An passive investors are going to get hosed by this thanks to NASDAQ cooking the rules to favor Elon and his band of misfits.
No longer will there be a year of price discovery for index funds, 15 days. Meaning index funds have to buy it at the peak of the hype cycle. Will be a huge wealth transfer from mom and pop retirement accounts to the ultra wealthy.
There's no rule you have to own QQQ and indeed most people don't. There are thousands of low cost ETFs that provide passive exposure to the market. If this new rule bothers you, be like most people and buy one of those instead of QQQ. Problem solved.
Like sure, let's improve our tax systems (as an aside, I would say there are many more efficient and progressive options than a wealth tax, but whatever), but I don't see how there is even a tangential link between that topic and the NDX rule change.
This writes itself. It shouldn't, but "should" as a concept needs a lot of work.
And even that isn't accurate. They are not bending the rules for a trillionaire, they are maintaining the consistency more systemic rules. This is how it has always been. We can all point to real or perceived ethical islands. They certainly exist, and are worth creating and preserving. But for now, the sea still sets the rules, and the sea is deep. For the deeper system, island visibility is a useful distraction. Sometimes something heavy moves near the surface and we misinterpret visibility as exception.
Did you get lost and start writing a poem? What’s all this about the “sea”? Fine. Let me turn down my anti-Elon-ness for a bit and caveat that the timing of these changes coinciding with this listing is suspicious, no? Grant me that at least. And then we can, with new found common ground, investigate the motives behind such a change.
If you were to apply the principle of charity[0] to the person you originally asked the question to, who do you think that they would mean by the word 'they' in this context?
>who do you think that they would mean by the word 'they' in this context?
It's really not clear, which is why I listed 3 plausible options. I'm also not going to bother attacking an imaginary position and be accused of "strawman" or whatever.
The unknown subject is a valid construction in language. It is not necessary to be able to answer "who's they?". It is semantically equivalent to saying "I knew the rules would be changed."
There are also perfectly ordinary situations in which this pattern is used to imply the influence of an unknown party. "They built a bridge over the river." Clearly the speaker does not believe that bridges over rivers construct themselves. She doesn't need to know who built the bridge.
>There are also perfectly ordinary situations in which this construction is used to infer the influence of an unknown party. "They built a bridge over the river." Clearly the speaker does not believe that bridges over rivers construct themselves. She doesn't need to know who built the bridge.
This excuse only works if who built the bridge isn't central to the discussion. Otherwise this is just generic conspiratorial thinking that we're being oppressed by The Elites™.
Aren't we, though? Like it's hard not to argue that there's one or more groups of people that get together at lunches and dinners and galas and have ongoing projects to do things like institute rule changes at NASDAQ that effectively require index funds to take on outsize risk from a known-overvalued IPO just in time for that IPO to happen.
To understand why this isn't a conspiracy of a sort by some "elite" group of people to take money from 401ks and IRAs, you'd have to argue that there's a good reason to shorten the window that outweighs the reason the window exists. The fact remains that many many IPOs crater within a few months. The rule change seems to exist to leave small low-effort investors holding the bag.
Just because we're paranoid doesn't mean they're not out to get us.
>Like it's hard not to argue that there's one or more groups of people that get together at lunches and dinners and galas and have ongoing projects to do things like institute rule changes at NASDAQ that effectively require index funds to take on outsize risk from a known-overvalued IPO just in time for that IPO to happen.
It's also not hard to think of half a dozen other groups that could possibly benefit and plausibly have enough clout to steer things in their favor, hence why the need to make a specific claim rather than beating around the bush a vague "they" that can't be refuted.
After 20+ years in the market, today I learned: "The S&P 500 is a float-adjusted, market-capitalization-weighted index."
So presumably an S&P 500 index fund is not disadvantaged, since it is tracking a float-adjusted index, i.e. the weight of SpaceX will be tiny if its float is tiny.
>So presumably an S&P 500 index fund is not disadvantaged, since it is tracking a float-adjusted index, i.e. the weight of SpaceX will be tiny if its float is tiny.
Nasdaq already caved. FTSE and S&P are supposedly considering it.
That sounds like a "no true scotsman" argument. Even passive investors need to pick some methodology of how to pick assets and how to relatively weigh them, and while you can make that as mathematically simple as possible, it's arguably an active decision.
Or would you say that e.g. an ETF tracking MSCI ex-US is not a passive fund?
I’d also argue that "passive investor" applies more to the buy and hold strategy when paired with low engagement in the account (few transactions, or scheduled transactions).
I’d consider someone that puts $50 into Coca Cola stock every paycheck a passive investor
Legally, any fund that tracks the NASDAQ 100 must follow the rules set by NASDAQ, so you'd want something that is neither a total market index, nor tracks the NASDAQ. Something like an S&P500 index would work
Index providers definitely own their trademarks. You can’t market an S&P index without paying S&P. But “the available authority indicates that copyright protection for indexes may extend to the index constituent lists but not index averages, and copyright preemption principles may limit misappropriation protection for indexes to a very narrow class of ‘hot news’ uses” [1].
> * you'd only get a license when accepting their terms*
Sure. But plenty of indices allow for mixing and matching. The terms are designed to avoid confusion—you can’t use the term NASDAQ 100 if it isn’t exactly that. More broadly, there are tons of indices and benchmark portfolios.
Not legally, only by contract/specification. Funds could get sued for deviating from the index, but funds generally have a decent amount of discretion in my experience in how they handle rebalancing.
AFAIK the problem is that they're lobbying the nasdaq 100 index provider to add a 5x multiplier for free float for spacex. Otherwise it would be far less controversial.
Actively managed funds like that charge around 0.5% to 1% a year. E.g. [0] The most prominent Nasdaq ETF, QQQ, charges 0.2% [1]
Spacex will be around 4.5% of the index [2].
If you believe the thesis of the article that Spacex is about 30% overvalued, and if the only advantage your fund manager has over the rest of the market is that they will avoid Spacex, they will save you 1% of your money over the lifetime of your investment. Assuming you're saving for retirement in 30 years time, the fees will cost you 15% or more.
Maybe your fund manager finds a Spacex-level mispricing every two years. In that case, they're worth the fees. Some people will tell you nobody can beat the market. My employer among others believes very strongly in the idea that some people do make better investment decisions than average. What is certainly true is that not everyone does.
