Yeah, it's pretty clear that these are just gigantic pump and dump schemes. The only reason to buy either company is to hope you are the dumper and not the pumper. Having a plan for when you're going to sell is critical and is basically gambling.
Anthropic will likely be the only AI company to come out on top outside of Google. Long term these guys should be OK even if the bubble pops (IMO). They've pretty much won at everything they've done. Profitable, not yet, but neither is Uber and it's still riding strong (pun).
SpaceX has laid out a long term plan and has merged all other assets into a single group. I really dont see why anyone would dump this -- they are literally building rockets, servers farms, etc, its not like its something that can easily go away like a meme coin.
SpaceX long term plan in their IPO filings boils down to AI. Their rocketry is mentioned surprisingly scarce. Starlink is the only profitable part of that company, with a respectable profit befitting a medium sized company, and the absolute anchor that is AI spending and Twitter/X pulling the entire venture into negative profitability.
The long term plan of SpaceX is "we'll figure out cooling in space some day, trust me" when "trust me" is something to back away from when Elon says that about anything.
It IPOs at an incredible level not befitting a company with this level of revenue, while also strong arming the Nasdaq into allowing everyone's 401k to pick up that stock at a ridiculous valuation. Courtesy of the low float.
It's a good way to dump the stock on the pensions when it inevitably sees a valuation downturn.
It's a shame that SpaceX is going full grift mode, they have some legitimately incredibly impressive technology and have almost single-handedly dug launch system technology out of the slump that was the post-shuttle era.
SpaceX was the one where Elon was the most hands off, and it turned a profit using a product that can be used worldwide. That product enables communication for people that otherwise had no real chance at a decent internet speed.
But then he started hemorrhaging money through Grok and the Twitter acquisition so he couldn't help himself but bail himself out through the profitability of SpaceX.
It turned a company with significance and a chance for serious growth into life support for a tumor that needn't be there.
I think they do have their satellite stuff down pat. Starlink is genuinely a good product that sees profitability. Their rockets are simply expensive R&D but Starlink kept that in balance as to not tank the company.. it's the acquisition of xAI and Twitter that has an outsized effect on their profitability.
Truthfully, I can't verify your question within their SEC filing. You're right that it would change the story.
Well 20 years of RnD in the most expensive industry on the planet, its very difficult to turn a profit. They're still scaling up production and hoping to achieve cheaper payloads via things like Starship. I wouldn't count them out just yet, they've done some pretty incredible work in the "space" so to speak.
Anthropic might survive. That's not my point. My point is that their IPO is a pump and dump. There is no possible way to justify their valuation and they know it, so you IPO and get as much money out of it before the AI hype dies and people move onto the next thing leaving retail investors and retirees holding the bag. They might survive, but unlike Google who actually makes money from other things, I am skeptical about Anthropics future. There is still no proof that AI can be done in a profitable way but there is always a possibility of some miracle break through. Not a good reason to buy a stock in my opinion, but I won't be completely shocked if Anthropic manages to survive.
As for SpaceX, it's even more obvious that it is a pump and dump. I don't disagree that they do real things. There is a better chance they survive as they have a real business in Starlink and Elon continues to rally tech bro retail investors. The problem is the same. AI evaluations are insane and unjustified. If SpaceX was IPOing as a space company, that would be an interesting discussion. However, they bought Twitter which Elon has run into the ground and xAI which is like what, maybe the 5th best AI company if we are being generous? And that failure as an AI company is the main thing they are using to justify their $1.75 trillion valuation. So, Elon gets Nasdaq and S&P500 to change their seasoning rules so all the people who helped him finance Twitter can get their money out. Elon doesn't need to be able to sell shares. It's all about getting his investors money so they keep giving him money for future schemes and again retail investors and retirees will be left holding the bag. Yes, the company will continue to exist, but it will never do anything to justify the insane valuation they are pushing.
For SpaceX, the valuation is the issue. Also xAI. They look like a 100b company at most. No more and definitely not 1.75 trillion.
If it wasn’t for xAI they’d make like 5 billion in profit with 20b rev. That’s pretty decent. Not 1.75 trillion, but solid.
With xAI, they’re actually in the red. And there’s no reason to think they’ll ever catch up to Anthropic, OpenAI, or Google.
Also you end up randomly own Twitter.
Assuming they can “deal” with the xAI issue I would expect the stock price to go down until it hits that 70-90b range. The company will exist and do fine. If you buy in at 1.75t you’d probably lose 95% of the original value.
I think most people aren't concerned so much about the long-term existence of these companies as they are concerned about the market-cap/reality mismatch. Anthropic does seem to be one of the more viable AI companies, but it seems like they will be entering the market right in the middle of the hype cycle (which admittedly has been lasting far longer than anyone expected) and it's unclear what sort of adjustment its valuation might undergo in a more normal market.
Similarly, though airing my feelings on Elon Musk would violate the tildes Code of Conduct, I concede SpaceX is likely to stick around. But I have difficulty imagining a world where its actual value even remotely approaches its projected valuation. In a vacuum, if I were instructed to guess what a reasonable market cap for it would be, I would probably come up with a number in the range of 80-150 billion USD, i.e. ~5-10% of what they plan to list it at. I suppose that since TSLA also seems overvalued by a factor of 10, it might be a reasonable approach to assume the same will apply here, but I personally wouldn't be comfortable investing money on those grounds.
I have some faith in the long term success of Anthropic. But to me it seems that clearly anything AI is severely overvalued atm, including them.
I'm pretty confident it'll be like the dotcom bubble. A lot of companies died, but also a lot of the big players are still around today. A handful eventually reached that valuation again, years after the crash.
I think Anthropic has the potential to survive if they handle it well. Yet they'll crash hard along with everyone else. And the entire global stock market will probably suffer too.
