Posted by vrganj 9 hours ago
Personally if anyone cares my take is that our economic problems are basically structural and geometric at this point. DC is a circus of people tasked with solving them and with the general competence the process selects for, the problems are in a practical sense unsolvable. So instead we get the tribal war spectacle over who holds the pen. Meanwhile the problems sit on the desk with a blank in the answer space.
How is this even debatable.
How is this even debatable.
Even if the Star Trek utopian future materialises, it is very likely to be a long time from now.
1. SpaceX has competitors. Most are making reusable rockets.
2. SpaceX has no moat.
3. The concept of money itself might change dramatical by the time SpaceX becomes a multi-planetary mega corporation. Investing now may not return returns in any meaningful sense.
True, and that's exactly the reason why people want to buy this stock now.
If future returns were already (almost) certain, they would have been priced in and you couldn't make any money with this stock.
This is a classic high risk / high reward stock. IF the space economy takes off you might 10X your investment. If it doesn't, you might lose most of it.
Rich people (who own most of the stock market) can afford to make such high risk bets, because they can afford to lose the money and thus many will make that bet.
And Starlink is a pretty big deal, particularly in a time of conflict where undersea cables are very vulnerable.
If Elon hadn't shifted so far to the right, these threads would be near-universally praising SpaceX despite Starship's struggles.
Starship is meant to answer all those questions about design intent and financial viability and then some. It could readily turn out to be an example of second system syndrome.
A symptom of his fickle nature and erratic behavior, as well as general poor impulse control, all of which rightfully make people skittish with their money and question his judgment.
He had period where he though he can become hero for the democrats due to green cars. It did not worked, neither democrats nor left accepted him as unconditional hero.
The racism, the villingness to cause harm to get more power for himself were there whole time. He was far right the whole time, just became more extreme and open when it stopped being disadvantage.
Especially now that every failure results in a massive wave of negative publicity
It doesn't matter if it's successful or not. Their space business is worth virtually nothing on paper and the funding structures and profit/loss accounts are scary.
The unfortunate thing is, a lot of people have no idea this rule change has gone into effect, and that they're about to get fleeced by a bunch of professional investors.
https://www.kiplinger.com/investing/what-the-nasdaqs-new-fas...
It's legalized theft, and the victims are people least able to defend themselves from it. Most people have no idea what's in their retirement accounts, or track very closely what's being tracked by the index funds they've been told for decades was the safest way to invest in the stock market for non-pros.
Their skepticism seems pretty valid to me
In other words, look one level deeper and you'll see it's not the S&P500 that's overvalued. It's you and me and 100 million other people desperately attempting to make sure young people pay for them for 20-30 years when they're old.
And then you calculate it out ... and see it's not happening. No matter what the number on the account says.
I don't think it is similar therefore.
Imagine in 2010 if investors had real transparency into how much money YouTube or Maps was losing, along with the governance structures to enforce their concerns.
You’re calling it “political motivation” as some sort of blind hate or vendetta out of principle, cutting off the nose to spite the face. But you can no longer separate Musk from politics and aggression towards Denmark.
The pension fund’s assessment looks entirely valid, objective and justifiable to me. But for anyone who personally favors Musk and his political views any dismissal will look politically motivated. It’s easy to cry foul. In this light your shallow dismissal might be just as politically motivated.
If you believe SpaceX is overvalued or do not like the way it is being handled by the big index funds, again, use direct indexing.
akademikerpension is pretty decent fund, it is about 50/50 asset allocation, losing out by only .9% per year compare to a US equity/bond portfolio. Better than many active funds:
https://www.finanshus.dk/wp-content/uploads/2023/02/Pensions... https://testfol.io/?s=h8azNZvMICk
You do not like the valuation ? What should a company that launches 98% of the world's non government tonnage to space (80% if you include the Chinese government) be valued at ? The only company that has figured out how to very reliably launch at a sustained and rapid pace ? Pioneered and is perfecting rocket reuseability ? The only thing we can can say with a degree of certainty is that $2T is either very overvalued or very undervalued. If you believe that space will become a huge part of our economy in the future, and believe that SpaceX will play a significant role, $2T is cheap. Dirt cheap. The only way to prosper is to be bold.
For all those who come here to say that they do not like Elon or that the valuation is ridiculous, or that SpaceX will not succeed, that is perfectly fine - you are just a few clicks away from making it happen. Sell your assets and buy a direct indexing product, simply buy the stocks you want, buy ex-US, or any other number of options you can do on your phone with a few clicks. Less clicks than it takes to virtue signal on this forum.
The TAM of that is under $10 billion. So even owning that entire market shouldn't get you anywhere near a trillion. Then factor in the development cost of starship which has been going on forever and still hasn't even made it to orbit.
Even the IPO filing isn't claiming the value comes from the rockets but from data centers in space which seems questionable. The real cash cow right now is Starlink but they aren't leaning into that heavily because those numbers also indicate that revenue growth might be stalling out.
If you just look at the pure numbers the case is very weak. No reason to change the inclusion rules. In fact I'd argue they never should change the inclusion rules. Let the market find a price first. Index funds are supposed to be boring and track the market. Including any recent IPO just adds chaos beyond simply tracking the overall market. It's trivial to buy some SpaceX if one wants and unlike selling your entire fund holding either doesn't trigger a taxable event at all or it's a much smaller one if you cannot avoid it.
Google when it ipo'd about 20 years ago had a market cap of $23B. It is now close to $5T. Even if it went over 10x overvalued at $230B when it ipo'd, it would still have been a good investment. That is because the internet became a large part of our economy, and Google is a major player.
If you really want to compare the two, Google had a market cap/revenue of $2B/$2.7B, SpaceX is currently $1.8T/$20B, or about 10x the ratio of Google back then.
Yeah, very pricey. Crazy ? Not sure. Do I like the valuation ? No. Would I buy more SpaceX than what will be in my equity ETF ? No. But I am not unhappy that I will own a piece when it comes out. Do I like the change in rules ? Absolutely not, but that is just the way it is. The market, over time, is, and always be a lot smarter than I am.
Many people have appreciated gains locked into their indexing products such that changing is very expensive.
The biggest issue is not SpaceX/Elon per se, but indexes bending over backwards for him and changing their indexing rules to fleece index investors.
Most IPOs perform badly, to the point where the SP500 excludes all of them for a year, and I think that is actually appropriate for an indexing product. Though they're looking to change that and their float weighting for Elon.
Though after doing some digging I am not personally meaningfully impacted since Vanguard uses CRSP, which is float weighted, so only 0.1% of that is going to be SpaceX and I can live with that.
I short the stock on the actual financials if I was exposed to it (and it was actually possible), but it's a small float and there are apparently tonnes of Elon fanboys propping up Tesla beyond belief already so I expect this to be one of the hardest to predict stocks/IPOs.
As far as the appreciated gains go, I agree with you. However, there is a strong correlation between someones wealth and how much they have in taxable. For most people, especially those that are not wealthy, their equity investments are heavily weighted to retirement accounts,so I look at this as more a rich persons proble.