They mean consistently make better decisions than a baseline index investor in a way that isn't luck.
Someone can win at roulette and make more money than the average player over some measurement period, but nobody can be good at roulette (when properly implemented and stuff). Stocks are somewhat possible to be good at but results are mostly random and the fee you'd pay is usually way too much.
> They mean consistently make better decisions than a baseline index investor in a way that isn't luck.
How would you know it is or is not luck?
> roulette
Has no winning strategy - it's very different.
The winning strategy with stocks is understanding the underlying businesses better than the average investor. Peter Lynch's Magellan fund did consistently better than others because Lynch had insights others didn't. When others figured it out, Magellan's returns retreated to market levels.
I.e. investors can do better than average if they have insight others don't have and stay below the radar.
It's an interesting question whether you could legally track the NASDAQ 100 without calling it that, or something very similar, e.g. "NASDAQ 100, but with a one year delay for new listings".
But assuming it is: How would you even call it, and how would you describe your methodology in the prospectus? "Tech 100 (compare with e.g. NASDAQ)"?
In order to call it a NASDAQ 100 Tracking Fund you need to pay the NASDAQ a licensing fee (same with S&P500, Wilshire 5000, etc.). The contract you have with NASDAQ will determine exactly how much freedom you have to change rules and still call it a NASDAQ 100 fund. I've never seen a licensing agreement, don't know anything about how they would typically read.
There is also the concept of "Index Tracking Error". No fund can perfectly mimic the index, and that is expected and understood, but the goal is generally to have the tracking error <0.1%- 1% would be a bad track. And so an index fund could take the risk that they will have a tracking error and delay picking up SpaceX even after it joins the official index, but then if it goes up they will look worse relative to their real competitors, the other NASDAQ 100 tracking index funds. If SpaceX goes down, of course, they will have positive tracking error, but I'm not sure how much potential investors would value that. SpaceX would be something like 4% of the NASDAQ 100 at it's announced expected market cap, so a 10% movement by SpaceX would be enough on its own to get you into the notable tracking error range if you didn't have any exposure to it.
They’re also reducing the float requirements, which is absolutely insane. As a passive investor with significant assets outside of tax-protected retirement accounts, I am beyond livid. If I have to switch investments to move away from the rules being changed out from under me, it will result in enormous tax consequences.
I don’t tend to let my emotions out this much here, but utterly fuck everything about this administration, and fuck anyone who voted in favor of it.
I think you need to consider who is being taxed. I doubt very much that OP is part of the class of people who really should be paying more tax. Rather, they're concerned about their retirement assets. Is that a good outcome here if it applied to everyone?
This is just one more of an endless list of inexcusable, indefensible, corrupt and incompetent acts this government has performed and/or enabled.
In this specific case I am retired and I have done this based on financial projections assuming the game continues to be played the same. So it hits closer to home for me. But it’s a far bigger problem than just me—this is looting the retirement savings of millions of Americans—and it is far from the only thing about this administration and those who have supported it to make me absolutely livid.
Seems like MSCI can add new large constituents very quickly as well [1], so to remain neutral to the frenzy until a price has been discovered, one might need to actively short.
The xAI piece is the one that stands out to me. $258B for a lab that's burning $1.46B/quarter against $430M revenue, valued almost entirely on a merger anchor from four months ago.
As I wrote in the piece, I'm extremely skeptical that xAI should be valued as if it is a frontier lab.
But as you say, going back to the xAI + SpaceX merger, analysts consistently seem to value it as if it is, so I predict the public will too, at IPO time.
I assume "extremely skeptical" is you being generous, is there anybody other than Elon who says xAI/Grok are SOTA? The only thing anybody says about it is that it's only good for porn, but local models do porn too so xAI has no moat or edge at all as far as I can see.
There is actually a real bull case for xAI (that I don't endorse), e.g. from people who think that chips & computer is the main determiner of model quality. xAI may plausibly soon have the biggest training apparatus of anyone.
If you don't spend any time comparing models to the point where you don't know about benchmarks, why do you care where people think the line for SOTA is?
The benchmark game is wholly gamed, but the proof is in the pudding. I know people using Anthropic, OpenAI, and Gemini. Chinese models locally. But who uses Grok for anything but porn? Whatever the benchmarks might say, Grok is just trash in practice. They spent too much time teaching it to be edgy and not enough time teaching it to code.
> I assume "extremely skeptical" is you being generous
I'm not sure that's the case. Every value in this forecast is absurd, I actually think the author is sincere in there feeling that they are being extremely skeptical.
It’s absolutely ludicrous that xAI is thrown into the mix at that valuation. They’re not even a player in AI other than providing Grok slop for twitter.
Even if you think those are standard numbers and you're banking on growth, or whatever, I don't see any way anyone rational (or even a semi-rational AI bull) could convince themselves xAI isn't an absolute garbage company.
What do you mean $380B? This "fair market value" forecast also includes $147B for starlink enterprise and $75B for starlink direct-to-cell. So almost $600B all in.
It's hard to imagine this turn into 50-60% short term banger starting from a $1.75T market cap, I wonder if people will actually trip over themselves to buy. I had been thinking I wanted to jump on it to flip but at that price and the macro environment it may end up cratering before a pop. Seems like a sketchy buy.
Yeah, it's wild. But it's not like the P/E should be 30, what do you think would be fair?
That's the thing about SpaceX, some businesses are real businesses that can be modeled in normal ways, like the government launch contracts, and to some degree starlink.
Others, like ~all of xAI, and the starship stuff, are being valued completely independent of revenue. I predict the IPO investors will generally follow the analysis consensus today with those eye-popping numbers.
The "official" value of a stock is it is the current best guess of the market for all future earnings until infinity discounted back to the present at some discount rate (to account for the time value of money). That price to earnings rate is 1, because it's the definition. The "E" in PE ratio, however, is for a different time period: traditionally just the trailing 12 months (or previous completed FY- for high growth companies you will sometimes see "last month's revenue multiplied by 12" or other guesses).
This calculation is why "growth" companies dominated the stock market during the 2010's: with the Zero Interest Rate Policy that most of the developed world had, the discount rate that the markets used ended up being basically zero. In which case a market player is indifferent between a dollar in 2020 and a dollar in 2040. So if a company had a 10% chance of being worth a trillion dollars in 2040, that was worth (0.1 * 1 trillion=10 billion dollars). But with a more traditional 4% discount rate then a dollar in 2040 is worth less than half of a dollar in 2020, and that means your 10% chance of being worth a trillion dollars in 2040 has less than half of the value. Even if nothing else changed about your business, just the discount rate changing halved the value of your company.