Anyone with exposure to the stock market will probably lose a significant amount of money. But the AI stock will crash the hardest. And others will suffer in the recession that follows.
SpaceX probably will not go away either, but I believe they are targeting a 2 trillion USD valuation. Their total revenue is 20 billion or so. That's clearly just the AI bubble inflating the stock price like crazy, based on some fairy tale of datacenters in space. They too will crash hard.
Plus knowing Elon Musk, he will do whatever he can to inflate the price and cash out at the peak. He does not shy away from manipulating the market
I think the massive valuation is because of a bubble, yes. One that will necessarily pop at some point. And I am rather worried about what will happen to the global economy when it does.
I am not sure what you mean by buffer. I can imagine some companies might keep some money they raise by selling stock as a war chest for when their stock price tanks and they are no longer able to raise money, if that's what you mean.
My expectation is that the crash comes some time after the main IPOs. So you might make a fair amount of money buying their stock, assuming you sell before the crash.
The core issue is that AI is just not worth as much money as people speculating think it is.
When LLMs started to become commonplace, people thought it would be huge and be everywhere. That made it very valuable. People were right. That is exactly what happened.
But the promises were bigger. It would dramatically change most industries. A lot of jobs would be replaced by AI. And other jobs would see massive productivity gains. If so, companies would pay fortunes for access to AI.
Some productivity gain for certain jobs seems to be there. Some jobs can be (partially) done by AI, though often with a lot of human oversight. The promised gain just doesn't seem to materialise, which pulls into question how much these AI companies can really earn in revenue. The tech seems quite far from changing this equation fundamentally.
Meanwhile, we've reached a point where marginal improvements in the capability of these models requires astronomical infrastructure investments. And this scales terribly, in the sense that the next step up is much larger still.
It seems like the scaling cannot go much further anymore until the world simply cannot invest more. That's the problem with this kind of exponential growth. The money they raise by going public means they can stretch this limit, but it’s still there.
Basically, while they can probably increase revenue significantly by changing how they monetize but nowhere near enough to justify a trillion dollar valuation. Meanwhile expenses are unsustainable. And even if they stop the hyper scaling, expenses are very high. So they will likely not have margins that are too great.
So very large and valuable companies, but much less that what they will be worth at the IPO.
Before the AI craze, the big tech companies were trading at a multiple of maybe 8× or 9× revenue for some. But those are highly profitable companies with high margins and a lot of growth potential.
OpenAI for instance is now estimated at 50× revenue. And it seems to me that they probably will end up trading at a multiple lower than Alphabet or Meta once the dust settles, due to their bottom line not being great even if they become profitable.
Yeah, but the problem is that everyone else thinks those things too. In order to make money on them, you need an edge, and everyone and their mom already thinks that these are two of the most valuable companies the world has ever seen. That's built into their price.
On the one hand, the valuations are sky-high already and on the other, opinions differ very widely on how valuable AI is and its long term effects on society. Maybe they won’t meet expectations, but I wouldn’t want to exclude them from a broad index fund. The point of such things is that you don’t want to exclude any possible winners.
For example, Google kept going up far longer than I thought it would based on my rather cynical view of Internet advertising.
I'm very curious if the changed S&P/NASDAQ inclusion rules (reduced from 3 months to 15 days, in one case) will reduce the potential "pop". 15 days, and every passive investor will start picking these stocks up through indexes, and then they'll sit on those investments until either retirement or the stock getting dropped from the index.
Yes, that would be the pumping part and then once all the ETFs add it to their portfolio, the dumping will commence. It's a genius way to pump a loser of a stock and exactly why Elon pushed them to change their rules for stock seasoning. It's in the Nasdaq and S&P500 best interest as they will make a ton of money in fees. With regulators completely gone in Trump's America, the reason for Elon pushing to elect Trump becomes all the more clear.
Would that work? It’d be a pretty strong claim that the weak efficient market hypothesis doesn’t hold. SpaceX’s filings are public, the rules changes are public, etc.
The hedge funds have an extremely strong financial incentive to short SpaceX if the plan really is a short-term pump and dump, putting downwards price pressure on the stock.
I acknowledge that there are other factors (a relatively small float, Elon’s ability to create demand for stock among a small collection of wealthy investors just by attaching his name to it, etc.) that could cause the hedge funds to get too nervous around making bets like shorts.
SpaceX is a bit challenging from an investment thesis.
They have a conglomerate problem where you have to really be buying into all of the parts of the conglomerate - if you think space is great, but ai underperforms, you might be better being in a pure play space company. Modern finance has been moving away from conglomerates for a long time because of this issue.
There is also a governance issue there as well that investors have no ability to reign in Elon Musk if there is an issue there besides to sell their stock. SpaceX has supervoting shares, forced arbitration, and tight rules on shareholder proposals. So, you're really betting long that Elon Musk will continue to be a massive force for innovation - which is an iffy proposal based on recent track record.
Finally, there is a bunch of debt from the Twitter acquisition that is rolled up in there. That has to hurt any prospective valuations.
My bet is that he will buy Tesla after the IPO and merge it with SpaceX like he did with xAI. Then weigh down the profitability of Starlink even more with another dead weight branch.
They wouldn't be burning cash if they didn't merge with xAI. Elon is sacrificing his most publicly liked company for a quick cash injection into an unprofitable AI business.
I can't be surprised that he's fucking up SpaceX like he's fucked up all the rest of his companies, but I'm a little sad. SpaceX has by far the most impressive and accomplished group of engineers in the private industry.
At least with things like Twitter, Tesla, etc there are established and actual good competitors in the space... SpaceX literally has no competition even close to them. Even if we magically threw all that budget at NASA I don't know if they'd be able to make the amount of progress that SpaceX has been able to do over the past 20 years.
