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Since the S-1 filing, xAI has taken over and is likely the largest share of revenue. I would estimate that ~95%+ of xAI revenue, and 100% of its profit, is from

by runako 4mo ago

Since the S-1 filing, xAI has taken over and is likely the largest share of revenue. I would estimate that ~95%+ of xAI revenue, and 100% of its profit, is from renting their datacenters. This is a datacenter REIT bolted onto a social media company bolted onto launch business bolted onto a niche ISP. The expected price to sales is ~100x. The best datacenter REITs trade at ~10x and pay a dividend, which SpaceX does not. Meta trades at ~7x sales. Comcast is one of the best-run ISPs, and it pays a 5.5% dividend on a stock trading at < 1x sales. To say SpaceX is overvalued is to even beginning to convey the magnitude of the situation. It's going to be very painful when the valuation normalizes.

theturtletalks 4mo ago
Do companies like Uber, Tesla, etc ever intend to pay dividends? If a stock never intends to pay dividends, the value of the stock is simply the price the next shumck is willing to pay.
- runako 4mo ago
  Excellent question. They may not intend, today, to pay dividends. However, the same question could have been asked about the successful tech companies of the '00s. Companies don't like to start paying dividends until they are fairly certain of their future profit stream and therefore ability to continue paying (and increasing) the dividends in the future. Apple, Oracle, Nvidia, Cisco, Alphabet, Meta, Salesforce, and Qualcomm all pay dividends now. It's not unreasonable to expect Uber and Tesla to pay in the future. However, the median time after IPO for similar companies to pay a dividend is close to 20 years. So we could expect Uber to perhaps wfstart paying sometime around 2039. Tesla...is Tesla so who knows?
- missedthecue 4mo ago
  The value of the stock is your share in the underlying business. Because underlying business changes over time (hopefully for the better) you are not simply hoping another shmuck pays you more, like with tulips, whose underlying value does not change with time. You own a portion of a concern that is improving its own fortunes. Furthermore, dividends are approved by the board once per quarter or once per year. A dividend on a stock is not a contractual guarantee like it is on a bond. Therefore, it cannot be a basis of value. With your logic, Berkshire Hathaway is a long-running greater-fool tulip bubble whose shares are only bidded up by finding more shmucks.
  - nestes 4mo ago
    Well, the value of the stock for people who essentially do not have any meaningful control of the business must essentially be tied to the expectation of some liquidity event down the line -- future cash flows. So this could come in the form of dividends, sale of the stock, bankruptcy proceedings, or a purchase of the business. If I knew for certain (big if) that a business would never have a liquidity event and I couldn't transfer my ownership then it's dead capital for all intents and purposes and you could consider its value essentially $0, right?
    - kjshsh123 4mo ago
      But you can transfer your ownership.
      - sebastos 4mo ago
        And you can sell your tulip. But if the mania stopped and you suddenly _couldn’t_ find another person to sell it to, would you now be upset you paid $5000 for a tulip? What’s the value at which you wouldn’t be upset? Ok, that’s the intrinsic value of a tulip to you.
        runako 4mo ago
        The thing about a profitable business that is different from a tulip is that it can at any point decide to issue a one-time or ongoing dividend. It can sell off parts to create cash. It has lots of optionality. Public companies have even more liquidity, which creates more optionality. Even if you don't have immediate liquidity, it would obviously be worth something to have a slice of e.g. Rolex SA. That's obviously different than owning a tulip.
        cavemandaveman 4mo ago
        Berkshire Hathaway doesn't pay a dividend yet the business has steadily grown more valuable
        4mo ago
- deleted 4mo ago
  [deleted]
- marcosdumay 4mo ago
  US companies normally do stock buy-backs instead. It is a way to distribute the money to the investors, that their tax system favors.
  - krupan 4mo ago
    There are lots of US companies that pay dividends. Another commentor lists some tech companies that do, and there are lots of other types of businesses that do. A quick internet search will give you a list. You are correct that stock buybacks are another way that companies reward their shareholders.
    - runako 4mo ago
      Good call. I should have said that most of those companies also do buybacks as part of their capital return strategies.
      - matwood 4mo ago
        And, as an investor I absolutely prefer buybacks so I can control my tax liability.