I remember in the 00’s when people would complain about how ridiculous a 30 PE was for tech stocks, and how no other stock was at that ridiculous price point except tech. Guess that starship has sailed.
P(rice)/E(arnings) ratio of 1 would mean it pays for itself in the earnings period.
The earnings period is 1 year.
It would mean making 100% return on investment each year. Being that low is only possible if there's reason to think the business is extremely precarious and unlikely to survive.
P/E 30 means returns of 3.33%, P/E of 20 means 5%. These are sensible numbers given people have other investment opportunities.
P/E of Tesla being 400 or so means it would take 400 years of its own profits to be able to afford to privatise itself, i.e. returns of 0.25%; being that high is a gamble that future revenue/unit time will go up by a factor of about 20 to bring it into the sensible range.
The upper bound from the grandparent comment for P/E 500-1000, says the annual return is 0.1%, which is what I saw on various current accounts, not savings accounts, not special deals, current accounts.
Of course not. If the P/E was 1, every single public company would be immediately gobbled up by Private Equity firms, who would make their money back after a few years of operation and the rest would be pure profit.
I do not know the P/E ratio for your magic box, sorry.
A P/E ratio of 1 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $1 for every $1 of earnings.
A P/E ratio of 10 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $10 for every $1 of earnings.
Which is the better deal? Neither! The first company could suddenly earn more per share and you will be better off. The second company could loose earnings per share and you will be worse off.
A P/E of 1 means you are paying exactly the earnings per share, which is the fairest and most non speculative price. You are paying what the company is earning.
Profitable remains to be seen, but it is undoubted that the potential resources in the solar system are (pun intended) astronomically valuable. Getting at them is "just" an engineering problem.
The float adjustment probably handles this for you? The tiny amount of float of that $1.75T means that for any large total market or s&p or whatever fund (VTI, SPY, etc), SpaceX is going to be a minuscule fraction of the fund.
Apple has a float of >99%. SpaceX is going to come out with 3-4% float. Since all big serious total market / whatever index funds are float adjusted, this means that SpaceX will be treated more like a company with $45B market cap, not $1.5T or whatever.
If you're buying most index funds, you should literally not care about this.
If you buy VTI, then SpaceX is going to be like what, <0.1% of the fund? That is noise.
I am not smart with stock legal-ese but I pasting something I found in a different article here.
> To balance index integrity and investability, Nasdaq proposes a new approach for including and weighting low-float securities (those below 20% free float). Each low-float security’s weight will be adjusted to five times its free float percentage, capped at 100%. Securities with more than 20% free float will continue to be weighted at full, eligible listed market capitalization, while those below 20% free float will be weighted proportionally to preserve investability.
> The rule reportedly includes a 5x float multiplier for low-float stocks, which would require passive vehicles to treat SpaceX as if it had significantly more tradable shares than actually exist, essentially forcing funds to chase the price.
It sounds to me like a way to increase demand for low float stocks by treating the float higher than it actually is. Glad to hear the explanations about this.
> If you're buying most index funds, you should literally not care about this.
Disagree. Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price. Granted, I’d be more concerned if the fund manager was buying it without a requirement to. The issue still remains about why are we paying so much for this stock? Make it make sense?
>Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price.
Right, but the whole point of index funds is that you're letting the market decide what's worth investing/buying (via market cap/free float weightings) and at what price. If you're making calls on what's "waste" or not, then you're no longer a passive investor and you're just picking stocks.
Fiduciary responsibility in this context is a large umbrella of responsibilities. They should be fighting the new nasdaq rules on behalf of us. As you mentioned, this forces them to participate in fleecing the passive fund holding public and undermines the whole point of index funds. I don’t see how a fund manager could just blindly take this rule change and not make a ruckus about how it’s forcing him to break their fiduciary obligations
Following the rules of the fund and being index is one thing. Sitting silently as this pump and dump is designed to fleece your clients, is something entirely different.
> Starting May 1, 2026, Nasdaq rules allow large IPOs (e.g., top 40 market cap) to join the Nasdaq-100 Index within 15 trading days. This forces index-tracking funds to buy new shares, often at inflated valuations shortly after listing, a "fast entry" rule designed for mega-IPOs like SpaceX or OpenAI
It’s also one of the thinnest floats IPO’ing. They’re only selling less than 5% of the company. That introduces a lot of sensitivity in the valuation, not to mention there exists a bit of game theory around fund managers needing to join in to maintain nominal returns with their peers.
Does it make sense to value Starship Commercial Launch at $170B, _and_ Falcon 9/Heavy at $100B? I would expect that if Starship achieves its operational goals, then it should quickly deprecate nearly all uses of Falcon, the exceptions being national security launches that require validating the launcher, or Dragon launches for similar reasons. Even those categories are likely on a countdown the moment starship is rapidly reusable.
> Starship at $170B is pure option value on technology still in advanced testing.
The argument that Starship is somehow an experimental/unproven technology that might fail to materialise was absurd but plausible sounding before flight 1, there were many new technologies simultaneously being deployed to a single launch system in one go.
But after 3 tower catches of the booster demonstrating centimetres of guided precision of the entire stack, this is becoming a tired argument.
I know the author is not making that case at all here, but it seems like one the core reasons to undervalue SpaceX is that Starship might not work out, and this all sounds exactly like how reusability might not work out for the Falcon 9 from 10 years ago.
The question is not even whether or not Starship works. Starship is, in theory, designed with the idea of getting many, many payloads to Mars. However, getting payloads to Mars is not currently something that anyone is paying for; even NASA isn't going to focus on Mars for at least another decade (likely more). And in the meantime, it's not like we don't have rockets capable of getting payloads to Mars (the Saturn V was fully capable of doing so in the 60s). Likewise in the meantime, the Artemis plans that look to require a dozen+ launches for a single moonshot aren't painting Starship in a favorable light.
So what is the near-to-medium-term economic prospect of Starship? That's the question. You can't just say "bigger rocket make more money", because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice. To use an analogy, we have jumbo jets, but most flights are not on jumbo jets.