SpaceX - definitely not, although I’d recommend everyone read their S-1. It’s clear that Elon wrote a lot of it and it’s very funny - it will randomly have pages and pages of sci fi inserted in between financial reporting. It’s so incredibly unprofessional I can only imagine the levels of cringe the IBs and accountants working on it felt.
Anthropic, it will depend on the S-1 numbers but probably not.
Although, a shower thought I had is that if you work in a white collar job, you should buy in Anthropic and OpenAI as a hedge.
Either the low percentage chance occurs that they succeed in automating all white collar work, or they deflate to boring 50-100b Atlassian type companies.
In the former, you will be out of a job - your Anthropic holdings at least give you some cushion.
In the latter, your Anthropic stock goes down by 90% but you will still have a job.
Basically, owning AI company stocks is insurance against the jobpocalpyse
Although, a shower thought I had is that if you work in a white collar job, you should buy in Anthropic and OpenAI as a hedge.
That wouldn't necessarily work. Even if AI succeeds in automating a lot of jobs, OpenAI and Anthropic have a lot of competition. Models could become commoditized, and the money would go to the regular companies who successfully automated their own business.
That, and like, how many shares exactly am I going to need to buy so that annual dividends might cover more than a single grocery trip?
Microsoft pays less than $4 a year per share. For a share that costs $460. All I need is $11 million dollars in Microsoft stock to keep a passive dividend as a hedge.....
Only dividends is pretty conservative. Even the boggleheads accept selling 4% of your equities a year for free cash flow. Moreover it's just nice to have a buffer. One of my friends made ~5m from his RSU grants at Roblox after the IPO.
It's not an insane amount of money, but it's a decent amount, and since then he's been partially employed ever since by choice, doing what he's interested and leaving whenever he wants.
If you stuff like 100k into a balanced set of OpenAI/Anthropic and they really did become the most valuable company in the history of the world by automating all of human knowledge work, you'd probably have a good amount to chill on, whatever the world would look like by then.
SpaceX have forced NASDAQ to change their own rules to include SpaceX in market indices as soon as possible and automatically make everyone who holds a NASDAQ index fund buy their stock, something that has previously required a 6 month track record in the market.
Elon Musk has merged X into xAI to inflate the numbers, and then did that again by merging xAI into SpaceX to pretend like the company is not losing tremendous amounts of money. Now xAI is a tumor on the company that bleeds away all of their profits.
Despite this, their long-term strategy is entirely AI buzzwords. And ambitious promises that are unlikely to be delivered on (it is Elon Musk, after all). The estimated evaluation is based entirely on those vague promises, giving it an even higher P/E (~1000x) than that of Tesla, a famously inflated meme stock.
Also, this part is very speculative, but the board of Tesla promised Elon Musk a trillion dollars if he manages to get Tesla to above $8.5 trillion market cap. I've seen theories that he plans to merge SpaceX into Tesla after the IPO to reach that target and get the money. Again, this part is pure speculation, but given his previous pattern of merging companies to make the numbers look better, I wouldn't be surprised at this point.
I've actually just set a meeting with a financial advisor to make sure we have managed exposure to SpaceX and the AI public offerings.
In general, the instant rules are being broken to get people "in on the action", it's the biggest red flag to me and it seems like the exact case here.
In terms of spaceX, there a lot of weirdness going on:
Most notably, the company is putting up a laughably small percentage of shares. Musk will still maintain full control of his company and have no incentive to act in investors best interest. If thr company goes public at the requested price, he then folds it into Tesla and is practically entitled to his insane "performance bonus" based on a damn technicality. And if SpaceX is rammed into every index fund and passive portfolio, governments will be forced to bail it out to protect pension funds. And all that money just goes to Musks slush fund.
Similarly, with AI, I do not see any sustainable path to recoup the costing. 2 Trillion dollars is the cost-to-date on the AI roll out. And that's loose change compared to the $15 trillion valuation across the 6 already existing AI companies.
Can EVERYONE make a significant RoI to justify these types of costs and valuations. This is with an escalating energy crisis. And an inevitable everything-shortage. And an increasingly likely Chinese invasion of Tiwan. And the fact that Data Centers are not coming online anywhere fast enough for nvidia to install Blackwell's and recoup costs to buy the latest high end tech. And to still perform in the face of cheaper Chinese models.
And an increasingly likely Chinese invasion of Tiwan.
I honestly don't know. That would really benefit U.S. manufacturing that the CHIPS act has brought state side. A brain drain in Taiwan from an invasion would likely be a huge negative impact for China. I don't agree with China's politics, but Xi hasn't shown himself to be egotistical or foolish in the way the leaders of the countries currently spearheading invasions have.
Its more likely that they continue to ramp up their domestic manufacturing and compete directly with the U.S. and Taiwan. Their electric cars are impressive, their nuclear rollout is impressive, their battery manufacturing is probably the best in the world. They've really played their cards impressively well. They're set to reap huge benefits when the petrodollar is inevitably threatened. An invasion jeopardizes all of that.
I feel that. My 401(k) (the only investment I really own) is 100% in a Vanguard index fund. I'm not Mr. Diversify Your Assets, I'm Mr. Plunk The Money Down And Walk Away. The index fund I picked is better rated, lower fees, and has an excellent record. If this thing craters, the entire US economy is a smoking crater anyway and I've got more to worry about than my retirement fund.
To be fair, while that is of benefit to those companies due to the huge amount of people buying those index funds, their actual share in the funds would be pretty small because the fund composition is only based on free floating (publicly available) shares. So I wouldn't worry about it much as an investor.
I have been moving a chuck of my holdingsfrom Fidelity's blanked index fund into their FTIHX international index fund. My kntebtion is to hedge some in case of a U.S. market down turn.
