Hacker News Reader

Comment by GDC7 | Hacker News Reader

At a 100B valuation you'd be kinda late to the party.

Non-SaaS, non-tech platforms and non-biotech companies have a really hard marketcap ceiling.

SpaceX builds stuff in the real world, macrostuff with millions of moving parts, that's like black death for economic margins, they also aim to go into an environment such as space which is very hard and has slapped us time and time again.

There is no convetional ROI for us up there, there maybe is in the form of artificial economics such as the morale boost that the country gets when a rocket goes up.

But if that's the case the US could just push for having the Olympics every 2 years given that it sweeps the gold medals everytime.

A 200k usd on a public SpaceX is a bet on Musk being able to convince people other than yourself that SpaceX is in fact a tech-platform a SaaS or a biotech.

View on HN

No, you aren't.

Revenue is projected to be 3 billion this year, projected to be 10 billion by 2025. You also get Starlink with it, which is valued at 10 billion by itself.

At 10x revenue, it is valued similar to Facebook, Microsoft and Google.

Everybody is focused on revenue.

Last time I checked the important metric in business is revenue - cost of goods sold

If they are approximately the same you are just running a big operation, not a profitable business. And I am not saying there is anything wrong with that, being at the helm of a big operation feels great and gives the master of the ship a lot of meaning, but it's not a profitable enterprise.

Even SaaS, bio-tech and platforms feel the pain and the anxiety every minute they spend without being profitable.

Despite what the CEOs say, it's like being underwater, you can be optimistic about your ability to swim towards the surface, but still you got to get there.

It's all about future growth potential. A company that is growing it's revenue at 50% y/y is going to get much higher valuation than a profitable saas growing at 10-15% y/y.

If you are not Saas , biotech or a tech-platform then revenue growing isn't as of itself a good news.

You need both revenue growing and costs staying flat or just slightly increasing

Only the SaaS, biotech and platforms get a free pass, because the rationale is that once you become the dominant player , drive everybody out of business and kill competitors in the cradle thanks to your strategy aimed at acquiring marketshare...you'd then be able to sweep the market because you'd found yourself in a monopoly or quasi-monopoly regime, thanks to the network effects and a huge first mover advantage.

No matter what Musk says : cars and rockets aren't tech-platforms.

Of course you can bet on his ability to convince people other than yourself that they are, but that is a social engineering bet, on the charisma and the salesman ability of mr. Musk, it's not an enterprise or a business bet.

Nothing wrong with social engineering bets, they are the most profitable ones and you can ride on the way up and all the way down, like Thiel and Robert Mercer did with Trump for example.

It's not like they believed he'd Make America Great Again, they believed he could convince people other than themselves that he'd do so.

Facebook, Microsoft, and Google are so valuable because their marginal costs are 0. SpaceX Won't be worth 10x revenue. Companies in capital intense industries with high variable costs have caps less than 5x revenue, with 2x being common.

Furthermore, $650 billion is spent on advertising each year and growing. That's a huge TAM for ad-tech companies like Google and Facebook.

What is the global spend on space launches annually? $5 billion maybe? And not growing very quickly, if at all. And most of that market is inaccessible because many of the biggest space agencies prefer to keep things in-house, even if it means a worse product at a higher cost.

I am guessing you aren’t a big crypto investor :). You are making an assumption that the other investors are all rational and use the same criteria when buying stocks. That is becoming less and less true every day.

Well if that's the case we can all go home, welcome our quant finance overlords with grace and hope they are magnanimous towards us mere mortals.

Reading other people's minds is not yet possible :( , for everything else there's AQR, RenTech and D.E. Shaw.

My point is that some stocks people are buying with their hearts and not as much with their brains. They believe in the future and they buy no matter what the price. Revenue multiples are not considered. Spacex will almost certainly be one of these stocks when it goes public.

that is the same as my point. You have to be able to read the emotions of all the other market participants

It’s 33x 2021e revenue, is it not?

