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Morningstar values SpaceX at $780B, half its IPO target

reuters.com

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Re: Morningstar values SpaceX at $780B, half its IPO target

#151

Post by jampa »

guidedlight wrote: post #122
altcognito wrote: post #96

Earlier quoted context omitted.

SpaceX sells starlink. That's probably the most valuable part of SpaceX by far based on recurring revenue. While they've made spaceflight reasonably cheap and reliable for a particular category of payloads - clearly there wasn't phantom demand just waiting to be launched. Given the IPO, I suspect they're hitting the wall with regards to new starlink signups, and SpaceX is done growing. SpaceX has $6.6B adjusted EBITD…

There are competitors to Starlink arriving now. For example, the Australian government has selected Project Kepler (now called Amazon Leo) to provide broadband services to the Australian Outback. https://www.nbnco.com.au/corporate-information/media-centre/... And geopolitical shenanigans in Ukraine with Musk and Starlink means that it may not be a reliable partner.

The biggest competitor to Starlink is, ironically, traditional fiber.

When COVID hit, I knew a lot of engineers who decided to move to rural areas / small farms, because they could leverage Starlink to work remotely.

Last year, when I asked whether they still liked Starlink, all of them said it was amazing, but they had gotten fiber coverage in their area from a local provider, so they don't use it anymore, or just use it as a backup.

I think Starlink was a huge demand signal that there were people willing to pay a premium for faster-than-radio internet. So, unless they manage to be cheaper and faster than fiber, I don't think there is much of an endgame there.

Re: Morningstar values SpaceX at $780B, half its IPO target

#152

Post by g8oz »

AdamJacobMuller wrote: post #128
guidedlight wrote: post #122

Earlier quoted context omitted.

There are competitors to Starlink arriving now. For example, the Australian government has selected Project Kepler (now called Amazon Leo) to provide broadband services to the Australian Outback. https://www.nbnco.com.au/corporate-information/media-centre/... And geopolitical shenanigans in Ukraine with Musk and Starlink means that it may not be a reliable partner.

And LEO is using SpaceX to launch. SpaceX was launching a modest % of the LEO constellation but after the Blue Origin failure, SpaceX is the only launch provider who can fill that gap and actually let LEO deliver on contracted time. Please don't misunderstand me, I'm no Musk sycophant though I do love SpaceX and Starlink. I want us to have multiple providers of super cheap space launch capabilities and multiple diver…

I for one am sure that BlueOrigin will never get there.

Re: Morningstar values SpaceX at $780B, half its IPO target

#153

Post by 8ytecoder »

minraws wrote: post #138
ryandvm wrote: post #125

Earlier quoted context omitted.

Wild that the guy whose decisions are directly responsible for driving profitability into the ground is somehow the reason these companies have 300+ PE valuations.

Proves the point that skills don't matter results do, if a monkey manages to make better milkshake and you fire the chef, you didn't really improve the kitchen. But that's what we do in stock and markets and well whatever we are living through, sometimes bad decisions can have good results because you were right place right time. if it happens more than once, that doesn't mean it was incredible it just means the bias…

Skills do matter. It’s just a different type of skill. Merit doesn’t matter - but even that’s a bit arguable - if the merit is decided based on what someone is creating value for their shareholders and value is entirely defined by stock price, it seems to be working well too.

(Not that I agree this is right)

Re: Morningstar values SpaceX at $780B, half its IPO target

#154

Post by dgellow »

supertroop wrote: post #77
dgellow wrote: post #75

Earlier quoted context omitted.

Can we stop just repeating quotes like those over and over. If you have thoughts, please articulate them, its pretty frustrating to see the same exact quotes repeated over and over whenever there is a submission stock related

That’s like 90% of this site. Roll with it.

It’s not and I won’t

Re: Morningstar values SpaceX at $780B, half its IPO target

#155

Post by BoggleOhYeah »

analogpixel wrote: post #10
Devasta wrote: post #6

Doesn't matter, as soon as they can they'll shove it into the indexes, meaning pension funds all over the world will be let holding the bag.

I keep seeing this comment on all these spacex posts, can someone ELI5 to me why the pension funds are going to be forced to buy this? (do they not have free will on what they buy?)

There is some truth to it.

401ks and pension funds have large amounts of money in index funds.

Major indexes like VTI will buy SpaceX after a waiting period as long as it satisfies other rules (and there have been some rule changes in various indexes to make something with low float like SpaceX eligible for inclusion).

However, most indexes are float-adjusted, meaning that they will adjust the amount of shares of a company in the index based on their float, not their total shares. So, they will initially pick up small amount of weight/shares around the IPO.

The NASDAQ-100 has been bending over backwards to cater to SpaceX, which makes some sense because they want it listed on their exchange. They changed their inclusion rules to include a fast-track for IPOs. This type of mechanism isn't uncommon in other large indexes (VTI has had fast-track rules for a long time) but the timing does make it appear that they changed their rules for SpaceX.