I'm highly interested of anyone has any ideas how to firmly avoid SpaceX in my index funds purchases. I'd like to cash out of TESLA, too, personally. Yes, I'd miss out on some "gains" but the stocks are not worth the ticket price, everyone know it, and one day before I retire it's going to crumble. It may be decades from now, but they're hemorrhaging money with no plan to fix it.
Matt Levine wrote today about the SpaceX IPO and the effect of index funds:
That is, the maximally cynical approach is to sell as little stock as possible to price-sensitive investors, in order to keep the supply low and the price high, and then sell as much stock as possible to index funds, who can’t negotiate on price. Actually “can’t negotiate on price” understates the issue. If index funds need to buy 24% of your stock, and only 20% of your stock is available to buy, then the index funds are forced to chase it, driving up the stock to whatever price you like. You have effectively created a short squeeze for the index funds: They have to buy stock at any price, and there isn’t enough stock for them to buy. “Just keep bidding,” you tell Vanguard.
I want to be really clear that this is the schematic maximally cynical approach, is not what SpaceX is doing, and is not actually possible. Pretty much every big stock index is “float-weighted” or “float-adjusted,” meaning that if only 20% of your stock is available to buy, index funds are not actually going to be trying to buy 24% of it. (As a first cut, they should try to buy 4.8% of it — 24% of 20% — though the actual number is slightly higher.)
...
The index demand is not 100% of the stock available in the IPO, or 110%, or even 50%. But it’s plausibly more than 25%. It’s not a short squeeze, but it’s a lot. Add a reported 30% allocation to retail, and arguably a majority of the IPO is being sold to price-insensitive investors. That is one way to get a high IPO price.
I really like what SpaceX is doing in the space space, but outside of that (e.g. X, xAI) I’m more worried.
I also think they’re overvalued, but that’s mostly speculation…they are currently one of a few reliable rocket providers, so as long as governments and companies want to keep launching things into space, SpaceX will have business. But I don’t think that’s enough business for their current valuation.
I’m also not a huge fan of the regulatory updates, might have to rebalance my retirement portfolios to see if there’s a way to avoid SpaceX once it makes it in to the S&P 500.
Damodaran estimated a value of $1.2T - close to the value of Tesla today. How does that pan out?
Damodaran got the margins wrong for the AI business and the SpaceX business. He was on the money for the Starlink business. Damodaran got the growth of revenue projections wrong as well, at least according to the S-1?
How good is Damodaran?
Damodaran signaled TSLA was a buy at around $16 in around 2019, of course, he signaled it was a sell seven months later just before the stock went vertical like a sky rocket.... then he signaled it was a buy at around $180 in 2024.... but that is his jam, he is like Buffett, he doesn't buy hype, he buys fundamentals.
Why compare SpaceX to TSLA? Around 2017-2019 TSLA was similar to SpaceX in terms of revenues, and what not. Sure, it only sold cars. But all it had to do was sell more cars at a profit. One more car specifically. The Model 3. And it did.
SpaceX has to execute perfectly on three businesses. I wouldn't want to bet against Musk, but I wouldn't want to bet on Musk executing perfectly on three businesses at once, especially after the Cyber Truck fiasco.
If you take Damodarans analysis and you apply the S1, you probably end up with a value of around $700B, not $1.4T. If you value SpaceX like Tesla used to be valued around 2017-2019, you are looking at closer to $200B-$700B.
But of course, there is a lot of hype with AI right now, no one can really buy the hype, this will be everyones first chance to buy a competitor to Anthropic/OpenAI... Also, there wont be a lot of stocks to short, and the nasdaq index funds will all be forced to buy this over valued stock due to a change in the index rules, so this stock could rocket up before it comes back down to earth once it can effectively be shorted. They are effectively limiting the float for the first 180 days I believe, so it wont require much money invested to value the company at $2T. Plus a limited float limits the chance to short the company.
But at $2T IPO, how much can it really go up before people no longer believe?
This is so reminiscent of the dot com crash.... Ride the wave dudes, but watch out for when it crashes and burns.
Google already owns some of Anthropic indirectly. The S&P 500 plans to add these new stocks six months after IPO. Other than that, no real plans. I'm curious about Anthropic's financial statements, though.
SpaceX and Blue Origin are the only commercial aerospace companies that have seen success, but investing in the former is supporting a Nazi.
As for Anthropic, they're the better of the AI firms and the most poised to achieve supremacy aside from Google. Investing in them could be a moderate loss or major win depending on bubbles.
ShroudedScribe | 23 hours ago
Do you have an exit strategy? (Perhaps that's hard to say without knowing the initial price.) I think that is where opinions will strongly differ.
Wafik | 23 hours ago
Yeah, it's pretty clear that these are just gigantic pump and dump schemes. The only reason to buy either company is to hope you are the dumper and not the pumper. Having a plan for when you're going to sell is critical and is basically gambling.
[OP] TylerSuits | 23 hours ago
Would disagree.
Anthropic will likely be the only AI company to come out on top outside of Google. Long term these guys should be OK even if the bubble pops (IMO). They've pretty much won at everything they've done. Profitable, not yet, but neither is Uber and it's still riding strong (pun).
SpaceX has laid out a long term plan and has merged all other assets into a single group. I really dont see why anyone would dump this -- they are literally building rockets, servers farms, etc, its not like its something that can easily go away like a meme coin.
CptBluebear | 23 hours ago
SpaceX long term plan in their IPO filings boils down to AI. Their rocketry is mentioned surprisingly scarce. Starlink is the only profitable part of that company, with a respectable profit befitting a medium sized company, and the absolute anchor that is AI spending and Twitter/X pulling the entire venture into negative profitability.
The long term plan of SpaceX is "we'll figure out cooling in space some day, trust me" when "trust me" is something to back away from when Elon says that about anything.
