SpaceX and the myth of independent Wall St research | Hacker News Reader

SpaceX and the myth of independent Wall St research

ft.com

Wall Street “analysts” are as right about the market as a coin flip. Downgrading a price target from $30 to $28 when the stock has trended from $20 to $15 in the last 12 months or raising the target from $450 to $500 when the stock price grew from $300 to $320. They’re not even remotely right on most things and are lagging indicators when they right.

Nassim Taleb has statistically proven that there is only a handful of investors ever who's returns over the market average can't be explained by random noise.

That doesn't prove there is no such thing as "talent" wrt investments, but it is proof there is almost no proof anyone has "talent".

If they did significantly better than random chance, they should be able to use that to become filthy rich in fairly short order, and you’d only be hearing their advice because they publish it as a hobby in between yachting. I don’t think there are any analysts like that.

> If they did significantly better than random chance, they should be able to use that to become filthy rich

To be fair, this is many analysts’ ambitions. Use the role to build contacts and a public track record. Then go out and raise a fund.

> Wall Street “analysts” are as right about the market as a coin flip

Source? (Not doubting. Just haven’t looked at this for a while.)

There are plenty of sites that track analyst performance, some paid others not.

Like every other group, there is some amount of groupthink happening with Wall Street analysts. They all came to similar incorrect conclusions because they are working with similar information using similar techniques towards similar goals. This creates a level of bias, even if banks didn't have incentives to write bullish projections.

Getting a diversity of opinions doesn't mean talking to 10 experts in the same field, but talking to experts in 10 related fields.

It's not Group Think I would say, more capitalism. SpaceX has all the big name banks and VCs and investors involved.

So the banks know that if they don't fall in line, the VC's may not select them for future IPOs/make them lead bank and also not use them for other work. And the banks know that the big name investors who invested in the VCs are also their high net worth day to day clients buying their services.

The banks loyalties and financial interests are not in protecting normal everyday people, it's protecting their business and individual bonuses. (SpaceX paid around $600 Million in fees for the IPO! And that's after negotiating a low percentage).

The news sites know that if they speak out of line too boldly, they won't be 1st in line to get exclusive stories and invites to events. Or Advertising Spend.

It's for governments and regulators to put rules in, otherwise capitalists will carry on in their own interests.

> This creates a level of bias, even if banks didn't have incentives to write bullish projections.

I don't necessarily disagree with you, but I think this is misleading. The bad estimate of fair price is _overwhelmingly_ due to incentives for bullish projections. I have no source to back this up, aside from common sense. SPCX is supposedly an AI-company now, even though we all know this is a lie. It's AI-only revenue within 5 years[1] is projected to be larger than most SP500 companies' full revenue today[2]. On the face of it, this is silly, and I don't accept that all the analysts group-thought their way to believing it.

[1] https://finance.yahoo.com/sectors/technology/articles/goldma...

[2] https://stockanalysis.com/list/sp-500-stocks/

SpaceX is literally the only company that has a reliable partially re-usable launch vehicle, and they're probably going to be the only company with a fully re-usable launch vehicle. Nobody else except maybe for some chinese companies and kind of RocketLab is even close. They basically have a monopoly...

They're launching like 150 rockets a year or something like that? It's bananas. They have star link too.

Honestly, I think people are asleep at the wheel with the valuation and shorting it seems stupid. They have the star shield thing, and hypothetically point-to-point QRF systems for governments with star ship. Then there's space data centers.

I know people gnash their teeth at that, but I'm pretty convinced the ass-pain associated with getting a data center constructed on the planet with all the NIMBY stuff will be will incentivize space data centers too.

Any idea how they're handling the space data center heat problems? Energy harvesting in space is easy, while getting rid of heat is quite hard.

Scott Manley had a really good video on it that more or less confirmed my "bar napkin approximations" when people first started talking about this stuff. I think it's this one?

https://youtu.be/DCto6UkBJoI?si=opcoaBEqKmw4LCrF

Anyway, I think sun synchronous orbit (basically slightly off from polar) and pointing the solar panels toward the sun and the radiator away... It's not as far fetched as people would have you believe.

