The SpaceX IPO will be the theft of the century
montanaskeptic.substack.com
montanaskeptic.substack.com
Anyways, seems like he's keeping the grudge alive.
They were right about a couple of things back then. But majorly wrong in aggregate and with respect to the outcome.
does that make it truly valuable?
If the thesis was that Tesla would be unable to create a system that would churn out cars that could be sold at scale with an economic surplus, then we have to reject it.
The point is, it's completely irrational - like winning lottery 3x in a row. Tesla's PE ratio, depending on how you look at it, something like 200-350. That means that if nothing changes, the expected return of earnings on your investment is 0.3-0.5%. You'll struggle to find a riskless fixed income instrument paying this little.
Ok, so clearly that's not why people buy this. They hope the earnings will increase, and/or the value of the stock. Seeing as you can lock in 4.5% riskless yield for 10 years, you'd hope for at least this much from a stock - realistically much more. Let's call it 7% - still low methinks but so be it. That's 14-25x more than it earns now.
You could say you don't care about earnings - just about price increase. Sure. But even to maintain the meagre PE ratio, earnings would have to double over 10 years. But realistically - this PE seems crazy for anything other than a crazy-high-growth stock. Which maybe Tesla is now but can't be forever. If it crawls down to a meagre 50x PE in 10 years time, to make your 7% return, earnings would still need to increase 8-14x in that time.
Maybe they can do it. They now sell, apparently, about 2% of all cars. No idea if total car production is stable; if it stays the same, and their margins stay the same, Tesla would need to increase their market share 8-14x too, to 16-28%. Maybe they can improve their margins and sell fewer cars, yet make more money - but typically increasing market share comes with lower profit margins as you lower the price to sell more stuff.
This is a veery bullish scenario. This is something an investment analyst for any other stock would need to sweat blood to argue. Yet this is what youre committing to when buying Tesla today.
Of course none of it really matters at the end of the day. Prices can levitate forever given enough believers. Wars can apparently be declared won with tweets with nothing to back them up - repeatedly. But if you think reality will come at some point, this is what is needed for Tesla to make sense as an investment.
Who knows if they'll be able to pull it off, but an analysis that treats Tesla as a car company misses why investors have priced so much growth into the company.
But hey Pokémon cards and meme coins and NFTs don't generate any revenue and yet you can make money buying and selling. Up to a point typically.
This is also addressed in the article:
> E. DON’T TRY TO SHORT SPACEX!!
> Elon Musk is a cult figure. Moreover, he has again and again proven himself immune to any meaningful market, legal, or regulatory scrutiny.
> Musk’s detractors have been correct about Tesla’s terrible fundamentals, its Full Self-Driving lies, its robotaxi fantasies, its shaky accounting. But when they have imagined these things might affect the stock price, they have been wrong.
> few could have anticipated that Tesla and Musk would be unaffected by valid scrutiny and criticism.
This almost implies that the scrutiny itself, and not the economic reality, should be the reason of Teslas demise or otherwise lesser financial outcome. Which seems a little self referential. If Elon doesn't wash his hands after peeing, and we pointed it out, that would be valid criticism. Ewww pee-hands. But the economic reality and aggregate outcome wouldn't change.
Like not even if the frontpage of WSJ, The Times or FT said "eww Elon pee-hands".
And that the thing - with enterprises of this scale, you could always nitpick and find some things that are suboptimal. But we gotta see it in proportion. 100mm accounting error in Tesla is not the same as a 100mm accounting error in the local McDonalds franchise. For one the error is magnitudes larger than their real economic footprint. For the other it's a rounding error.
TL;DR: I hear you - yes there is valid criticism. We just gotta see it in proportion. I like Teslas cars. But I don't like pee-hands.
There is no future prospect of explosive growth at Tesla any longer. That price to earnings ratio is not less absurd for having lasted this long.
The markets may well be wrong now. But they weren't back then, and the arguments haven't changed drastically.
