He thinks it's a daming accusation that SpaceX is "not AI" but in reality "not AI" means rockets and satellite internet.
The parts of the business his class cares about is the garbage, not the substance
Agree that X.ai is a tire fire.
Well, no.
SpaceX it is the 50th or so rocket company. The previous ones did not fail because they couldn't get rockets working or couldn't improve on the state of the art in rocketry. The ones not supported by nation-states failed because they couldn't get the financials working. To be fair some of them failed because they couldn't get to earth orbit. But that's not the common case. More common: "New rocket type works! We demonstrated it succesfully! No launches ... so no money. We're publishing our work and shutting down. Bye". Irritatingly quite a few of these new rocket companies are theoretically more efficient than SpaceX will ever be. Also irritatingly most of these companies, through financial necessity, demonstrated a working rocket in one try, in contrast to SpaceX.
(my favorite? Aerospike nozzles. Aside from their great "Wiley E. Coyote" potential should launch fail they look absolutely incredible)
Did Space part of SpaceX get the financials working? No. Not even with Starlink (their debt repayments still drag it into the negative). What is their fix for too small a market? Make Spaceship, an even bigger rocket ... for a market that sees no use for the existing Falcon 9 launch capacity ...
Starlink: same. It's not even the 10th satellite internet company. The previous ones all failed, because the market was too small, and had to be bailed out by nation states, famously Iridium. Did Starlink solve the financials? No.
The most irritating bit of this is of course Elon Musk himself. Why did he succeed? Well he keeps mentioning himself and "starting from first principles". As illustrated above: he started from first principles, he failed (private, ie. profitable access to earth orbit? SpaceX doesn't do that), then he got incredible amounts of money somewhere to pour down a black hole (using artificial demand like Starlink) and so everything is still moving. Obviously Elon Musk's achievement is 100% finding this money and 0% practicing science from first principles".
That's also Elon Musk's great redeeming quality. What's his achievement? Convincing, first himself, then humanity, or at least enough humans to get ~300 billion in cash, that Space exploration is worth doing despite the fact that it's unprofitable. The actual technical Space exploration side he ... frankly didn't do particularly well, though well enough that it (eventually) worked. But the result is still fantastic: we're in space far more than before!
It’s designed to go to Mars. It boggles the mind that anyone would invest in a company and just ignore and/or disbelieve the reason the company was created. Either they’re just gambling or they’re delusional when they discuss so called fundamentals.
So, you don’t invest in it. And then you don’t need to bother discussing the financial viability of Starlink or anything else.
It’s like there’s a planet sized elephant in the room that everyone is avoiding looking at.
Its Falcon 9 has flown 667 times to orbit with a 99.55% success rate. SpaceX isn't like the other rocket companies and it's pretty obvious to anyone who looks at the metrics objectively. Not in technology or in finances.
>"minus $5B/year but AI/Space makes it +$200B”
$18.7B revenue in 2025. Starlink alone was $11.4B
The comparison to Iridium isn't even worth refuting because it's like comparing the Wright Flyer to the 747.
It's a shame that otherwise intelligent people have such difficulty objectively assessing anything Elon Musk; I assume it's mostly idealogical reasons. Do I think $135 is a bit high for the SpaceX IPO? probably. Do I agree with everything Elon Musk says? nah. Is Elon Musk the most capable entrepreneur and innovator to ever live? It's definitely possible.
But ... you do realize how you have to use those numbers right? SpaceX owns Starlink. So let's do some basic accounting.
For ease of calculation I call upon the Math Gods to change $11.4B to $12B.
SPCX -> Starlink $12B
Starlink -> SPCX $12B
SPCX uses 50% more than that amount to launch the rockets (because SPCX has a negative margin (if you include debt service + research), after with 50% SPCX would have less than $5B loss). Hence:
SPCX -> $18B (to whatever SPCX does to build rockets)
In other words: your fabulous "Starlink alone was $11.4B" really means SpaceX lost $18B (a bit less) and gained starlink shares, which it already owned ... in other words: that revenue represents a $18B loss for the company.
This is the same problem people have with AI spending, but there the math is 100x more complicated.
Patrick Boyle said it best. Roughly 1 billion people on the planet make more than $12k annually (folks with "discretionary" income). Divide that TAM of $28.5T by 1B and the every single person needs to give SpaceX ~$28.5K every year forever in order for that figure to make sense. It's more than 3x what the planet spends on food currently.
It also seems impossible. What are people seeing that I don’t?
This will continue to work until they run out of morons willing to buy a stock with a PE of 300 at which point it will contract spectacularly.
Either or both of those being true is almost as mind-boggling to me. How is one supposed to navigate that world?
Mass delusion seems like the most likely answer to me. I can point to instances of that at similar scales outside of tech/investing.
In a sane market neither will generative AI, but that’s what’s propping up this valuation at present.
So you appear to agree with him that the valuation is nonsensical.