- bottlepalm 4mo ago
  Not really, the company reinvests the dividends, increasing the value of the company/stock. The big difference is you pay taxes of dividends - you don't pay taxes on the stock going up year over year. Unrealized gains compound much faster than realized ones.
bwfan123 4mo ago
Circular financing at its finest. And Self-dealing between the hyperscalers, openai, and anthropic. google invests in anthropic and spacex - and shows appreciated values as earnings. Then it turns around and rents tpus to anthropic to show it as revenues. The main buyers and sellers for all of this are the hyperscalers, openai and anthropic. It is a game of musical chairs while the party is still on.
- SwellJoe 4mo ago
  They're all betting ignorant retail investors will be the final bagholders. It's a license to steal from retirement accounts.
- webninja 4mo ago
  I think the measurable term for this is “Velocity of Money”.
- akarii 4mo ago
  They are just trading company stocks for compute.
rootusrootus 4mo ago
TSLA has a forward PE of ~200x. That is probably the most logical comparison with SpaceX. Proof that the market can stay irrational for quite a long time. It fills me with a bit of dread about the future of the market. I am 10 years out from retirement, have a bit over 1M sitting in that market, and I wonder if it will implode in the meantime. I am fairly committed to the "invest like a dead man" (i.e. index funds, no touch), but the world we live in today makes me have real doubts that the next few decades will look anything like the last few.
- tony69 4mo ago
  Plenty of hedged equity funds out there. Trade some performance for peace of mind.
  - throwaway2037 4mo ago
    What is a "hedged equity fund"? Can you provide an example?
    - tony69 4mo ago
      [dead]
    - zuzululu 4mo ago
      there's no such thing. He's talking about L/S funds. The market neutral funds survive by capitalizing edge cases but during real market turmoil the whole thing blows up.
- Waterluvian 4mo ago
  About 10 years out as well. I’ve concluded I just invest a very balanced set of index funds and bonds and GICs across a handful of institutions, and then invest in my home because even if the housing market collapses I get to enjoy my nice home. Other than that I’m just not over investing for retirement and instead making sure the money is spent today on family growth and experience. I eventually just got tired of everyone with an opinion on what doing it right looks like or how to predict the market.
bmitc 4mo ago
> It's going to be very painful when the valuation normalizes. Painful for everyone except the grifters who are engineering this and can get out early enough with their stolen millions and billions. Musk's companies are just a giant pyramid scheme.
krupan 4mo ago
I love this clip (this is the other guy that predicted the 2008 crash, played by Steve Carell in The Big Short). Cult Stock is a great way to think about it. https://x.com/i/status/2061808563979251857 https://x.com/i/status/2061808563979251857
preommr 4mo ago
My only consolation is that this is so obvious that it's not going to lead to a disaster. Things like the housing crisis happened because long-established institutions like credit ratings and mortgage lenders didnt do their jobs. It's the swiss cheese model, hidden behind curtains. This is like a giant sign saying you can buy $2 for a $1.
- adestefan 4mo ago
  This is exactly how the dot com crash happened. People point out this like pets.com, but that wasn’t the issue. It was the musical chairs the played with the fiber telecoms. Today it’s data centers.
djfergus 4mo ago
I feel like your analysis is correct and it’s overvalued but employees and insiders have already been selling shares (eg on platforms like Forge) for around the $130-135 IPO price. So there are buyers, question is if there is enough to consume the liquidity of a $75B IPO.
- sroussey 4mo ago
  I think there will be plenty of demand. Most of which is not bothered by price at all. When the indexes get in -- watch out! They will have to buy so much SpaceX, that it will force them to sell everything else.
  - riffraff 4mo ago
    They won't, SpaceX will weigh less then 1% in most indexes, since they're mostly float adjusted, only NASDAQ will overweight them, but FTSE/MSCI/CRSP/SP will not. It's still quite some money but it won't crush the market by itself.
fc417fc802 4mo ago
> Comcast is one of the best-run ISPs You mean the company with such a bad reputation that it had to aggressively rebrand? I take it you've never had the displeasure of doing business with them. That said it wouldn't surprise me in the slightest to learn that it was one of the most profitable ISPs for investors. That would fit quite well with the general theme of prioritizing the interests of investors over all else.
- kube-system 4mo ago