Currently I'm sitting in Palo Alto. So I get to see a lot of Waymos and Cybercabs. I struggle to see how Waymo can compete on price if Tesla can keep production prices in the same realm as M3. And making a car is a pretty steep barrier to entry. So that edge may take some time to compete away.
At around $60B valuation sometime in 2018, how was TeslaQ spot on?
Are you maybe claiming that Tesla is lying in their current disclosures?
Do you think that Kathie Woods trying to memestock Tesla to 2000USD/share is normal?
Or do you think that promises like 20 million cars / year within 2030 while having extremely limited amount of models were ever achievable?
>Do you think that Kathie Woods trying to memestock Tesla to 2000USD/share is normal?
Frankly, I don't see why any sane adult would care enough to have an opinion.
>Or do you think that promises like 20 million cars / year within 2030 while having extremely limited amount of models were ever achievable?
I doubt the timeline was, I don't see why the model range would really be an issue.
That doesn't mean much when Toyota was already a behemoth company, it's much harder to grow when you are already enormous.
But to say there’s a “grudge” seems to ignore another market fact “past results are not indicative of future results”. He might be right this time around for all you know. Is there anything you disagree apart from saying he is a Musk hater? Otherwise this comment is just unhelpful.
So my trade on IPO day will be long $X SpaceX, short $X Tesla. Wait 1 month. Wish me luck.
Also, you'd be surprised at how simple the most profitable Quant strategies are.
Also, realized move always carries more value than expected because of uncertainty.
Risky, IMO. I've been closing my TSLA shorts because I think he'll just use spacex stock to buy tsla at a very overvalued price, just to wipe out all the shorts.
If SpaceX ever has the ability to buy Tesla in an all Stock deal at a high Tesla price then SpaceX would need to expand faster than Tesla which is precisely my trade.
That said, if you think this is as bad as the article claims you'll obviously buy SpaceX at IPO, then sell it when Index funds are obligated to buy.
The price at IPO will obviously be influenced by expectations of a future purchase by index funds... as an analogy, if it became public knowledge that next week, 1,000,000 people would all be required to buy gold, the price of gold would go up today, not next week
If the fast entry rule changes hadn’t happened I would agree with you entirely.
Fortunately, this only affects indices that follow nasdaq, and from what i know, no other index is following this. That means it's "safe" to purchase a globally diversified, cap weighted index fund (safe as in the float isn't manipulated).
People talk of the demise of passive investing due to this, but most of the commentary fail to mention it's a specific, nasdaq thing and not a general change.
this IPO is to pay debts for failing tech.
Also don't get me started on data centers in space idea...
When the Chinese land on the moon sometime in 2030 and the US still doesn't have a way to get there, will Elon finally reap the consequences for his lies or just the interim NASA admin that gave Space X the contract?
In all likelihood, neither.
As a point of reference, the GDP of the United States is roughly $30T.
But there's Starlink. What's a telecom provider worth per customer? Value starlink double or triple that, maybe. And that's about it.
While you're right, I'd be more sceptical due to politics. The people around Lake Zürich are up in arms over wind turbines. Even solar panels on mountain sides are too much (though that's hopefully less about noise.) I can't imagine the uproar if someone wanted to fire rocket engines regularly there.
I may have bought a few bridges in my day, but at least bridges are a thing that exists.
There is no way people in Switzerland will vote yes to this.
I feel that what this article is telling me is that passive funds are becoming active funds by way of manipulating the index itself. Kind of like if you’re passively invested in Brazil winning the World Cup but you can’t adjust the team or tactics, so instead you move the goal posts to where they’re about to kick the ball?
Pension funds seem more selective on the other hand. It’s always been the case that you can adjust your palette based on personal preference eg green energy, no weapons, tech stocks, etc.
The fund itself is a financial product with a fee attached. Regardless of an index's perceived "quality" funds will always be created as long as there is investor demand. In recent years there has been an explosion of exotic "thematic" ETFs with exaggerated returns & comparatively higher fees. These tend not to attract the most sophisticated crowd. You can be sure they won't perform well into the long term.
