6 ms·

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 succ

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?

lumost 5y ago
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.
- FiberBundle 5y ago
  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.
  - izend 5y ago
    You are discounting the potential military contracts that SpaceX will be awarded.
    - FiberBundle 5y ago
      How large is that market? And how much is it expected to grow?
      - Symmetry 5y ago
        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-30-years-180962249/ 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.
      - minhazm 5y ago
        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-research-120300313.html https://www.yahoo.com/lifestyle/space-launch-services-market...
      - Mountain_Skies 5y ago
        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.
        lumost 5y ago
kiba 5y ago
Starship is a launch platform that makes possible a space economy. Think space stations, lunar outposts, mining and manufacturing.
- rotexo 5y ago
  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.
  - cfcosta 5y ago
    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.
rvz 5y ago
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.
ericd 5y ago
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.
ren_engineer 5y ago
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-rocket-to-ship-weapons-anywhere-world https://futurism.com/the-byte/spacex-building-military-rocke...
rehitman 5y ago
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.
7952 5y ago
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.

lumost 5y ago

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.

FiberBundle 5y ago
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.
- izend 5y ago
  You are discounting the potential military contracts that SpaceX will be awarded.
  - FiberBundle 5y ago
    How large is that market? And how much is it expected to grow?
    - Symmetry 5y ago
      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-30-years-180962249/ 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.
    - minhazm 5y ago
      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-research-120300313.html https://www.yahoo.com/lifestyle/space-launch-services-market...
    - Mountain_Skies 5y ago
      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.
      - lumost 5y ago

kiba 5y ago

Starship is a launch platform that makes possible a space economy. Think space stations, lunar outposts, mining and manufacturing.

rotexo 5y ago
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.
- cfcosta 5y ago
  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.

rvz 5y ago

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.

ericd 5y ago

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.

ren_engineer 5y ago

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-rocket-to-ship-weapons-anywhere-world https://futurism.com/the-byte/spacex-building-military-rocke...

rehitman 5y ago

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.

7952 5y ago

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.