  Comcast is a successful business in spite of their customer satisfaction. You don’t need to please your customers when when you can involuntarily extract their money anyway.
  - Robotbeat 4mo ago
    Comcast is not a rapidly growing company, though. This isn’t hypothetical. SpaceX is increasing Starlink revenue by like 50% per year. And their current Starlink constellation, about 10,000 satellites, has been launched entirely by Falcon 9. They’ve been waiting to launch much larger satellites on starship (in fact they had versions of these ready for several years now, and recently did suborbital tests of some of them on recent starship flights). Starship is about 5-10 times the capacity of Falcon 9, is fully reusable, & has larger diameter allowing much larger satellites. They asked for approval for roughly 40,000 of these larger satellites (~3 times the size of current ones, each about 10 times the bandwidth… and half of the 10,000 are even older designs), and they may eventually do about 100,000 of them & further increase the size and reduce latency (by operating at lower altitude). It’s not an exaggeration to say SpaceX intends to increase bandwidth by at least 100x, maybe a lot more. They intend to use a lot of this extra capacity to expand into mobile coverage as well. They are leveraging their platform for incredibly important national defense capabilities as well, and they operate as their own backhaul using on-board laser links. They can service anywhere in the world that will let them, including lucrative sectors like aviation. I do think it makes sense to value SpaceX as a rapidly growing business, not as a dividend-giving, plateaued ISP like Comcast. This is all before even mentioning the idea of orbital datacenters.
narrator 4mo ago
Datacenter REITs do not directly own all those scarce wired up and powered Nvidia chips.
- anonymous_user9 4mo ago
  If they did, they'd be less valuable. Unlike real estate, those chips will be obsolete in a few years.
  - adammarples 4mo ago
    This chips will still be able to process tokens in a few years and you'll still be buying them
- runako 4mo ago
  The stated reason SpaceX and others are talking about doing the near-impossible (orbital datacenters) for astronomical sums is that they are unable to do what e.g. Digital Realty does as its core business. Conventional wisdom is that building datacenters is easy, but maybe the CW is wrong on this? If it were easy, companies would not be talking about spending $1500+/kg to put datacenters in orbit. Note that they assume they can get the chips either way, they just need somewhere to run them and they are saying it will be easier to get them orbital than to literally do what Digital Realty does now.
  - narrator 4mo ago
    The main problem is that nobody is building new power except China. In space solar panels are 5x more efficient and run 24/7 and you don't need the kind of permits you need to build on earth. That, and you've got NGOs funded by China connected billionaires that relentlessly sue to stop data centers and new power in the United States, and you don't have to deal with that B.S in space because it's federally regulated and there isn't any environmental impact to sue over.
    - runako 4mo ago
ChuckMcM 4mo ago
Yes, yes it is. (going to be painful) If the IPO gets fully subscribed. For a long time I've pointed out that after the dot com crash the 'unicorns' were mostly on private markets and when they washed out only the 'qualified' investors got hurt (and of course their employees needed to find new jobs). The retail investors were protected because the SEC made sure you couldn't lie to them without penalties. Once the SEC got defanged, retail investors once again became the primary target.
gmerc 4mo ago
Profit … to be seen. Compute is not a high margin business and Colossus was idle for enough of its depreciation timeline to put a question on profit. In any case none of this is a better investment than Nvdida because that’s where all the money is going
th234oi34087 4mo ago
> To say SpaceX is overvalued is to even beginning to convey the magnitude of the situation. It's going to be very painful when the valuation normalizes. The scale of corruption in trying to use Index-Funds and Retail investors as the exit liquidity to bail out the VCs who were pumping the AI hype is unheard of. It's become so damn brazen! I'm surprised Musk's image hasn't crumbled in front of his fan-bois.
_heimdall 4mo ago
Not to mention all the IPO rules changes that all but guarantee SPCX will be swept into 401ks and index funds in very short order. They seem to believe the over valuation can be hidden if the shares get picked up by the public quickly enough or that the it can be a quick exit that leaves the public holding the bag.
tcp_handshaker 4mo ago
This is like BMW bragging about their thriving auto business while renting all their car factories to Toyota.

