pore over their quarterly and annual regulatory findings and see what's in the MD&A sections, assess the competency of senior leadership, look at how they view themselves, etc.
Then you'd look at comparable firms, i.e. companies doing the same or materially-similar things. Some of those are "pure plays", i.e. companies selling exactly the same product/service (e.g. TSMC, UMC, GFS) and some are not pure (e.g. red bull sells energy drinks but it also has a bunch of other stuff like a formula 1 team).
You compare your target company's fundamentals to those of its comparables, see what prices those comps are trading at, look at discounted cash flows, and then you pull a semi-informed number more or less out of your ass for the target as a forecast, based on your analysis.
These days, though, valuations are more or less completely disconnected from fundamentals. This is why Warren Buffett-style value investing is commonly said to be dead in today's market.
It was the same thing with Tesla. Everyone screaming when Tesla had. $20bn market cap how they were extremely over valued because their car sales revenue paled in comparison to the other car manufacturers and yet their market cap was in the same ballpark. It was such a joke and so obviously unprofessional / dishonest. The traditional automakers were all nearly insolvent (tens to hundreds of billions of debt) and had stagnant growth. At the time Tesla had no debt and was growing consistently ~70% a year. Anyone willing to actually analyze and see the truth and not just read headlines and repeat them could have seen it.
It could grow, it could shrink, but it seems like the root comment misunderstood the headline by thinking it's current market cap is <$1T