The Saturn V payload to LEO is large, but the payload to the Moon was much smaller (the Eagle lander was less than ten tons on touchdown, with a couple of tons of cargo). Starship might be able to put 100 tons on the Moon, because of orbital refueling, which is the reason they need several Starship launches.
It’s not really sensible to compare a single spacecraft with what is essentially a fleet of ships with an order of magnitude greater cargo capacity. It’s the possibility of refueling that unlocks the ability to push really large payloads beyond LEO, and many of the more audacious plans (like a Moon base) do require a lot of cargo well beyond LEO.
> because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice
This is only true because we are so completely beholden to the tyranny of the rocket equation with the current status quo. With the $/kg (and payload volume) that Starship would unlock, the entire ELO/GEO/Interplanetary/Deep Space market looks very different.
Labs in space. Hotels in space. Weapons in space. Much more interesting satellites in space. More government science missions. Privately funded science/research missions. etc
The question is whether those markets are not already adequately served by Falcon 9. Once again, just because you have a jumbo jet that can fly 500 people from New York to London does not mean that everyone flying out of New York wants to go to London, and it doesn't mean that it's worth flying that jumbo jet from New York to Pierre, South Dakota with only one passenger on board.
> The question is whether those markets are not already adequately served by Falcon 9
What does that even mean? Almost every single Falcon 9 customer will prefer launching on Starship if/when it is available, because the cost will be much lower. A very small segment who have payloads that are exactly Falcon 9 sized and want a very particular orbit might still be better served by F9, but maybe not.
Beyond that, much lower cost unlocks previously untenable opportunities that you have not sufficiently imagined, as stated earlier.
That's not how this works. The JWST was limited by the size of its faring, but increasing the size of the faring doesn't mean they'd ship a less complex telescope with the same functionality; they'd ship an equally-complex telescope with more functionality. Better for science, yes, but that doesn't translate to more expenditure that could be captured by the launch company. And that still relies on a government that gives a damn about funding science, which is not not the direction that the US is heading in.
> that doesn't translate to more expenditure that could be captured by the launch company.
Of course it does. With Starship, SpaceX could've charged NASA/ESA more to launch a bigger JWST than the cost to launch with Ariane 5, with huge profit margins.
On top of that, with a much larger fairing, you could almost certainly simplify the telescope and increase capability. A significant part of the JWST's complexity is the unfolding sequence, which could be simplified with a fairing that is more than double (triple? quadruple?) the volume.
Weapons in space, yes. Government constellations are SpaceX's best opportunity. As for anything else, the market for anything bigger than Falcon 9 is very small. Elon Musk didn't even want to proceed with Falcon Heavy because there isn't much market for even that, but Shotwell managed to convince him that having Falcon Heavy would actually help sales of Falcon 9, by inducing the government to take SpaceX more seriously.
> there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice
Well, they are going to live with multi-customer payloads if Starship can do it for a tenth of the price. There's already a large market for ride-sharing and it's only going to get bigger.
> There's already a large market for ride-sharing and it's only going to get bigger.
Except that at some point this stops being true. Induced demand is not infinite. There's no telling when we'll reach that point, or indeed if we've already reached it.
The booster is definitely looking good, just like the Falcon 9 booster is very reliable. The big question for me is the upper stage, and whether they will be able to reuse anywhere near as often as they claim. It is so much more complex than the Falcon upper stages, which aren't reusable very quickly. It seems they have a lot to learn about upper stage reusability.
Yeah, I might have stated this poorly. In the forecast it's just a question of expected value, I don't give almost any probability to "Starship is worthless".
My 50% CI on Starship's fair market value at IPO time is $123b - $227b, with a 80% CI even wider, not based on my own modeling, but based on anchoring to analysts that give credible arguments.
> and this all sounds exactly like how reusability might not work out at all for the Falcon 9 from 10 years ago
I think a lot of it depends on whether they can make the reuse of the second stage work without having to redo stuff constantly like the shuttle. Reusing the booster will obviously save tons of money and make launches cheaper, but they're competing with themselves here. How big is the launch market with cheaper launches? We don't actually know.
The viability of direct to cell connectivity at scale is unproven. This is actually the core value of SpaceX in the next 3-5 years.
The other core value generation product will be financial transactions. It is unproven whether X money will be adopted for friction free transactions across national boundaries and whether the company can compete in the financial services sector.
The tower catches are great, but the payload rating has been reduced several times now[1] and with it the economic argument for how Starship will make launching much cheaper than today as well as suitability for lunar/Mars launches. For Starship to be revolutionary enough for this kind of valuation it has to not just work, but outperform current solutions.
SpaceX has basically admitted as much by promising Starship 2 & 3 with larger payloads (that Starship 1 was already supposed to deliver).
That article is two years old. In traditional space launch terms that is a very short amount of time, but in SpaceX terms that's quite a while. They've already progressed to Starship 2 since then and are going to launch Starship 3 imminently (slated this month), which has Raptor v3 engines onboard and come with the efficiency gains you are talking about.
I know it’s easy to sit at home being indignant at the internet, but how on earth does an ISP with 10M subscribers and the most expensive infrastructure in the solar system ever come out to be worth $300B? They even have to routinely replenish their “cell towers” as their orbits decay.
Any mid-sized country would have multiple cellphone and Internet providers with larger customer bases and less upkeep.
They are pushing business-to-business service too, like ships, airlines, and retail/office backup. Plus smartphones can talk directly to their satellites. A lot of countries will use them for military use. Whether it adds up to a reasonable IPO I can't tell - market irrationality is hard to measure.
How much would it cost you to run wires to the northern tip of Greenland and Antarctica? How about the middle of the Pacific? All of Africa? At the end of the day, that is the alternative. If you think normal ISP ground stations don't need maintenance (especially power), you're missing a lot. Also I know people who have cell towers on their property, and they get paid over a hundred thousand a year just for that.
These premises may or may not make sense, but the thing that matters is capturable revenue.
European settlers being on the north american continent would be an amazing technical tour de force. But relatively speaking, there isn't much revenue there.
I'm not sure that the continental Colonies brought in much revenue, though. The individual colonists could do quite well, but viewed as an financial investment for the British Crown (which they were not, but that's the OP's analogy) I don't think they were very good. Plus, when they wanted to extract revenue via taxes, the Colonies revolted. Eight years of war probably cost a pretty penny, too.