by runako 4mo ago

theturtletalks 4mo ago

Do companies like Uber, Tesla, etc ever intend to pay dividends? If a stock never intends to pay dividends, the value of the stock is simply the price the next shumck is willing to pay.

runako 4mo ago
Excellent question. They may not intend, today, to pay dividends. However, the same question could have been asked about the successful tech companies of the '00s. Companies don't like to start paying dividends until they are fairly certain of their future profit stream and therefore ability to continue paying (and increasing) the dividends in the future. Apple, Oracle, Nvidia, Cisco, Alphabet, Meta, Salesforce, and Qualcomm all pay dividends now. It's not unreasonable to expect Uber and Tesla to pay in the future. However, the median time after IPO for similar companies to pay a dividend is close to 20 years. So we could expect Uber to perhaps wfstart paying sometime around 2039. Tesla...is Tesla so who knows?
missedthecue 4mo ago
The value of the stock is your share in the underlying business. Because underlying business changes over time (hopefully for the better) you are not simply hoping another shmuck pays you more, like with tulips, whose underlying value does not change with time. You own a portion of a concern that is improving its own fortunes. Furthermore, dividends are approved by the board once per quarter or once per year. A dividend on a stock is not a contractual guarantee like it is on a bond. Therefore, it cannot be a basis of value. With your logic, Berkshire Hathaway is a long-running greater-fool tulip bubble whose shares are only bidded up by finding more shmucks.
- nestes 4mo ago
  Well, the value of the stock for people who essentially do not have any meaningful control of the business must essentially be tied to the expectation of some liquidity event down the line -- future cash flows. So this could come in the form of dividends, sale of the stock, bankruptcy proceedings, or a purchase of the business. If I knew for certain (big if) that a business would never have a liquidity event and I couldn't transfer my ownership then it's dead capital for all intents and purposes and you could consider its value essentially $0, right?
  - kjshsh123 4mo ago
    But you can transfer your ownership.
    - sebastos 4mo ago
      And you can sell your tulip. But if the mania stopped and you suddenly _couldn’t_ find another person to sell it to, would you now be upset you paid $5000 for a tulip? What’s the value at which you wouldn’t be upset? Ok, that’s the intrinsic value of a tulip to you.
      - runako 4mo ago
        The thing about a profitable business that is different from a tulip is that it can at any point decide to issue a one-time or ongoing dividend. It can sell off parts to create cash. It has lots of optionality. Public companies have even more liquidity, which creates more optionality. Even if you don't have immediate liquidity, it would obviously be worth something to have a slice of e.g. Rolex SA. That's obviously different than owning a tulip.
      - cavemandaveman 4mo ago
        Berkshire Hathaway doesn't pay a dividend yet the business has steadily grown more valuable
        4mo ago
deleted 4mo ago
[deleted]
marcosdumay 4mo ago
US companies normally do stock buy-backs instead. It is a way to distribute the money to the investors, that their tax system favors.
- krupan 4mo ago
  There are lots of US companies that pay dividends. Another commentor lists some tech companies that do, and there are lots of other types of businesses that do. A quick internet search will give you a list. You are correct that stock buybacks are another way that companies reward their shareholders.
  - runako 4mo ago
    Good call. I should have said that most of those companies also do buybacks as part of their capital return strategies.
    - matwood 4mo ago
      And, as an investor I absolutely prefer buybacks so I can control my tax liability.
bottlepalm 4mo ago
Not really, the company reinvests the dividends, increasing the value of the company/stock. The big difference is you pay taxes of dividends - you don't pay taxes on the stock going up year over year. Unrealized gains compound much faster than realized ones.

bwfan123 4mo ago

Circular financing at its finest. And Self-dealing between the hyperscalers, openai, and anthropic. google invests in anthropic and spacex - and shows appreciated values as earnings. Then it turns around and rents tpus to anthropic to show it as revenues. The main buyers and sellers for all of this are the hyperscalers, openai and anthropic. It is a game of musical chairs while the party is still on.