It IPOs at an incredible level not befitting a company with this level of revenue, while also strong arming the Nasdaq into allowing everyone's 401k to pick up that stock at a ridiculous valuation. Courtesy of the low float.
It's a good way to dump the stock on the pensions when it inevitably sees a valuation downturn.
OBLIVIATER | 20 hours ago
It's a shame that SpaceX is going full grift mode, they have some legitimately incredibly impressive technology and have almost single-handedly dug launch system technology out of the slump that was the post-shuttle era.
CptBluebear | 20 hours ago
SpaceX was the one where Elon was the most hands off, and it turned a profit using a product that can be used worldwide. That product enables communication for people that otherwise had no real chance at a decent internet speed.
But then he started hemorrhaging money through Grok and the Twitter acquisition so he couldn't help himself but bail himself out through the profitability of SpaceX.
It turned a company with significance and a chance for serious growth into life support for a tumor that needn't be there.
vord | 22 hours ago
Does that mean SpaceX hasn't actually been reducing satellite launch costs across the board, but rather has been undercutting as a loss leader?
That certainly changes the narrative of their accomplishments if that is the case.
CptBluebear | 21 hours ago
I think they do have their satellite stuff down pat. Starlink is genuinely a good product that sees profitability. Their rockets are simply expensive R&D but Starlink kept that in balance as to not tank the company.. it's the acquisition of xAI and Twitter that has an outsized effect on their profitability.
Truthfully, I can't verify your question within their SEC filing. You're right that it would change the story.
OBLIVIATER | 21 hours ago
Well 20 years of RnD in the most expensive industry on the planet, its very difficult to turn a profit. They're still scaling up production and hoping to achieve cheaper payloads via things like Starship. I wouldn't count them out just yet, they've done some pretty incredible work in the "space" so to speak.
Wafik | 23 hours ago
Anthropic might survive. That's not my point. My point is that their IPO is a pump and dump. There is no possible way to justify their valuation and they know it, so you IPO and get as much money out of it before the AI hype dies and people move onto the next thing leaving retail investors and retirees holding the bag. They might survive, but unlike Google who actually makes money from other things, I am skeptical about Anthropics future. There is still no proof that AI can be done in a profitable way but there is always a possibility of some miracle break through. Not a good reason to buy a stock in my opinion, but I won't be completely shocked if Anthropic manages to survive.
As for SpaceX, it's even more obvious that it is a pump and dump. I don't disagree that they do real things. There is a better chance they survive as they have a real business in Starlink and Elon continues to rally tech bro retail investors. The problem is the same. AI evaluations are insane and unjustified. If SpaceX was IPOing as a space company, that would be an interesting discussion. However, they bought Twitter which Elon has run into the ground and xAI which is like what, maybe the 5th best AI company if we are being generous? And that failure as an AI company is the main thing they are using to justify their $1.75 trillion valuation. So, Elon gets Nasdaq and S&P500 to change their seasoning rules so all the people who helped him finance Twitter can get their money out. Elon doesn't need to be able to sell shares. It's all about getting his investors money so they keep giving him money for future schemes and again retail investors and retirees will be left holding the bag. Yes, the company will continue to exist, but it will never do anything to justify the insane valuation they are pushing.
stu2b50 | 22 hours ago
For SpaceX, the valuation is the issue. Also xAI. They look like a 100b company at most. No more and definitely not 1.75 trillion.
If it wasn’t for xAI they’d make like 5 billion in profit with 20b rev. That’s pretty decent. Not 1.75 trillion, but solid.
With xAI, they’re actually in the red. And there’s no reason to think they’ll ever catch up to Anthropic, OpenAI, or Google.
Also you end up randomly own Twitter.
Assuming they can “deal” with the xAI issue I would expect the stock price to go down until it hits that 70-90b range. The company will exist and do fine. If you buy in at 1.75t you’d probably lose 95% of the original value.
evergoe | 23 hours ago
I think most people aren't concerned so much about the long-term existence of these companies as they are concerned about the market-cap/reality mismatch. Anthropic does seem to be one of the more viable AI companies, but it seems like they will be entering the market right in the middle of the hype cycle (which admittedly has been lasting far longer than anyone expected) and it's unclear what sort of adjustment its valuation might undergo in a more normal market.
Similarly, though airing my feelings on Elon Musk would violate the tildes Code of Conduct, I concede SpaceX is likely to stick around. But I have difficulty imagining a world where its actual value even remotely approaches its projected valuation. In a vacuum, if I were instructed to guess what a reasonable market cap for it would be, I would probably come up with a number in the range of 80-150 billion USD, i.e. ~5-10% of what they plan to list it at. I suppose that since TSLA also seems overvalued by a factor of 10, it might be a reasonable approach to assume the same will apply here, but I personally wouldn't be comfortable investing money on those grounds.
EpicAglet | 22 hours ago
I have some faith in the long term success of Anthropic. But to me it seems that clearly anything AI is severely overvalued atm, including them.
I'm pretty confident it'll be like the dotcom bubble. A lot of companies died, but also a lot of the big players are still around today. A handful eventually reached that valuation again, years after the crash.
I think Anthropic has the potential to survive if they handle it well. Yet they'll crash hard along with everyone else. And the entire global stock market will probably suffer too.
Anyone with exposure to the stock market will probably lose a significant amount of money. But the AI stock will crash the hardest. And others will suffer in the recession that follows.
SpaceX probably will not go away either, but I believe they are targeting a 2 trillion USD valuation. Their total revenue is 20 billion or so. That's clearly just the AI bubble inflating the stock price like crazy, based on some fairy tale of datacenters in space. They too will crash hard.