(Sourcing my claim is difficult. I include this reference [1], which says that the Caribbean colonies were more profitable than all the continental colonies together. It doesn't comment on the cost of the war.)
Tesla's highest market cap in 2010 was $3.3B. Tesla has more net income, sometimes multiples more, per year, from 2021 to 2025.
For comparison, it is routine to see sale prices of 3x to 5x revenue for many, many kinds of everyday businesses that have much less potential than Tesla.
There are very, very few businesses whose shares one could have purchased in 2010 that performed better over the subsequent 15 years. That is about as objective as one can get about determining whether or not something was under or over valued (in 2010).
Having never really looked at valuations, my ignorant mind can get from Starlink's 10M subscribers to a $380B valuation. If you make $100/mo/user that's 12B/yr and that with a higher 50x P/E ratio is 60B. If you go to 100x, that's $120B.
Starlink's maritime, roving, airplane, and military options are all much more than $100/mo/user. Not sure how much that closes the gap, but it's _something_.
I read your comment as being glib, but in forecasting this I was really puzzled how much to anchor to how analysts tend to value these businesses.
I ended up largely deferring to them, e.g. predicting the public will value xAI at $258 billion ($222b - $310b) at time of IPO, even though I've elsewhere been skeptical that xAI should be valued like a frontier AI lab.
All these IPOs are extremely bearish and mirroring the 2019 race-for-the-exit IPOs out there.
Of course once again, you are "not allowed" to be early into pre-IPO companies which is where the actual money is made.
The moment several companies start IPOing, you are already too late for those multiples and have to wait for a massive crash until these stocks reach all time lows after IPO.
An passive investors are going to get hosed by this thanks to NASDAQ cooking the rules to favor Elon and his band of misfits.
No longer will there be a year of price discovery for index funds, 15 days. Meaning index funds have to buy it at the peak of the hype cycle. Will be a huge wealth transfer from mom and pop retirement accounts to the ultra wealthy.
When index funds became such a default I knew they’d change the rules.
They’re taking everything thats not nailed down. A wealth tax is the only way, it cannot continue like this.
Geez this comment is a melodramatic non sequitur.
There's no rule you have to own QQQ and indeed most people don't. There are thousands of low cost ETFs that provide passive exposure to the market. If this new rule bothers you, be like most people and buy one of those instead of QQQ. Problem solved.
Like sure, let's improve our tax systems (as an aside, I would say there are many more efficient and progressive options than a wealth tax, but whatever), but I don't see how there is even a tangential link between that topic and the NDX rule change.
Got a source on this? I didn't take into account in this forecast that public markets could be very inefficient in this way.
oh baby, that's the just 'new' way they screw ya
Yeah imma get out of index and hold my basket and just rebalance. This is dumb. Why bend the rules for a trillionaire?
> Why bend the rules[?]
> for a trillionaire[!]
This writes itself. It shouldn't, but "should" as a concept needs a lot of work.
And even that isn't accurate. They are not bending the rules for a trillionaire, they are maintaining the consistency more systemic rules. This is how it has always been. We can all point to real or perceived ethical islands. They certainly exist, and are worth creating and preserving. But for now, the sea still sets the rules, and the sea is deep. For the deeper system, island visibility is a useful distraction. Sometimes something heavy moves near the surface and we misinterpret visibility as exception.
Did you get lost and start writing a poem? What’s all this about the “sea”? Fine. Let me turn down my anti-Elon-ness for a bit and caveat that the timing of these changes coinciding with this listing is suspicious, no? Grant me that at least. And then we can, with new found common ground, investigate the motives behind such a change.
Lol. Yeah, I am tired and need a nap. Half unconscious over focus. Pay no mind!
Who's "they"? Billionaires? Wall st? SpaceX insiders and investors?
By now, questioning "who are they" is naive or plain weak.
Someone who can't articulate who the villains are out of a pre-selected list and has to fall back to personal attacks is pretty "weak" as well.
If you were to apply the principle of charity[0] to the person you originally asked the question to, who do you think that they would mean by the word 'they' in this context?
[0] https://en.wikipedia.org/wiki/Principle_of_charity
>who do you think that they would mean by the word 'they' in this context?
It's really not clear, which is why I listed 3 plausible options. I'm also not going to bother attacking an imaginary position and be accused of "strawman" or whatever.
The unknown subject is a valid construction in language. It is not necessary to be able to answer "who's they?". It is semantically equivalent to saying "I knew the rules would be changed."
There are also perfectly ordinary situations in which this pattern is used to imply the influence of an unknown party. "They built a bridge over the river." Clearly the speaker does not believe that bridges over rivers construct themselves. She doesn't need to know who built the bridge.
>There are also perfectly ordinary situations in which this construction is used to infer the influence of an unknown party. "They built a bridge over the river." Clearly the speaker does not believe that bridges over rivers construct themselves. She doesn't need to know who built the bridge.
This excuse only works if who built the bridge isn't central to the discussion. Otherwise this is just generic conspiratorial thinking that we're being oppressed by The Elites™.
Aren't we, though? Like it's hard not to argue that there's one or more groups of people that get together at lunches and dinners and galas and have ongoing projects to do things like institute rule changes at NASDAQ that effectively require index funds to take on outsize risk from a known-overvalued IPO just in time for that IPO to happen.
To understand why this isn't a conspiracy of a sort by some "elite" group of people to take money from 401ks and IRAs, you'd have to argue that there's a good reason to shorten the window that outweighs the reason the window exists. The fact remains that many many IPOs crater within a few months. The rule change seems to exist to leave small low-effort investors holding the bag.
Just because we're paranoid doesn't mean they're not out to get us.
>Like it's hard not to argue that there's one or more groups of people that get together at lunches and dinners and galas and have ongoing projects to do things like institute rule changes at NASDAQ that effectively require index funds to take on outsize risk from a known-overvalued IPO just in time for that IPO to happen.
It's also not hard to think of half a dozen other groups that could possibly benefit and plausibly have enough clout to steer things in their favor, hence why the need to make a specific claim rather than beating around the bush a vague "they" that can't be refuted.
Open your eyes? Everyone on the top 1000 Forbes and at trumps inauguration?
Yes.
Wow! This comment inspired me to dig deeper.
After 20+ years in the market, today I learned: "The S&P 500 is a float-adjusted, market-capitalization-weighted index."