SwellJoe 4mo ago
They're all betting ignorant retail investors will be the final bagholders. It's a license to steal from retirement accounts.
webninja 4mo ago
I think the measurable term for this is “Velocity of Money”.
akarii 4mo ago
They are just trading company stocks for compute.

rootusrootus 4mo ago

TSLA has a forward PE of ~200x. That is probably the most logical comparison with SpaceX. Proof that the market can stay irrational for quite a long time. It fills me with a bit of dread about the future of the market. I am 10 years out from retirement, have a bit over 1M sitting in that market, and I wonder if it will implode in the meantime. I am fairly committed to the "invest like a dead man" (i.e. index funds, no touch), but the world we live in today makes me have real doubts that the next few decades will look anything like the last few.

tony69 4mo ago
Plenty of hedged equity funds out there. Trade some performance for peace of mind.
- throwaway2037 4mo ago
  What is a "hedged equity fund"? Can you provide an example?
  - tony69 4mo ago
    [dead]
  - zuzululu 4mo ago
    there's no such thing. He's talking about L/S funds. The market neutral funds survive by capitalizing edge cases but during real market turmoil the whole thing blows up.
Waterluvian 4mo ago
About 10 years out as well. I’ve concluded I just invest a very balanced set of index funds and bonds and GICs across a handful of institutions, and then invest in my home because even if the housing market collapses I get to enjoy my nice home. Other than that I’m just not over investing for retirement and instead making sure the money is spent today on family growth and experience. I eventually just got tired of everyone with an opinion on what doing it right looks like or how to predict the market.

bmitc 4mo ago

> It's going to be very painful when the valuation normalizes. Painful for everyone except the grifters who are engineering this and can get out early enough with their stolen millions and billions. Musk's companies are just a giant pyramid scheme.

krupan 4mo ago

I love this clip (this is the other guy that predicted the 2008 crash, played by Steve Carell in The Big Short). Cult Stock is a great way to think about it. https://x.com/i/status/2061808563979251857 https://x.com/i/status/2061808563979251857

preommr 4mo ago

My only consolation is that this is so obvious that it's not going to lead to a disaster. Things like the housing crisis happened because long-established institutions like credit ratings and mortgage lenders didnt do their jobs. It's the swiss cheese model, hidden behind curtains. This is like a giant sign saying you can buy $2 for a $1.

adestefan 4mo ago
This is exactly how the dot com crash happened. People point out this like pets.com, but that wasn’t the issue. It was the musical chairs the played with the fiber telecoms. Today it’s data centers.

djfergus 4mo ago

I feel like your analysis is correct and it’s overvalued but employees and insiders have already been selling shares (eg on platforms like Forge) for around the $130-135 IPO price. So there are buyers, question is if there is enough to consume the liquidity of a $75B IPO.

sroussey 4mo ago
I think there will be plenty of demand. Most of which is not bothered by price at all. When the indexes get in -- watch out! They will have to buy so much SpaceX, that it will force them to sell everything else.
- riffraff 4mo ago
  They won't, SpaceX will weigh less then 1% in most indexes, since they're mostly float adjusted, only NASDAQ will overweight them, but FTSE/MSCI/CRSP/SP will not. It's still quite some money but it won't crush the market by itself.

fc417fc802 4mo ago

> Comcast is one of the best-run ISPs You mean the company with such a bad reputation that it had to aggressively rebrand? I take it you've never had the displeasure of doing business with them. That said it wouldn't surprise me in the slightest to learn that it was one of the most profitable ISPs for investors. That would fit quite well with the general theme of prioritizing the interests of investors over all else.