Yup. It’s weirdly closer than I would have thought before sitting down with pen and paper.

Did we watch the same video? My takeaway from Manley is that it is something that can pencil out as a physics problem with a very carefully selected orbit

But as an engineering problem it's quite another thing. For example he talks about how far you have to pump the ammonia, and then you either need a very large amount of ammonia, or you have to pump a smaller amount of ammonia very fast through kilometers of plumbing.

Of course there are highly theoretical ideas like making an atmosphere of coolant around the satellite or something but he left that stuff on the sci fi category.

That's like saying that controlled fusion is a napkin problem.

The issue has always been the engineering. Programmers tend to be extremely bad at estimating he complexity of real world problems.

https://www.nextbigfuture.com/2026/02/spacex-has-the-best-ra...

Fair point, and thanks. Certainly true that Starlink satellites are already successfully dealing with the problem and use a lot of energy.

I think the trouble with my thinking was that I was locked into the Shuttle/STS numbers of waste heat transfer.

> I know people gnash their teeth at that, but I'm pretty convinced the ass-pain associated with getting a data center constructed on the planet with all the NIMBY stuff will be will incentivize space data centers too.

You can build solar panels practically anywhere with enough daylight. Space data centers will never make any sense and it's clearly bait for people who will believe anything.

I would have agreed with you a couple years ago... but not in the last year or so? People complaining about change and construction near them is a real factor. We can't even build houses during a housing crisis because of NIMBY nonsense and a wildly bloated set of rules for what and where you can build stuff.

See that detail of "near them"? Yeah it's a crucial one.

For some reason data center companies keep wanting to build data centers near existing utilities, near existing roads and transport infrastructure, and near existing electrical utilities.

Not in the middle of a desert. Or the antarctic. Or decommissioned oil fields.

Still cheaper to run power lines to a desert over run a data center in space

I think it may be cheaper to use Starship as a point-to-point delivery system to put solar panels and compute modules in a desert, than to put the same compute performance into space.

Mainly depends on how much of a mess Starship makes taking off and landing.

-We should put data centers where no one is!

All the concrete stuff you describe is plenty justification for a really high valuation. Maybe a couple hundred billion, even. To justify a couple trillion, you have to really believe in orbital data centers, which just don’t make much sense. If NIMBY is the issue, it’s literally a thousand times cheaper to bribe the government of some poor country and put your stuff there than it is to put it in fricken space.

We will see, but I don't buy it. We can't build housing in a housing crisis, or build high speed rail anywhere it seems, things aren't going to get built under the current paradigm at the same rate. We will see, but I bet this is what we see.

SpaceX is now publicly traded, so go and place that bet!

Who’s “we”?

If you can put the things in space, then you can put them anywhere in the world. They don’t need to go in American suburbs. I bet Mongolia would be happy to host you in exchange for the cost of a few rocket launches. Or put them on container ships and run them in the middle of the ocean. All sorts of completely crazy ideas are easier and cheaper than space.

The point of the article isn't whether they are a good company or not. It is whether their stock price is justified. Even if they are the best in their field, they can't just name their stock price. At the end of the day, it has to be rooted somewhere in fundamental numbers.

It doesn't have to be rooted in fundamental numbers. It should be, it would make more sense if it was, but the market is the only thing that matters. See also: Tesla, a failing car company with a strong history of empty promises, and a currently empty promise of solving labour, and they're worth more than all the other car companies combined.

China managed to land a reusable rocket just recently.

> and they're probably going to be the only company with a fully re-usable launch vehicle. Nobody else except maybe for some chinese companies and kind of RocketLab is even close. They basically have a monopoly...

Back in 2018 when dearMoon was announced, I was expecting this to be true for a while, a temporary monopoly while others caught up; but dearMoon was due to launch in 2023, got cancelled in 2024, and SpaceX have so little confidence in the vehicle dearMoon was supposed to use that it still hasn't had a fully circularised orbit so far, by mid 2026.