It is not obvious that Starlink is not a liability. I have seen people make convincing economic arguments that Starlink will eat money not make money.

SpaceX is at the moment the only feasible enabler of humanity as an interplanetary species. Their deeds can open up a new economic growth regime that has no practical upper limit, we can expand to trillions of people in the solar system. You really cannot price this properly. No single company was so pivotal in the history of humanity.

You , me , our descendants 50 generations down the road will all be dead before anything like that even begins to happen. Like 0.01% of the progress towards the trillions of humans vision you , Musk and Bezos are talking about.

Being early = being wrong.

Aren't you convinced by Starlink? There's a subscription business that should have great margins. It fits right in with the new remote work paradigm. Literally working from anywhere including the middle of the ocean is possible but only with Starlink. Other companies cannot offer enough bandwidth.

>middle of the ocean

Is this true? It’s been my dream to use it on a boat and be able to work from there, but my understanding was that you had to have the satellite dish in a permanent fixed location on land.

not yet, but will be once SpaceX starts to mass launch their next-gen satellites that communicate with each other with laser.

You still need a downlink base near you, so while you are ok on Cuba if the base station is Miami. Getting a connection on Easter island is still not possible without using the fiberlink to that island.

EDIT: looking at that map, it's better to say that Puerto Rico can not get a connection from Miami, but Cuba can.

https://starlink.sx/

If anything it's a dying business model.

The world is getting more and more urbanized.

We won't leave cities because of the remote work. Humans feel the need to be together socially. Now there are 2 schools of thoughts about work;

one says that working is a social activity and thus remote work is doomed (IBM tried and failed before the pandemic)

The other says that working is just working.

Now even if the proponents of the latter are right and the whole world were to switch to 100% remote work you'd still would want to be living in NYC or LA for the social scene.

If anything the big winners are going to be the megalopolis where the social scene is more vibrant and people are more open compared to NYC and LA.

Thinking about Mexico City, Buenos Aires, Rio De Janeiro, Sao Paolo, Bogotà...at least for Americans who can speak Spanish.

They have Fiber down there, but sure there are niches such as the new Aerion supersonic plane, but is that enough?

> If anything it's a dying business model.

For values of dying that include an unserved market of about 2 billion people in Africa and Asia.

Africa and Asia are getting urbanized faster than everywhere else.

Lagos, Nigeria will be home to 88M people in 2100, Kinshasa, RDC 72M.

I don't care how bad their infrastructure is now, running fiber in such a high density populated are will always be better than relying on internet via satellite.

If you are in countries that have the institutional capacity to protect it and your ownership of it, sure, lay network infrastructure.

Despite the growth of the large cities, most African urbanization is due to villages growing past a threshold where they are statistically counted as towns (IIRC 10 000 inhabitants), and therefore as urban, though. "Greater Lagos", the coastal-urban strip running from Abidjan in the west to Port Harcourt/Douala in the east, is mostly like this: villages that grew.

* Most African population growth is still going to be outside these megacities, and even within them, only the centres will have much infrastructure, unless there is massive social change leading to institutional reform.

Edit: clarifying this, which I should have done first: The majority of the population for at least the next 40 years will be in areas with population density below about 1000 people per square km, where Starlink is viable but laid cable is expensive.[1]

1. https://caseyhandmer.wordpress.com/2019/11/02/starlink-is-a-... under the heading "Architecture".

Then you have to think about how many people want to work from the middle of the ocean, or anywhere else other than where their family/relatives/community is

HN is a bubble in a bubble, ask around, 99.999999% of the population will tell you they don't give a fuck about starlink and even less of a fuck about remote work and "digital nomadism".

> ... 99.999999% of the population will tell you they don't give a fuck ...

So only about 100 people on Earth care about internet connectivity in remote places?

I mean, technically they are every two years. Summer and winter.

Reply on news.ycombinator.com