So presumably an S&P 500 index fund is not disadvantaged, since it is tracking a float-adjusted index, i.e. the weight of SpaceX will be tiny if its float is tiny.
Or, is there a nuance that I'm missing?
>So presumably an S&P 500 index fund is not disadvantaged, since it is tracking a float-adjusted index, i.e. the weight of SpaceX will be tiny if its float is tiny.
Nasdaq already caved. FTSE and S&P are supposedly considering it.
https://www.economist.com/leaders/2026/03/31/index-providers...
Low float, large cap companies will get a 5x multiplier.
> An passive investors are going to get hosed by this thanks to NASDAQ cooking the rules
I’m genuinely confused how a passive investor winds up tracking the NASDAQ 100 versus a broader index.
Also, if you’re picking and choosing your exposures, you aren’t passive.
That sounds like a "no true scotsman" argument. Even passive investors need to pick some methodology of how to pick assets and how to relatively weigh them, and while you can make that as mathematically simple as possible, it's arguably an active decision.
Or would you say that e.g. an ETF tracking MSCI ex-US is not a passive fund?
I’d also argue that "passive investor" applies more to the buy and hold strategy when paired with low engagement in the account (few transactions, or scheduled transactions).
I’d consider someone that puts $50 into Coca Cola stock every paycheck a passive investor
> I’d consider someone that puts $50 into Coca Cola stock every paycheck a passive investor
They’re not. Passive vs active are terms of art in investing. They refer to the degree selection effect is at play.
A broader index that tracks the NASDAQ tracks the NASDAQ 100 and is impacted by this rule.
You buy VTI, you're impacted.
Now I need a fund that will honor a year of price discovery rather than 15 days. Any recommendations?
Legally, any fund that tracks the NASDAQ 100 must follow the rules set by NASDAQ, so you'd want something that is neither a total market index, nor tracks the NASDAQ. Something like an S&P500 index would work
> Legally, any fund that tracks the NASDAQ 100 must follow the rules set by NASDAQ
No? Contractually, maybe. But legally you can do whatever you want with index constructions.
Are indexes not covered by copyright, even if you don't mention the underlying data source by name?
If they are, you'd only get a license when accepting their terms.
> Are indexes not covered by copyright
Index providers definitely own their trademarks. You can’t market an S&P index without paying S&P. But “the available authority indicates that copyright protection for indexes may extend to the index constituent lists but not index averages, and copyright preemption principles may limit misappropriation protection for indexes to a very narrow class of ‘hot news’ uses” [1].
> * you'd only get a license when accepting their terms*
Sure. But plenty of indices allow for mixing and matching. The terms are designed to avoid confusion—you can’t use the term NASDAQ 100 if it isn’t exactly that. More broadly, there are tons of indices and benchmark portfolios.
[1] https://www.blegalgroup.com/market-index-licensing-a-review-...
You might be surprised to learn that the stock markets are heavily regulated.
> You might be surprised to learn that the stock markets are heavily regulated
How is this a response?
Not legally, only by contract/specification. Funds could get sued for deviating from the index, but funds generally have a decent amount of discretion in my experience in how they handle rebalancing.
What is an example nasdaq 100 fund that isn't float adjusted?
>that isn't float adjusted?
AFAIK the problem is that they're lobbying the nasdaq 100 index provider to add a 5x multiplier for free float for spacex. Otherwise it would be far less controversial.
edit: https://keubiko.substack.com/p/nasdaqs-shame
What law prevents someone from choosing to buy stocks from the NASDAQ 100 however they want for a fund?
Actively managed funds like that charge around 0.5% to 1% a year. E.g. [0] The most prominent Nasdaq ETF, QQQ, charges 0.2% [1]
Spacex will be around 4.5% of the index [2].
If you believe the thesis of the article that Spacex is about 30% overvalued, and if the only advantage your fund manager has over the rest of the market is that they will avoid Spacex, they will save you 1% of your money over the lifetime of your investment. Assuming you're saving for retirement in 30 years time, the fees will cost you 15% or more.
Maybe your fund manager finds a Spacex-level mispricing every two years. In that case, they're worth the fees. Some people will tell you nobody can beat the market. My employer among others believes very strongly in the idea that some people do make better investment decisions than average. What is certainly true is that not everyone does.
[0] https://helpcenter.ark-funds.com/what-is-the-fee-structure-e...
[1] https://www.invesco.com/qqq-etf/en/home.html
[2] https://www.fool.com/investing/2026/04/01/how-the-spacex-cou...
> the idea that some people do make better investment decisions than average.
Of course some do. After all, that's what makes an "average".
Some people are taller than average, too!
They mean consistently make better decisions than a baseline index investor in a way that isn't luck.
Someone can win at roulette and make more money than the average player over some measurement period, but nobody can be good at roulette (when properly implemented and stuff). Stocks are somewhat possible to be good at but results are mostly random and the fee you'd pay is usually way too much.
> They mean consistently make better decisions than a baseline index investor in a way that isn't luck.
How would you know it is or is not luck?
> roulette
Has no winning strategy - it's very different.
The winning strategy with stocks is understanding the underlying businesses better than the average investor. Peter Lynch's Magellan fund did consistently better than others because Lynch had insights others didn't. When others figured it out, Magellan's returns retreated to market levels.
I.e. investors can do better than average if they have insight others don't have and stay below the radar.
You can make a mutual fund or ETF with any stocks you want, you just can't call it a NASDAQ 100 fund if you're not tracking the NASDAQ 100 index.
It's an interesting question whether you could legally track the NASDAQ 100 without calling it that, or something very similar, e.g. "NASDAQ 100, but with a one year delay for new listings".
But assuming it is: How would you even call it, and how would you describe your methodology in the prospectus? "Tech 100 (compare with e.g. NASDAQ)"?
Is that really true? It doesn’t sound likely to me. Then again I’m often surprised by this stuff.
In order to call it a NASDAQ 100 Tracking Fund you need to pay the NASDAQ a licensing fee (same with S&P500, Wilshire 5000, etc.). The contract you have with NASDAQ will determine exactly how much freedom you have to change rules and still call it a NASDAQ 100 fund. I've never seen a licensing agreement, don't know anything about how they would typically read.
