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Comment by marcus_holmes | Hacker News Reader

Agree, but Coca-Cola has plenty of value despite being "boring" and "stable".

The post I was replying to was saying that SpaceX had no growth and therefore little value. That's a mindset that sees companies as speculative assets that are only valuable if their price is set to change in a way that a speculative profit can be made.

SpaceX is making money and doing well, the business fundamentals are working out, and it is valuable because of that. If it turns into a boring, stable, company then that's a good thing - it's less likely to spend $10B of shareholder funds chasing some sci-fi pipe dream (instead of, say, spending $1B testing its assumptions first) in the hope of continuing to be valued as a "high-growth" stock.

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Coca Cola indeed has a lot of value its market capitalization is USD 76 billion making it one of the 30 most valuable companies in the world!

The problem with SpaceX is that its valuation is almost entirely driven by its expected future growth. For 2025 SpaceX reported EBITDA of USD 7.5 billion. Other mature aerospace companies (Lockheed, Northman, Airbus, Boeing etc.) are currently valued as ~19x EBITDA (i.e., Market Cap / EBITDA is ~19x). But SpaceX is being valued at 166x EBITDA (USD 1.25 trillion market cap / USD 7.5 billion EBITDA).

What drives this difference in valuation? The answer is quite simple, investors expect the EBITDA to grow and quite rapidly. EBITDA could grow via higher margins (EBITDA margins is EBITDA / Revenue, and for SpaceX it is already a decent 50%), but even at 100% EBITDA margin (i.e., zero operating cost) its valuation multiple would b 83x EBITDA. So the only way to justify SpaceX valuation is if its revenue grows and gorws rapidly.

A quick back of the envelop calculation would shows that investors expect SpaceX revenue to grow at minimum of 65-70% annually for the next 5 years. If the revenue grows at less than that the investors are unlikely to earn a good return on their investment.

Someone else here pointed out that when your biggest asset is a network of thousands of satellites that all have a five-year lifespan, earnings after depreciation is unusually important.

>> SpaceX is making money and doing well, the business fundamentals are working out, and it is valuable because of that.

Not true. They have to build a new constellation, every four years, at a cost of 8 billion dollars, and that is not accounted for.

Their main customer is...them: https://news.ycombinator.com/item?id=47613231

"SpaceX is making money and doing well, the business fundamentals are working out, and it is valuable because of that."

Spacex is making $10 billion. That does not give it a value of $1.75 trillion.

The $1.75 trillion value is wholly based on speculation about its future growth.

But they made up a bunch of forecasts with rosy future prospects! Think of how profitable they'll be if literally the world model matched their simple growth equations!

From my perspective, it's all just collective gambling when it comes down to it for tech IPOs these days. The market trends are just as much a popularity game as they are anything else.

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