This means Starship has been slower to develop than the Saturn V and the Space Shuttle, with many of the same problems as the Space Shuttle and the Soviet N1. Rather loses its shine when that's the comparison.

> Honestly, I think people are asleep at the wheel with the valuation and shorting it seems stupid. They have the star shield thing, and hypothetically point-to-point QRF systems for governments with star ship. Then there's space data centers.

If nobody else had a chance of catching up in twenty years[0], and if the world trusted Musk[1], then Starlink would be worth something like 100-200 billion in today's money. Realistically, it's probably more likely worth $50-100 bn.

Starshield and QRF is ??? money, because while the US government is very good at spending taxpayer money on military stuff, Musk's personally made a lot of political enemies and may just not survive a Democratic congress or President.

The space data centers… I really need to get back to editing my draft blog post, I've got a whole bunch of open threads I'm pulling on and around 8k words on why all possible variations of it are a bad idea. At presented scale, it's about the same difficulty as making an orbital ring[2], which would be a better use of resources, though still has the geopolitical trust deficit working against it.

[0] This is the relevant time horizon for valuations

[1] Highly divisive; while this doesn't matter in all markets, it matters more in the markets with more money to spend on Starlink.

[2] Contiguous structure with two parts, one stationary with respect to the ground, the other slightly above orbital velocity to provide additional centrifugal force to keep up the stationary part. Makes space elevators much easier, because you only need 100-200 km rather than 36,000 km.

Que? Market analysis thinks SpaceX sucks as a stock.

Heck, it goes against all my value investing instincts for me to even have 2% of my net value in it. To be fair however, 15% of my net value came from Tesla. I obviously have brain worms.

It’s not about fundamental value, it’s about how rational everyone else is.

Yep. Keesian Beauty Contest!

(Dear Reader, if you have no idea what that is, it's a good idea to know about in my opinion)

Emperors new clothes.

There's a relationship in that a persuasive kid pointing out the obvious flaws could collapse a Keynesian beauty contest.

To save other readers a web search: in a *Keynesian beauty contest, you pick the winners based on who you think others will find most beautiful.

Professional Wall Street analysis is incredibly bullish:

https://www.msn.com/en-us/money/topstocks/wall-street-is-bul...

https://archive.is/TSTgD

Money talks, even through the walls that should keep analysts and bankers from talking.

And fomo is human.

We need transparency combined with widespread education and high trust so folks believe the few that investigate. All these pillars are needed - that's why we see attacks on all of them.

That "wall" doesn't exist anymore. Trump tore it down.

> Deutsche Bank, for example, hailed SpaceX as “the apex of civilizational ambition, oftentimes expressed in steel and fire, bending the arc of history”.

This is pitiful. Not least because it is execrable writing. It’s 50 Shades Of Grey applied to investment advice.

TLDR research teams at nearly all the big Wall St banks wrote bullish reports on SpaceX and recommended buying it, some with very optimistic projections. The author says you can't always trust these reports because these banks also have a financial incentive to sell management services. Also covers how there is existing government regulation by Spitzer from 2003 dealing with this situation, where research teams are kept independent of the sales side but implies that doesn't eliminate financial incentives entirely, but also claims the regulation is still well enforced within banks. Other Wall St investment firms allegedly don't rely on these reports heavily and do their own research before investing.

Nothing too deep here.

Wall Street research is a scam mostly because efficient market hypothesis suggests that real research would cost so much more than this type of coverage and distribution would be much less so obviously the research is for some other purpose and you can’t purchase stock advice for far less than it is worth and most people can’t afford it.

Sell side research exists to get deals and sell securities. The main reason Morgan Stanley gets so much business from Musk is because Adam Jonas (probably Musk's No.2 fan after Cathie Wood) loves insane upgrades and price targets on TSLA.

But to be fair to Musk he is probably the GOAT at executing unlike Cathie who incinerates money by the tonne.

Matt Levines predicted "everything but space x' etf is looking more and more appealing. Iirc someone has established this fund already.

QQNE and SPNE, but look carefully at their management fees.

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