There is also the concept of "Index Tracking Error". No fund can perfectly mimic the index, and that is expected and understood, but the goal is generally to have the tracking error <0.1%- 1% would be a bad track. And so an index fund could take the risk that they will have a tracking error and delay picking up SpaceX even after it joins the official index, but then if it goes up they will look worse relative to their real competitors, the other NASDAQ 100 tracking index funds. If SpaceX goes down, of course, they will have positive tracking error, but I'm not sure how much potential investors would value that. SpaceX would be something like 4% of the NASDAQ 100 at it's announced expected market cap, so a 10% movement by SpaceX would be enough on its own to get you into the notable tracking error range if you didn't have any exposure to it.
You need enough customers to make it profitable at reasonably low expense ratio.
They’re also reducing the float requirements, which is absolutely insane. As a passive investor with significant assets outside of tax-protected retirement accounts, I am beyond livid. If I have to switch investments to move away from the rules being changed out from under me, it will result in enormous tax consequences.
I don’t tend to let my emotions out this much here, but utterly fuck everything about this administration, and fuck anyone who voted in favor of it.
What about those that made this administration so desirable for so many?
Nothing like a forced tax event to get the people rioting in the streets!
I think you need to consider who is being taxed. I doubt very much that OP is part of the class of people who really should be paying more tax. Rather, they're concerned about their retirement assets. Is that a good outcome here if it applied to everyone?
This is just one more of an endless list of inexcusable, indefensible, corrupt and incompetent acts this government has performed and/or enabled.
In this specific case I am retired and I have done this based on financial projections assuming the game continues to be played the same. So it hits closer to home for me. But it’s a far bigger problem than just me—this is looting the retirement savings of millions of Americans—and it is far from the only thing about this administration and those who have supported it to make me absolutely livid.
Huh, TIL, thank you.
Seems like MSCI can add new large constituents very quickly as well [1], so to remain neutral to the frenzy until a price has been discovered, one might need to actively short.
[1] e.g. https://www.msci.com/eqb/methodology/meth_docs/MSCI_GIMIMeth...
Does the hype cycle even last 15 days in 2026? It seems like they stabilize after a day or two. Happy to be proven wrong here…
[flagged]
The xAI piece is the one that stands out to me. $258B for a lab that's burning $1.46B/quarter against $430M revenue, valued almost entirely on a merger anchor from four months ago.
xAI's valuation comes from an internal transfer of Elon's. Elon has stated it's worth 258B and that's the only data point to go by.
It's absolutely bonkers and wrong but it's unlikely to raise to the level of actual misrepresentation.
As I wrote in the piece, I'm extremely skeptical that xAI should be valued as if it is a frontier lab.
But as you say, going back to the xAI + SpaceX merger, analysts consistently seem to value it as if it is, so I predict the public will too, at IPO time.
I assume "extremely skeptical" is you being generous, is there anybody other than Elon who says xAI/Grok are SOTA? The only thing anybody says about it is that it's only good for porn, but local models do porn too so xAI has no moat or edge at all as far as I can see.
There is actually a real bull case for xAI (that I don't endorse), e.g. from people who think that chips & computer is the main determiner of model quality. xAI may plausibly soon have the biggest training apparatus of anyone.
I think talent is more important than compute, as I wrote in my Jan 2026 predictions that Anthropic would end up on top this year: https://futuresearch.ai/blog/forecasting-top-ai-lab-2026/
If you don't spend any time comparing models to the point where you don't know about benchmarks, why do you care where people think the line for SOTA is?
The benchmark game is wholly gamed, but the proof is in the pudding. I know people using Anthropic, OpenAI, and Gemini. Chinese models locally. But who uses Grok for anything but porn? Whatever the benchmarks might say, Grok is just trash in practice. They spent too much time teaching it to be edgy and not enough time teaching it to code.
> I assume "extremely skeptical" is you being generous
I'm not sure that's the case. Every value in this forecast is absurd, I actually think the author is sincere in there feeling that they are being extremely skeptical.
It’s absolutely ludicrous that xAI is thrown into the mix at that valuation. They’re not even a player in AI other than providing Grok slop for twitter.
Even if you think those are standard numbers and you're banking on growth, or whatever, I don't see any way anyone rational (or even a semi-rational AI bull) could convince themselves xAI isn't an absolute garbage company.
For $380B you can get both AT&T and Verizon and you pay ~1.55x the revenue. Why pay 38x for Starlink?
What do you mean $380B? This "fair market value" forecast also includes $147B for starlink enterprise and $75B for starlink direct-to-cell. So almost $600B all in.
Not bad for about $12-$16B in total actual revenue.
net income probably: $1.5B – $3B
P/E:500-1000
Of course people will trip overthemselves to buy it up.
It's hard to imagine this turn into 50-60% short term banger starting from a $1.75T market cap, I wonder if people will actually trip over themselves to buy. I had been thinking I wanted to jump on it to flip but at that price and the macro environment it may end up cratering before a pop. Seems like a sketchy buy.
Yeah, it's wild. But it's not like the P/E should be 30, what do you think would be fair?
That's the thing about SpaceX, some businesses are real businesses that can be modeled in normal ways, like the government launch contracts, and to some degree starlink.
Others, like ~all of xAI, and the starship stuff, are being valued completely independent of revenue. I predict the IPO investors will generally follow the analysis consensus today with those eye-popping numbers.
> But it's not like the P/E should be 30
... Why not? Aside from memes, I mean.
I mean, shouldn’t the price to earnings ratio be 1? Anything higher or lower is just speculating or other words, gambling.
The "official" value of a stock is it is the current best guess of the market for all future earnings until infinity discounted back to the present at some discount rate (to account for the time value of money). That price to earnings rate is 1, because it's the definition. The "E" in PE ratio, however, is for a different time period: traditionally just the trailing 12 months (or previous completed FY- for high growth companies you will sometimes see "last month's revenue multiplied by 12" or other guesses).
This calculation is why "growth" companies dominated the stock market during the 2010's: with the Zero Interest Rate Policy that most of the developed world had, the discount rate that the markets used ended up being basically zero. In which case a market player is indifferent between a dollar in 2020 and a dollar in 2040. So if a company had a 10% chance of being worth a trillion dollars in 2040, that was worth (0.1 * 1 trillion=10 billion dollars). But with a more traditional 4% discount rate then a dollar in 2040 is worth less than half of a dollar in 2020, and that means your 10% chance of being worth a trillion dollars in 2040 has less than half of the value. Even if nothing else changed about your business, just the discount rate changing halved the value of your company.