Plus knowing Elon Musk, he will do whatever he can to inflate the price and cash out at the peak. He does not shy away from manipulating the market
[OP] TylerSuits | 22 hours ago
Odd Question: Do you think the massive evaluation is because of an impeding bubble pop? A buffer so to say?
EpicAglet | 19 hours ago
I think the massive valuation is because of a bubble, yes. One that will necessarily pop at some point. And I am rather worried about what will happen to the global economy when it does.
I am not sure what you mean by buffer. I can imagine some companies might keep some money they raise by selling stock as a war chest for when their stock price tanks and they are no longer able to raise money, if that's what you mean.
My expectation is that the crash comes some time after the main IPOs. So you might make a fair amount of money buying their stock, assuming you sell before the crash.
The core issue is that AI is just not worth as much money as people speculating think it is.
When LLMs started to become commonplace, people thought it would be huge and be everywhere. That made it very valuable. People were right. That is exactly what happened.
But the promises were bigger. It would dramatically change most industries. A lot of jobs would be replaced by AI. And other jobs would see massive productivity gains. If so, companies would pay fortunes for access to AI.
Some productivity gain for certain jobs seems to be there. Some jobs can be (partially) done by AI, though often with a lot of human oversight. The promised gain just doesn't seem to materialise, which pulls into question how much these AI companies can really earn in revenue. The tech seems quite far from changing this equation fundamentally.
Meanwhile, we've reached a point where marginal improvements in the capability of these models requires astronomical infrastructure investments. And this scales terribly, in the sense that the next step up is much larger still.
It seems like the scaling cannot go much further anymore until the world simply cannot invest more. That's the problem with this kind of exponential growth. The money they raise by going public means they can stretch this limit, but it’s still there.
Basically, while they can probably increase revenue significantly by changing how they monetize but nowhere near enough to justify a trillion dollar valuation. Meanwhile expenses are unsustainable. And even if they stop the hyper scaling, expenses are very high. So they will likely not have margins that are too great.
So very large and valuable companies, but much less that what they will be worth at the IPO.
Before the AI craze, the big tech companies were trading at a multiple of maybe 8× or 9× revenue for some. But those are highly profitable companies with high margins and a lot of growth potential.
OpenAI for instance is now estimated at 50× revenue. And it seems to me that they probably will end up trading at a multiple lower than Alphabet or Meta once the dust settles, due to their bottom line not being great even if they become profitable.
papasquat | 2 hours ago
Yeah, but the problem is that everyone else thinks those things too. In order to make money on them, you need an edge, and everyone and their mom already thinks that these are two of the most valuable companies the world has ever seen. That's built into their price.
skybrian | 2 hours ago
On the one hand, the valuations are sky-high already and on the other, opinions differ very widely on how valuable AI is and its long term effects on society. Maybe they won’t meet expectations, but I wouldn’t want to exclude them from a broad index fund. The point of such things is that you don’t want to exclude any possible winners.
For example, Google kept going up far longer than I thought it would based on my rather cynical view of Internet advertising.
DynamoSunshirt | 23 hours ago
I'm very curious if the changed S&P/NASDAQ inclusion rules (reduced from 3 months to 15 days, in one case) will reduce the potential "pop". 15 days, and every passive investor will start picking these stocks up through indexes, and then they'll sit on those investments until either retirement or the stock getting dropped from the index.
Wafik | 23 hours ago
Yes, that would be the pumping part and then once all the ETFs add it to their portfolio, the dumping will commence. It's a genius way to pump a loser of a stock and exactly why Elon pushed them to change their rules for stock seasoning. It's in the Nasdaq and S&P500 best interest as they will make a ton of money in fees. With regulators completely gone in Trump's America, the reason for Elon pushing to elect Trump becomes all the more clear.
TonesTones | 21 hours ago
Would that work? It’d be a pretty strong claim that the weak efficient market hypothesis doesn’t hold. SpaceX’s filings are public, the rules changes are public, etc.
The hedge funds have an extremely strong financial incentive to short SpaceX if the plan really is a short-term pump and dump, putting downwards price pressure on the stock.
I acknowledge that there are other factors (a relatively small float, Elon’s ability to create demand for stock among a small collection of wealthy investors just by attaching his name to it, etc.) that could cause the hedge funds to get too nervous around making bets like shorts.
D_E_Solomon | 22 hours ago
SpaceX is a bit challenging from an investment thesis.
They have a conglomerate problem where you have to really be buying into all of the parts of the conglomerate - if you think space is great, but ai underperforms, you might be better being in a pure play space company. Modern finance has been moving away from conglomerates for a long time because of this issue.
There is also a governance issue there as well that investors have no ability to reign in Elon Musk if there is an issue there besides to sell their stock. SpaceX has supervoting shares, forced arbitration, and tight rules on shareholder proposals. So, you're really betting long that Elon Musk will continue to be a massive force for innovation - which is an iffy proposal based on recent track record.
Finally, there is a bunch of debt from the Twitter acquisition that is rolled up in there. That has to hurt any prospective valuations.
[OP] TylerSuits | 22 hours ago
Solid take - thank you.
CptBluebear | 22 hours ago
My bet is that he will buy Tesla after the IPO and merge it with SpaceX like he did with xAI. Then weigh down the profitability of Starlink even more with another dead weight branch.
[OP] TylerSuits | 22 hours ago
Glad I am talking to y'all - failed to realize the cash burn SpaceX is doing... they've already lost in Q1 all of 2025... This is wild stuff.
pete_the_paper_boat | 21 hours ago
They wouldn't be burning cash if they didn't merge with xAI. Elon is sacrificing his most publicly liked company for a quick cash injection into an unprofitable AI business.
OBLIVIATER | 20 hours ago
I can't be surprised that he's fucking up SpaceX like he's fucked up all the rest of his companies, but I'm a little sad. SpaceX has by far the most impressive and accomplished group of engineers in the private industry.
