The SpaceX Investment Thesis: Where We Are Now

**Josh** (0:00)
Four days, that's how long SpaceX has been a public company. And in those four days, it's broken just about every single IPO record that there's ever been. They blew past Amazon and Microsoft's valuation, reaching a $3 trillion valuation. It is the fourth most valuable company in the world. But Elon also became the world's first trillionaire. He made more money in one day than Warren Buffett has made in his entire life. Just absolutely insane. The stock itself, the price is already 50% above its IPO price. And they've already made their first acquisition. $60 billion to acquire Cursor to become the number one frontier AI lab. But it's not all unstoppable for SpaceX right now. Only 4% of the stock supply is available to purchase. And the company is valued at 107x its earnings. This is the largest gap that we've seen for any Mag 7 company or top Fortune 500 company. And there's an aggressive unlock schedule, which we'll get on later in the episode. But the number one question that's on my mind, and I'm sure a lot of your minds is, is SpaceX the investment of the century, or is this the strongest signal that we are in an AI bubble?

**Ejaaz** (1:04)
Well, according to Elon, it is. He just posted that they're going to have a trillion dollars of revenue by the end of the decade. That is going to be a tremendous amount of upside, and retail seems to agree. I was looking at this chart just before we started recording that showed over the last two trading sessions, retail investors bought nearly as much SpaceX as every other single US stock combined. And it's been amazing. The first day of trading, it was up, what is it, 20%, second day, 20%, third day, 5%. Today, as we're recording, this is up another 5%.
The thing has been up only, it eclipsed a $3 trillion market cap, making it the fourth most valuable company in the world over Microsoft. I mean, look at this chart, it's crazy. We have Nvidia, Alphabet, which is Google, Apple, SpaceX, and Microsoft in the top five. It's unbelievable that this new company comes on the scene and is immediately among the top five. And it has been doing really well for good reason. There's a very strong outlook on revenue, on guidance, on the actual company. But man, like you said, it's very expensive. And there's a lot to get into with this as it relates to how expensive this is. But it's a double-sided sword because this premium that the stock has allows it to do really interesting things. Like, for example, purchase a company for $60 billion effectively for free. And that has some upside for the stock as well. So there's a lot of really exciting things that have been happening with SpaceX. It's doing well. I think the answer that I want to give at the end of this episode is, should you be investing in this now? And what is our kind of forward outlook?

**Josh** (2:31)
So let's get into what exactly happened. On Friday, they IPO'd 555.6 million shares were released for trading. That's around 4.3 to 4.7 of the entire share supply. So not that much. And we'll get into why that might be problematic later. But at a fixed price of $135.
Now, immediately upon listing, it hit $160. And by the end of trading on Friday, I think it was sitting just above $200. And then like you mentioned, it's been on a subsequent run that has put it just around 50% above its IPO $135 price. Now, this is absolutely insane because, as I mentioned earlier, there's a large discrepancy between what SpaceX generates as a company. And just last year, they generated around $15 to $18 billion.
Now, it's positioned above Amazon and Microsoft, but above Amazon, which comparably generated, I believe, $770 billion last year, of which $80 billion was actual revenue that they earned. Compare that to SpaceX, they lost $4.9 billion. So the multiples are kind of like reaching for a moment, but it was the most insane wealth-creating event ever. Over 4,400 SpaceX employees became millionaires, with, I think, well over 100 of them earning $100 million just from this singular event. Elon himself, as I mentioned, became the world's first trillionaire, and of course, his wealth is mixed up in a lot of different companies, but now SpaceX, his baby, formerly it was Tesla, has now become his main source of value creation. So the question in everyone's mind is, what are you going to do with all this money? Now, there was an option that we spoke about a few episodes ago around SpaceX potentially acquiring this different company that will allow them to leapfrog and become a Frontier AI Lab. Turns out that's exactly what Elon did.