Other providers have made changes to float requirements for inclusion.

The NASDAQ-100 (QQQ being the popular ETF tracking it) is also not float adjusted and, instead, has some capping rules for low-float securities. I haven't done any projections but it seems that NASDAQ-100/QQQ will pickup more shares than the float-adjusted indexes.

Re: Morningstar values SpaceX at $780B, half its IPO target

#156

Post by mrDmrTmrJ »

novaleaf wrote: post #147
mrDmrTmrJ wrote: post #92

Earlier quoted context omitted.

Why is "ai-big loss"? My understanding is that the S-1 showed a Q1 loss of xAI of $2.47 billion in Q1. But with the Anthropic Colossus-I rental agreement at $1.25B/month or $3.75B/quarter, xAI should now be net-neutral to cash-flow positive. If Colossus-II rents networked GB-200s, that could be up to +$47B/year at $9/hour/GB-200 for 555,000 GB-200s. For reference, current rental rates are $10-$27/hour for the same ha…

the xAi revenue comes from renting their infrastructure to their biggest competitor. Anthropic is going to IPO for aprox 1/2 the valuation, is profitable, and can cancel the contract with 90 days notice.

Oh, I would far prefer to own Anthropic's stock than SpaceX's.

Re: Morningstar values SpaceX at $780B, half its IPO target

#157

Post by Recurecur »

pandoro wrote: post #129
nonethewiser wrote: post #88

Earlier quoted context omitted.

>I don't think so at all. In this context, it feels like even 150 Billions would be a big stretch considering revenue and forecasts. How are you valuating SpaceX?

Their launch business has a dominant market position but is not run for profit and xAI is loosing money. Starlink is the only segment earning real money: $7.2 billion in adjusted EBITDA. So 150 Billions seems "realistic" when taking Musk out of the equation. Maybe 150 to 250 billions would be better as a range if you want to be really optimistic.

The stock market is not about current results, it’s about future results.

SpaceX has more future upside than any company I can think of…

Re: Morningstar values SpaceX at $780B, half its IPO target

#158

Post by Recurecur »

jampa wrote: post #151
guidedlight wrote: post #122

Earlier quoted context omitted.

There are competitors to Starlink arriving now. For example, the Australian government has selected Project Kepler (now called Amazon Leo) to provide broadband services to the Australian Outback. https://www.nbnco.com.au/corporate-information/media-centre/... And geopolitical shenanigans in Ukraine with Musk and Starlink means that it may not be a reliable partner.

The biggest competitor to Starlink is, ironically, traditional fiber. When COVID hit, I knew a lot of engineers who decided to move to rural areas / small farms, because they could leverage Starlink to work remotely. Last year, when I asked whether they still liked Starlink, all of them said it was amazing, but they had gotten fiber coverage in their area from a local provider, so they don't use it anymore, or just u…

Starlink isn’t for areas served by fiber, it’s for areas that do not have have good Internet access available, which are far larger than the area served by fiber.

Re: Morningstar values SpaceX at $780B, half its IPO target

#159

Post by s1artibartfast »

erulabs wrote: post #100

While I agree with the sentiment that SpaceX today is not worth anywhere near 1T+, it's worth understanding that: a) SpaceX is currently trading at ~>1.5T in secondary markets and b) most of what the market is reacting to is the _chance_ that SpaceX goes on to become one of the largest companies in the world. Remember the reaction when Facebook IPOed? It was hilariously overpriced (at the time, on paper, based on exi…

Most sober post ive read on this topic

Re: Morningstar values SpaceX at $780B, half its IPO target

#160

Post by mrandish »

This exposes a fundamental (and obvious) problem with not just SpaceX but the OAI and ANT IPOs as well. Their valuations are massive far beyond what the existing GAAP revenue and profit can justify, forcing large percentages of the valuation to rely on multiple future events not only happening but happening on the upper-end of any reasonable probability curve based on real-world priors.

While all IPO valuations rely on forward-looking expectations, IPOs this large don't usually rely this much, on this many forward expectations for which there are so few real-world comps or priors to inform estimates. In short, when the error bars are in danger of swamping the signal, wild swings are likely. I expect more than one of these three to drop at least 10% relative to the overall market at some point in their first 18 months. All the potential upside (and probably much more) is already priced in. So taking this bet at the IPO price requires valuations most worry are already too high not only being correct but too low by quite a lot. To paraphrase Alice in Wonderland, these valuations require 'believing as many as six unlikely things before breakfast.'

That said, I'll also predict that one of them will be trading >50% higher than its first year low ten years later (vs the overall market). Basically, they are all hugely overvalued in the ~3 year time frame but one may turn out to have been undervalued in 10 years. So, regardless don't buy any of them at IPO. If you're interested in one or more of them, wait for it to drop >10% vs the market and then re-evaluate for early indicators it might be 'the one'.

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