At least with things like Twitter, Tesla, etc there are established and actual good competitors in the space... SpaceX literally has no competition even close to them. Even if we magically threw all that budget at NASA I don't know if they'd be able to make the amount of progress that SpaceX has been able to do over the past 20 years.
vord | 20 hours ago
And his Twitter fuckup.
stu2b50 | 22 hours ago
SpaceX - definitely not, although I’d recommend everyone read their S-1. It’s clear that Elon wrote a lot of it and it’s very funny - it will randomly have pages and pages of sci fi inserted in between financial reporting. It’s so incredibly unprofessional I can only imagine the levels of cringe the IBs and accountants working on it felt.
Anthropic, it will depend on the S-1 numbers but probably not.
Although, a shower thought I had is that if you work in a white collar job, you should buy in Anthropic and OpenAI as a hedge.
Either the low percentage chance occurs that they succeed in automating all white collar work, or they deflate to boring 50-100b Atlassian type companies.
In the former, you will be out of a job - your Anthropic holdings at least give you some cushion.
In the latter, your Anthropic stock goes down by 90% but you will still have a job.
Basically, owning AI company stocks is insurance against the jobpocalpyse
joelthelion | 20 hours ago
That wouldn't necessarily work. Even if AI succeeds in automating a lot of jobs, OpenAI and Anthropic have a lot of competition. Models could become commoditized, and the money would go to the regular companies who successfully automated their own business.
vord | 20 hours ago
That, and like, how many shares exactly am I going to need to buy so that annual dividends might cover more than a single grocery trip?
Microsoft pays less than $4 a year per share. For a share that costs $460. All I need is $11 million dollars in Microsoft stock to keep a passive dividend as a hedge.....
stu2b50 | 19 hours ago
Only dividends is pretty conservative. Even the boggleheads accept selling 4% of your equities a year for free cash flow. Moreover it's just nice to have a buffer. One of my friends made ~5m from his RSU grants at Roblox after the IPO.
It's not an insane amount of money, but it's a decent amount, and since then he's been partially employed ever since by choice, doing what he's interested and leaving whenever he wants.
If you stuff like 100k into a balanced set of OpenAI/Anthropic and they really did become the most valuable company in the history of the world by automating all of human knowledge work, you'd probably have a good amount to chill on, whatever the world would look like by then.
vord | 18 hours ago
The problem is aquiring that $100k to start with.
pxl | 22 hours ago
I have two rules: don't buy individual stocks, don't time the market. I also don't think I know anything that the market at large doesn't know.
fxgn | 22 hours ago
SpaceX have forced NASDAQ to change their own rules to include SpaceX in market indices as soon as possible and automatically make everyone who holds a NASDAQ index fund buy their stock, something that has previously required a 6 month track record in the market.
Elon Musk has merged X into xAI to inflate the numbers, and then did that again by merging xAI into SpaceX to pretend like the company is not losing tremendous amounts of money. Now xAI is a tumor on the company that bleeds away all of their profits.
Despite this, their long-term strategy is entirely AI buzzwords. And ambitious promises that are unlikely to be delivered on (it is Elon Musk, after all). The estimated evaluation is based entirely on those vague promises, giving it an even higher P/E (~1000x) than that of Tesla, a famously inflated meme stock.
Also, this part is very speculative, but the board of Tesla promised Elon Musk a trillion dollars if he manages to get Tesla to above $8.5 trillion market cap. I've seen theories that he plans to merge SpaceX into Tesla after the IPO to reach that target and get the money. Again, this part is pure speculation, but given his previous pattern of merging companies to make the numbers look better, I wouldn't be surprised at this point.
Templa | 22 hours ago
Absolutely not, the reason they're going public is because they're burning money.
SloMoMonday | 21 hours ago
I've actually just set a meeting with a financial advisor to make sure we have managed exposure to SpaceX and the AI public offerings.
In general, the instant rules are being broken to get people "in on the action", it's the biggest red flag to me and it seems like the exact case here.
In terms of spaceX, there a lot of weirdness going on:
Most notably, the company is putting up a laughably small percentage of shares. Musk will still maintain full control of his company and have no incentive to act in investors best interest. If thr company goes public at the requested price, he then folds it into Tesla and is practically entitled to his insane "performance bonus" based on a damn technicality. And if SpaceX is rammed into every index fund and passive portfolio, governments will be forced to bail it out to protect pension funds. And all that money just goes to Musks slush fund.
Similarly, with AI, I do not see any sustainable path to recoup the costing. 2 Trillion dollars is the cost-to-date on the AI roll out. And that's loose change compared to the $15 trillion valuation across the 6 already existing AI companies.
Can EVERYONE make a significant RoI to justify these types of costs and valuations. This is with an escalating energy crisis. And an inevitable everything-shortage. And an increasingly likely Chinese invasion of Tiwan. And the fact that Data Centers are not coming online anywhere fast enough for nvidia to install Blackwell's and recoup costs to buy the latest high end tech. And to still perform in the face of cheaper Chinese models.
arch | 2 hours ago
I honestly don't know. That would really benefit U.S. manufacturing that the CHIPS act has brought state side. A brain drain in Taiwan from an invasion would likely be a huge negative impact for China. I don't agree with China's politics, but Xi hasn't shown himself to be egotistical or foolish in the way the leaders of the countries currently spearheading invasions have.
Its more likely that they continue to ramp up their domestic manufacturing and compete directly with the U.S. and Taiwan. Their electric cars are impressive, their nuclear rollout is impressive, their battery manufacturing is probably the best in the world. They've really played their cards impressively well. They're set to reap huge benefits when the petrodollar is inevitably threatened. An invasion jeopardizes all of that.