> Is it simply a branding thing? I’m buying into S&P500 because S&P500 is a highly recognized term used to mean “The US Economy”?
Absolutely, it is 100% branding. For better or for worse S&P500 is the barometer of US economic health. There's every incentive to manipulate it to score political points.
It's wrong. They're undoing a previous manipulation and making the index more accurately reflect the market.
Why do you think anything that Nasdaq-100 does would matter?
> Musk’s detractors have been correct about Tesla’s terrible fundamentals, its Full Self-Driving lies, its robotaxi fantasies, its shaky accounting. But when they have imagined these things might affect the stock price, they have been wrong.
> Someday, someone, somewhere will make a lot of money shorting Tesla or SpaceX. But it’s unlikely to be you.
> For now, Tesla remains better understood as a religion than a financial investment, and we can now add SpaceX to that category.
But as a 95% FSD user, I'm living (and loving) the Full Self-Driving lie.
Is the argument that SpaceX the business fails, or just that the IPO price is disconnected from reality?
How much of the index fund manipulation concern applies to any mega-cap IPO, vs. something unique to SpaceX?
Toyota, NASA, many people have done it many times. They have also failed many times. Failure happens, even after successes.
Starship has come a long way but it can still fail on so many ways. They may simply not progress. The rockets may prove too expensive to reuse, or not reliable. The market might not be there.
But the valuation is as if they have already achieved it and will definitely make a fortune out of it.
> How much of the index fund manipulation concern applies to any mega-cap IPO, vs. something unique to SpaceX?
Fair question. Index inclusion typically happens when stocks have reached some equilibrium, in particular they have been trading for a while and have a fair price. Also they need a substantial amount of shares trading in public, not held by insiders.
SpaceX will be neither. The concern is that the IPO price is hugely inflated (which is possible to rig but only short term) inflating its market cap and thus it's weight in the index. Then all these index funds will be forced to fight over the small amount of shares inflating the price further.
This happens in micro scale when normal stocks enter indices, but nowhere near to this extent, and it's typically for a established, well priced securities.
He's got some kind of beef with Elon and has predicted TSLA stock will crash many times.
F sells an order of magnitude more cars (~$190 billion in revenue), and has a market cap of $62.8 billion vs TSLA market cap of $1.59 trillion.
TSLA is ridiculous. Any sane investor would look at those numbers and run as far and as fast as they can.
Comparing with MSFT and AAPL makes TSLA look even more insane.
There are a lot of high stakes bets wrapped up in that company at this point already. AI, orbital launch business, communications networks, a little bit of Twitter/X, etc. And soon robots, grid battery, solar panels, electrical vehicles, autonomous driving, etc. They don't all have to work out to justify the combined valuation. Of course the facts are that quite a few of these lines of businesses are generating many billions in revenue already. It's at least a more diversified bet if a merge happens. Which might be why some share holders might prefer this. I don't have shares but I think that's a pretty rational attitude.
Still a risky bet of course. But betting that it will all fail might be the riskier one. Maybe it will just end up somewhere in between and not quite live up to expectations but still be a business generating lots of revenue with some healthy growth.
Some of the pessimists are absolutely perma-bears who hate any thing to do with Elon to the point of madness, but still doesn't change the fact that this IPO makes no financial sense no matter how reasonably you try to look at it.
I listened to all 3 hours of the Dwarkesh interview with Elon. I would really really love to see mass drivers on the moon, but all the facts were obviously made up on the spot. This wasn't just the usual Elon exaggerating. It was pure fantasy stuff. All the hard engineering questions were just being hand-waved away along with reasons of why the data centers couldn't be here on earth.
Combine that with the fact that Elon will retain complete control of SpaceX. Yeah no. I wouldn't be crazy enough to short the stock but I really don't want any of my money in it either.
[1] Psychology of money
I'm rooting for SpaceX, but even I can see that there's some extremely dicey work being done to mask the enormous sinkhole of XAi (and Twitter).
