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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

by 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
        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.
    - lumost 5y ago
      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.
  - tenpies 5y ago
    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.
    - wumpus 5y ago
      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.
- TeMPOraL 5y ago
  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.

by lumost 5y ago

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
      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.
  - lumost 5y ago
    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.
- tenpies 5y ago
  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.
  - wumpus 5y ago
    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.
TeMPOraL 5y ago
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.