Space ecstasy

Katie Martin (0:06)

Pushkin.

Markets, ladies and gents, are heading into a new dimension. They are heading into space, led by that guy again, Elon Musk. Investing in space as a big theme has been around for a while, but Musk is really taking it up a notch because he's planning to list one of his companies, SpaceX, on the stock market in the States. And he reckons it's worth, get this, $1.75 trillion, trillion with a T, which would make it one of the most valuable companies on earth and indeed in the known universe. Now, you take a little look at the electric vehicle slash robot maker Tesla, which is Musk's other big thing, and you wonder what gives him so much confidence in his ability. That stocks down by about 30 percent since November. But the launch, get it, of SpaceX is happening. It will be impossible to avoid, and it will be a big test of whether investors are up for hype and promises, and whether they really want more Elon Musk in their lives. Today on the show, will this thing fly?

This is Unhedged, the markets and finance podcast from the Financial Times. I'm Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in lovely sunny London. And I'm joined down the line from New York City by my usual fellow astronaut, Rob Armstrong. Rob, say hello.

Rob Armstrong (1:31)

Greetings from space.

Katie Martin (1:34)

But we also have all the way from San Francisco, a genuine FT legend, a stalwart, Richard Waters, known affectionately around these parts as Muddy. You're a real authority on all things big tech and Silicon Valley, and it's very early over there. So Rich, thank you so much for coming on today.

Richard Waters (1:52)

Well, it's very nice to be with you. And by the way, I should say, I'm not in San Francisco, I'm in San Diego today. I'm in the FT satellite office.

Katie Martin (2:00)

It's all about the satellites.

Rob Armstrong (2:03)

Richard, just to establish your bona fides, if that's how you pronounce it, in what year did your byline first appear in the Financial Times?

Richard Waters (2:13)

Well, Rob, it was a year when there was a stock market crash, I can tell you that much.

Katie Martin (2:17)

Oh, and we're not talking 8

Richard Waters (2:21)

But I'll tell you one, but I will tell you, it was 1987

I was there a month before the 87 crash. You may not remember that one, but it was big at the time.

Rob Armstrong (2:32)

And when did you start covering tech for the FT?

Richard Waters (2:34)

Oh, I'm getting the whole personal grill here. In around, well, so I was covering tech out of New York in the late 90s when tech, telecom and media were going to emerge in some big thing, and it was part of the.com bubble.

Rob Armstrong (2:48)

Yeah, boy, has that idea not worked over the last 30 years.

Richard Waters (2:52)

I've seen a few, but I've been in California since 2002, so I've seen a few cycles.

Rob Armstrong (2:58)

Right on.

Katie Martin (3:00)

So look, tell us, let's start from like basics here. For normal people, what is SpaceX? Where does it fit in this grand Elon Musk universe where everything has an X in it?

Richard Waters (3:10)

I think the way we should think about SpaceX as a stock is, is going to be Elon Musk's kind of Field of Dreams part 2

Tesla was an electric car company that turned into many other things.

SpaceX is a rocket company that is turning into other things before our eyes. It started out as an incredibly successful, the first private company to put a rocket into orbit. You know, it was an extraordinary thing. And Musk is ferrying astronauts to the International Space Station. Before that, the US relied on Russian rockets. So Musk is the US space program in many ways, or became it. And then, you know, through his Falcon rockets, he basically established this incredible lead and cost in getting payloads into orbit. So he is the global workhorse for getting anything into orbit. Extraordinary, absolutely extraordinary.

Katie Martin (4:06)

So like SpaceX mushed together with XAI, which is his artificial intelligence GROK thing. Tell me how that makes sense.

Richard Waters (4:15)

You skipped over part two, part two, was putting Starlink satellites, tens of thousands of satellites into orbit. This is now two thirds of SpaceX revenue. I mean, it's an incredibly successful thing. He's got way ahead of the rest of the industry. Every other business and every other country wants to put up a network, a global network of communications satellites, because they all want to be dependent on Elon, which they are at the moment. That was step two. Step three is let's clutch this thing together with, as you say, XAI, which is Musk's money pit of an AI company, which has also been clutched together with X, the former Twitter. And let's put it all together and call it, well, what do we call it? And that's the amazing thing here. You know, I've had people say to me, this is some new style, vertically integrated space conglomerate for the 21st century or something, I don't know. But you can start to see some rationale. You can say, well, let's put data centers into space and generate AI in space. And hey, you know, we're one step ahead of open AI.