kube-system 4mo ago
Comcast is a successful business in spite of their customer satisfaction. You don’t need to please your customers when when you can involuntarily extract their money anyway.
- Robotbeat 4mo ago
  Comcast is not a rapidly growing company, though. This isn’t hypothetical. SpaceX is increasing Starlink revenue by like 50% per year. And their current Starlink constellation, about 10,000 satellites, has been launched entirely by Falcon 9. They’ve been waiting to launch much larger satellites on starship (in fact they had versions of these ready for several years now, and recently did suborbital tests of some of them on recent starship flights). Starship is about 5-10 times the capacity of Falcon 9, is fully reusable, & has larger diameter allowing much larger satellites. They asked for approval for roughly 40,000 of these larger satellites (~3 times the size of current ones, each about 10 times the bandwidth… and half of the 10,000 are even older designs), and they may eventually do about 100,000 of them & further increase the size and reduce latency (by operating at lower altitude). It’s not an exaggeration to say SpaceX intends to increase bandwidth by at least 100x, maybe a lot more. They intend to use a lot of this extra capacity to expand into mobile coverage as well. They are leveraging their platform for incredibly important national defense capabilities as well, and they operate as their own backhaul using on-board laser links. They can service anywhere in the world that will let them, including lucrative sectors like aviation. I do think it makes sense to value SpaceX as a rapidly growing business, not as a dividend-giving, plateaued ISP like Comcast. This is all before even mentioning the idea of orbital datacenters.

narrator 4mo ago

Datacenter REITs do not directly own all those scarce wired up and powered Nvidia chips.

anonymous_user9 4mo ago
If they did, they'd be less valuable. Unlike real estate, those chips will be obsolete in a few years.
- adammarples 4mo ago
  This chips will still be able to process tokens in a few years and you'll still be buying them
runako 4mo ago
The stated reason SpaceX and others are talking about doing the near-impossible (orbital datacenters) for astronomical sums is that they are unable to do what e.g. Digital Realty does as its core business. Conventional wisdom is that building datacenters is easy, but maybe the CW is wrong on this? If it were easy, companies would not be talking about spending $1500+/kg to put datacenters in orbit. Note that they assume they can get the chips either way, they just need somewhere to run them and they are saying it will be easier to get them orbital than to literally do what Digital Realty does now.
- narrator 4mo ago
  The main problem is that nobody is building new power except China. In space solar panels are 5x more efficient and run 24/7 and you don't need the kind of permits you need to build on earth. That, and you've got NGOs funded by China connected billionaires that relentlessly sue to stop data centers and new power in the United States, and you don't have to deal with that B.S in space because it's federally regulated and there isn't any environmental impact to sue over.
  - runako 4mo ago

ChuckMcM 4mo ago

Yes, yes it is. (going to be painful) If the IPO gets fully subscribed. For a long time I've pointed out that after the dot com crash the 'unicorns' were mostly on private markets and when they washed out only the 'qualified' investors got hurt (and of course their employees needed to find new jobs). The retail investors were protected because the SEC made sure you couldn't lie to them without penalties. Once the SEC got defanged, retail investors once again became the primary target.

gmerc 4mo ago

Profit … to be seen. Compute is not a high margin business and Colossus was idle for enough of its depreciation timeline to put a question on profit. In any case none of this is a better investment than Nvdida because that’s where all the money is going

th234oi34087 4mo ago

> To say SpaceX is overvalued is to even beginning to convey the magnitude of the situation. It's going to be very painful when the valuation normalizes. The scale of corruption in trying to use Index-Funds and Retail investors as the exit liquidity to bail out the VCs who were pumping the AI hype is unheard of. It's become so damn brazen! I'm surprised Musk's image hasn't crumbled in front of his fan-bois.

_heimdall 4mo ago

Not to mention all the IPO rules changes that all but guarantee SPCX will be swept into 401ks and index funds in very short order. They seem to believe the over valuation can be hidden if the shares get picked up by the public quickly enough or that the it can be a quick exit that leaves the public holding the bag.

tcp_handshaker 4mo ago

This is like BMW bragging about their thriving auto business while renting all their car factories to Toyota.