Very_Bad_Janet | 20 hours ago
I only buy index funds and index ETFs. I have gotten almost completely out of US stocks and have bought world ex US index funds. Too many shenanigans.
Narry | 17 hours ago
I feel that. My 401(k) (the only investment I really own) is 100% in a Vanguard index fund. I'm not Mr. Diversify Your Assets, I'm Mr. Plunk The Money Down And Walk Away. The index fund I picked is better rated, lower fees, and has an excellent record. If this thing craters, the entire US economy is a smoking crater anyway and I've got more to worry about than my retirement fund.
Positive | 16 hours ago
Check out @fxgn's post above:
https://tildes.net/~finance/1ugj/whos_buying_spacex_and_anthropic#comment-hzlr
Index funds will be forced to include these stocks.
fxgn | 11 hours ago
To be fair, while that is of benefit to those companies due to the huge amount of people buying those index funds, their actual share in the funds would be pretty small because the fund composition is only based on free floating (publicly available) shares. So I wouldn't worry about it much as an investor.
skybrian | 17 hours ago
There are shenanigans in other parts of the world too, and you miss some big gains that way.
arch | 2 hours ago
I have been moving a chuck of my holdingsfrom Fidelity's blanked index fund into their FTIHX international index fund. My kntebtion is to hedge some in case of a U.S. market down turn.
I'm highly interested of anyone has any ideas how to firmly avoid SpaceX in my index funds purchases. I'd like to cash out of TESLA, too, personally. Yes, I'd miss out on some "gains" but the stocks are not worth the ticket price, everyone know it, and one day before I retire it's going to crumble. It may be decades from now, but they're hemorrhaging money with no plan to fix it.
skybrian | 17 hours ago
Matt Levine wrote today about the SpaceX IPO and the effect of index funds:
...
Zorind | 22 hours ago
I really like what SpaceX is doing in the space space, but outside of that (e.g. X, xAI) I’m more worried.
I also think they’re overvalued, but that’s mostly speculation…they are currently one of a few reliable rocket providers, so as long as governments and companies want to keep launching things into space, SpaceX will have business. But I don’t think that’s enough business for their current valuation.
I’m also not a huge fan of the regulatory updates, might have to rebalance my retirement portfolios to see if there’s a way to avoid SpaceX once it makes it in to the S&P 500.
[OP] TylerSuits | 22 hours ago
I posted a new comment, but would agree on the overvalue.
nic | 21 hours ago
Damodaran did a fundamental pricing evaluation of SpaceX before the IPO was filed.
https://aswathdamodaran.blogspot.com/2026/04/to-trillion-dollars-and-beyond-spacex.html
You can read the IPO S-1 here
https://www.sec.gov/Archives/edgar/data/1181412/000162828026036936/spaceexplorationtechnologi.htm
Damodaran estimated a value of $1.2T - close to the value of Tesla today. How does that pan out?
Damodaran got the margins wrong for the AI business and the SpaceX business. He was on the money for the Starlink business. Damodaran got the growth of revenue projections wrong as well, at least according to the S-1?
How good is Damodaran?
Damodaran signaled TSLA was a buy at around $16 in around 2019, of course, he signaled it was a sell seven months later just before the stock went vertical like a sky rocket.... then he signaled it was a buy at around $180 in 2024.... but that is his jam, he is like Buffett, he doesn't buy hype, he buys fundamentals.
Why compare SpaceX to TSLA? Around 2017-2019 TSLA was similar to SpaceX in terms of revenues, and what not. Sure, it only sold cars. But all it had to do was sell more cars at a profit. One more car specifically. The Model 3. And it did.
SpaceX has to execute perfectly on three businesses. I wouldn't want to bet against Musk, but I wouldn't want to bet on Musk executing perfectly on three businesses at once, especially after the Cyber Truck fiasco.
If you take Damodarans analysis and you apply the S1, you probably end up with a value of around $700B, not $1.4T. If you value SpaceX like Tesla used to be valued around 2017-2019, you are looking at closer to $200B-$700B.
But of course, there is a lot of hype with AI right now, no one can really buy the hype, this will be everyones first chance to buy a competitor to Anthropic/OpenAI... Also, there wont be a lot of stocks to short, and the nasdaq index funds will all be forced to buy this over valued stock due to a change in the index rules, so this stock could rocket up before it comes back down to earth once it can effectively be shorted. They are effectively limiting the float for the first 180 days I believe, so it wont require much money invested to value the company at $2T. Plus a limited float limits the chance to short the company.
But at $2T IPO, how much can it really go up before people no longer believe?
This is so reminiscent of the dot com crash.... Ride the wave dudes, but watch out for when it crashes and burns.
vord | 20 hours ago
You know, give or take half a trillion dollars.
This shit is B A N A N A S.
Oh my house, yea it's worth $200,000. Or $2,000 or $2,000,000. You know, depending on who's looking.
nic | 17 hours ago
That is deep value territory, I don't expect SpaceX to get there outside a giant bubble popping.
skybrian | 20 hours ago
Google already owns some of Anthropic indirectly. The S&P 500 plans to add these new stocks six months after IPO. Other than that, no real plans. I'm curious about Anthropic's financial statements, though.
Bullmaestro | 20 hours ago
SpaceX and Blue Origin are the only commercial aerospace companies that have seen success, but investing in the former is supporting a Nazi.
As for Anthropic, they're the better of the AI firms and the most poised to achieve supremacy aside from Google. Investing in them could be a moderate loss or major win depending on bubbles.
Staross | 23 hours ago
No, I don't invest generally, but if I did I wouldn't buy American companies, and if I did I would try to avoid companies owned by fascists.
WrathOfTheHydra | 22 hours ago
The picking oppertunities of American companies that aren't facist are getting smaller by the day! Are we great yet?