The future pedo-island in Albania, ex-protected island where the Trump family promised to only develop 8% of it before developing everything, skirting every environmental rules, every foreign investment rules to destroy what was a natural park where at most you could anchor next to is the theft of the century.
This is just american capitalism in america.
Have they cleared all the landmines and UXBs already?!?
That was fast.
* https://www.theguardian.com/world/2025/jun/24/trump-family-k...
Having X and Grok be bundled with SpaceX (muh datacenters in space) is like SolarCity on steroids.
With regards to the index discussion, my over/under on an ETF that tracks the index minus SpaceX is like two months post IPO.
Why do you think TAM is shrinking? It's pretty clear, to me at least, that Starlink is basically one of a kind military contractor that has a freeway to both raise prices and expand offerings.
Civilian market sure, but it's pretty clear the milltech path is going to be a money printer for satellites and it looks like you have a clear moat (i.e European sattelite companies won't be able to bid on those contracts).
this is the new playbook.
Same as the old playbook, just scaled up. Tesla got billions from state subsidies and selling carbon credits.
- many funds owned by the public will buy this, so people will be indirectly invested and could lose money
- if this affects the economy, it will affect everyoneIt must be terrible to be so utterly powerless.
Sure we can hate pension funds but fuck the management of those indexes.
The management of those indices is just doing exactly what the vast majority of their customers want.
The customers of indexes are providers of funds (Vanguard, BlackRock, ...). In turn, people like you and me are clients of those providers.
Indexes are changing the rules thanks to lobbies by the world's richest people so they can get even richer by dumping their overvalued stocks.
If you are not a SpaceX investor, you are losing money. Including pension funds.
This is a paranoid delusion.
These rules were never on particularly solid ground, it's only natural to see them gone when you have significant upcoming IPOs changing the structure of the market. It is the job of these indices to keep up with that.
Those rules were implemented to protect the index from being skewed when an IPO happens because the IPO is exactly the moment where the stock may be overvalued and very volatile (compared to all the other stocks that are in the index). We especially don't know at IPO time if the company is changing the structure of the market because it's too soon. And in fact, we won't know for a couple more weeks or even years; but by that time the price will have stabilized.
The index is supposed to be slow at rebalancing to minimize costs and make it practical for providers as well.
And as I write this comment, I've just read that they cancelled the changes[1]. Which completely proves your last sentence wrong.
[1]: https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-...
The rules were changed in the mid-90s because of a significant amount of big IPOs which did not have a reasonable path to profitability. That's not even close to the situation we're in right now. Both OpenAI and Anthropic are clearly solid businesses.
> We especially don't know at IPO time if the company is changing the structure of the market because it's too soon. And in fact, we won't know for a couple more weeks or even years; but by that time the price will have stabilized.
This is largely magical thinking. How many more weeks should I wait before $TSLA will stabilize?
>And as I write this comment, I've just read that they cancelled the changes[1]. Which completely proves your last sentence wrong.
Or maybe deranged Americans just turned this non-political issue into a political one, and S&P global thought this was not a hill worth literally getting shot in their office for? I don't know, that'd certainly be my primary concern in their place. Wouldn't it be yours?
Could you give me a link to read up on that?
> Both OpenAI and Anthropic are clearly solid businesses
Maybe you're an insider so you have more information than me; I'm not so I don't know.
> How many more weeks should I wait before $TSLA will stabilize?
TSLA is mature enough since their IPO to be included in an index.
> Or maybe deranged Americans just turned this non-political issue into a political one, and S&P global thought this was not a hill worth literally getting shot in their office for?
No, it's probably because major fund providers and other market participants (including retail) saw through the subterfuge. Indexes and providers and retail investors have nothing to gain from the former proposed changes. It was very obviously a play by SpaceX to force passive investors to buy into the stock, therefore pumping the price up.
On the other hand if they don't I'm making popcorn because the lawsuits and political fallout if / when this goes wrong is going to be epic.