691–700 of 1001 posts
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I wouldn't call it brilliant. It's like cancer cells celebrating how fast they're growing.
Isn’t that the entire point of a capitalist economy? What is the alternative?
This is a masterful piece of financial engineering by Google and SpaceX. Google purchased 10% of SpaceX over a decade ago. After dilution they probably own around 5%. SpaceX is valued at a whopping 94x revenue. This deal increases SpaceX's revenue by $11 billion per year. If SpaceX maintains this revenue multiplier, then this single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars. Google owns…
But Google loses $11 billion per year, and they gain $50 billion... in stock? As far as I know they really will be paying $11 billion annually in liquid cash to SpaceX (not a small ask) starting this year, and all they get in return is more money on paper? What incentive do they have to help SpaceX out like this at great cost, if they're not actually buying something valuable? Why are they incentivized to do this if…
And this deal protects Google's investment. Google owns close to $100 billion of SpaceX stock. This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. Assuming $6-7 trillion in S&P 500 tracked funds, and a 1% SpaceX weight after a year, this is $600-700 billion in demand for SpaceX stock. It means Google now has someone to unload its position off to. This play directly protects Google's investments.
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Bonds are no longer recommended. Current research indicates 100% equities to be the best composition leading up to, and past, retirement. To point, the economic uncertainties around geopolitics, AI, and war, plus irresponsible debt spending by governments and the prospect of QE (and higher inflation), is pushing long term rates steadily higher. There’s a reasonable chance that 30y treasuries are nearing 6% by the end…
> Anyone who holds bonds in this market will likely lose money. Yes, you lose money (or more precisely you lose opportunity) but you gain certainty. Which is what you want for retirement That’s pretty much the definition of risk premium.
If you have more than enough saved to meet your basic needs, it does (IMO) make sense to give up some total income for lower variance.
This is a masterful piece of financial engineering by Google and SpaceX. Google purchased 10% of SpaceX over a decade ago. After dilution they probably own around 5%. SpaceX is valued at a whopping 94x revenue. This deal increases SpaceX's revenue by $11 billion per year. If SpaceX maintains this revenue multiplier, then this single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars. Google owns…
(I thought for sure the title was backwards - it's a strange world)
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Yes. But I’d caution to not conflating passive investing with indexing to a popular index. They sound similar. But most passive assets index to one of a variety of indices, many of them built in-house by various asset managers. (Vanguard, for example, is famous for doing this.)
Yes. And just because yesterday's rules were "invest in S&P500" does not mean the governors of many (not all) funds cannot change the rules to dodge such blatant fraud The managers of huge funds are not complete idiots- far from it- and they will do what they can, most of them, to fulfill their duties
There are no governors. The assets that automatically follow the S&P 500 are like individual IRAs. If a fund has a governing body, they're generally not indexing to a single narrow index like the S&P 500. They're going for a set of total-market funds, or they're building a custom benchmark.
For the assets that do follow the S&P 500, virtually nbody would be expected to react to these kinds of rule changes. If anything, you'd just create a higher-fee fund that anyone who is upset about this can switch into that equal weights or won't include SpaceX. This is what some RIAs I know in the Bay Area have done, and this entire shitshow has just been a moneymaker for them.
> managers of huge funds are not complete idiots
Zero hedge funds automatically follow the S&P 500, or any other public index, like that. That's sort of the point of being a hedge fund–you're delivering something different.
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But Google loses $11 billion per year, and they gain $50 billion... in stock? As far as I know they really will be paying $11 billion annually in liquid cash to SpaceX (not a small ask) starting this year, and all they get in return is more money on paper? What incentive do they have to help SpaceX out like this at great cost, if they're not actually buying something valuable? Why are they incentivized to do this if…
The contract has an exit clause, either side can terminate the agreement with 90 days notice. I do not expect this contract to last the full 3-year term. And this deal protects Google's investment. Google owns close to $100 billion of SpaceX stock. This deal increases SpaceX's revenue by 30%, and pushes SpaceX into profitability. With this deal, SpaceX is eligible for S&P inclusion. Assuming $6-7 trillion in S&P 500…
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Anthropic is buying a lott of inference from SpaceX. Where else could they have turned?
by inference .. do you mean renting GPU compute ?
> Anthropic is paying SpaceX $1.25 billion per month (approximately $15 billion annually) to use the computing infrastructure at the Colossus and Colossus II data center clusters in Memphis, Tennessee. This massive infrastructure deal gives Anthropic access to over 220,000 NVIDIA GPUs (mostly H100 and H200 chips) for large-scale AI inference.
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Yes, the appreciation will accrue to the investor, in this case, Google (and every other shareholder). But it is not revenue for SpaceX, which is the error OP made. I’m aware of the guidelines. Another guideline should be “check yourself for accuracy before you reach for the keyboard”—especially since it’s easier than ever. Giving false information that, if practiced and not disclaimed, could land someone in jail is…
But the OP very clearly did not write anything of that sort. Their claim was: > This deal increases SpaceX's revenue by $11 billion per year. And that is pretty obviously correct. This deal is Google is buying a service from SpaceX for $920M/month, not investing in SpaceX. And that is revenue for SpaceX. I don't know why you're so insistent it isn't.
A quick peek at their S-1 filing shows a $5B annual loss last year. Unless SpaceX is selling compute to Google at a 50% margin (unlikely but possible), they’re not going to turn a profit because of this deal. Any profit that does result will be small.
Google’s equity investment and P/E multipliers are irrelevant and have no bearing on SpaceX’s profitability. It should also be noted that when there are no earnings (i.e. net profit), the P/E ratio is NaN. There are no “securitized profits” when there are no profits.
And I have no idea why the OP responded to my response about the math not making sense the way they did. I said “equity investments aren’t revenue”. The response strongly implied that they believed equity investments in a company are revenue. Perhaps I read that wrong, and if so, I owe OP an apology.
If there’s financial engineering going on with SpaceX, it’s not merely because they have customers who are also equity stakeholders in a company. This is as common as the day is long. The top level comment is just a red herring.