I remember in the 00’s when people would complain about how ridiculous a 30 PE was for tech stocks, and how no other stock was at that ridiculous price point except tech. Guess that starship has sailed.
P(rice)/E(arnings) ratio of 1 would mean it pays for itself in the earnings period.
The earnings period is 1 year.
It would mean making 100% return on investment each year. Being that low is only possible if there's reason to think the business is extremely precarious and unlikely to survive.
P/E 30 means returns of 3.33%, P/E of 20 means 5%. These are sensible numbers given people have other investment opportunities.
P/E of Tesla being 400 or so means it would take 400 years of its own profits to be able to afford to privatise itself, i.e. returns of 0.25%; being that high is a gamble that future revenue/unit time will go up by a factor of about 20 to bring it into the sensible range.
The upper bound from the grandparent comment for P/E 500-1000, says the annual return is 0.1%, which is what I saw on various current accounts, not savings accounts, not special deals, current accounts.
Of course not. If the P/E was 1, every single public company would be immediately gobbled up by Private Equity firms, who would make their money back after a few years of operation and the rest would be pure profit.
Of course they would! If the P/E of a company is 1.1 it is overvalued by definition so why would anyone buy an over valued company?
So you have to be a complete idiot to but stock in a company with a P/E of 500!
> Of course they would! If the P/E of a company is 1.1 it is overvalued by definition so why would anyone buy an over valued company?
This is obviously untrue. Would you sell a box that spits out $1 million dollars a year for 1 million dollars?
I do not know the P/E ratio for your magic box, sorry.
A P/E ratio of 1 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $1 for every $1 of earnings.
A P/E ratio of 10 indicates that a company's share price is equal to its earnings per share, suggesting that investors are paying $10 for every $1 of earnings.
Which is the better deal? Neither! The first company could suddenly earn more per share and you will be better off. The second company could loose earnings per share and you will be worse off.
A P/E of 1 means you are paying exactly the earnings per share, which is the fairest and most non speculative price. You are paying what the company is earning.
I actually dont think the world will collapse by next quarter so am willing to bear the risk of doing so by having higher P/E.
At the extremes, taking the next step is speculating because you might trip and fall and hit your head.
I just don't think space is as useful or profitable as people think. Time will tell.
Profitable remains to be seen, but it is undoubted that the potential resources in the solar system are (pun intended) astronomically valuable. Getting at them is "just" an engineering problem.
You could argue that space is highly useful for creating profitable narratives. You could even argue that this is the whole game.
As long as we don't find a new it energy to get stuff up, I don't think so.
According to commentators on other threads people with any index funds will be automatically buying, no need to trip over ourselves
Any funds you'd recommend that would preserve the legacy 1 year watch period?
The float adjustment probably handles this for you? The tiny amount of float of that $1.75T means that for any large total market or s&p or whatever fund (VTI, SPY, etc), SpaceX is going to be a minuscule fraction of the fund.
Apple has a float of >99%. SpaceX is going to come out with 3-4% float. Since all big serious total market / whatever index funds are float adjusted, this means that SpaceX will be treated more like a company with $45B market cap, not $1.5T or whatever.
If you're buying most index funds, you should literally not care about this.
If you buy VTI, then SpaceX is going to be like what, <0.1% of the fund? That is noise.
I am not smart with stock legal-ese but I pasting something I found in a different article here.
> To balance index integrity and investability, Nasdaq proposes a new approach for including and weighting low-float securities (those below 20% free float). Each low-float security’s weight will be adjusted to five times its free float percentage, capped at 100%. Securities with more than 20% free float will continue to be weighted at full, eligible listed market capitalization, while those below 20% free float will be weighted proportionally to preserve investability.
> The rule reportedly includes a 5x float multiplier for low-float stocks, which would require passive vehicles to treat SpaceX as if it had significantly more tradable shares than actually exist, essentially forcing funds to chase the price.
It sounds to me like a way to increase demand for low float stocks by treating the float higher than it actually is. Glad to hear the explanations about this.
> If you're buying most index funds, you should literally not care about this.
Disagree. Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price. Granted, I’d be more concerned if the fund manager was buying it without a requirement to. The issue still remains about why are we paying so much for this stock? Make it make sense?
>Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price.
Right, but the whole point of index funds is that you're letting the market decide what's worth investing/buying (via market cap/free float weightings) and at what price. If you're making calls on what's "waste" or not, then you're no longer a passive investor and you're just picking stocks.
Fiduciary responsibility in this context is a large umbrella of responsibilities. They should be fighting the new nasdaq rules on behalf of us. As you mentioned, this forces them to participate in fleecing the passive fund holding public and undermines the whole point of index funds. I don’t see how a fund manager could just blindly take this rule change and not make a ruckus about how it’s forcing him to break their fiduciary obligations
Following the rules of the fund and being index is one thing. Sitting silently as this pump and dump is designed to fleece your clients, is something entirely different.
> Starting May 1, 2026, Nasdaq rules allow large IPOs (e.g., top 40 market cap) to join the Nasdaq-100 Index within 15 trading days. This forces index-tracking funds to buy new shares, often at inflated valuations shortly after listing, a "fast entry" rule designed for mega-IPOs like SpaceX or OpenAI
Which is how Elon gets away with fleecing the retails. Someone with 100k in VTI is giving $100 to Elon at a p/e of 1000.
You have to hand it to him, he’s the best grifter we’ve seen in years.
I remember when this happened with Nortel!
But consider that they will eventually own the entire observable universe excluding Earth! /s
It’s also one of the thinnest floats IPO’ing. They’re only selling less than 5% of the company. That introduces a lot of sensitivity in the valuation, not to mention there exists a bit of game theory around fund managers needing to join in to maintain nominal returns with their peers.
Check out Matt Levine commentary, which goes into more detail (SpaceX Indexing) https://www.bloomberg.com/opinion/newsletters/2026-03-31/are...
> They’re only selling less than 5% of the company
Wait for the lock-up terms.
Does it make sense to value Starship Commercial Launch at $170B, _and_ Falcon 9/Heavy at $100B? I would expect that if Starship achieves its operational goals, then it should quickly deprecate nearly all uses of Falcon, the exceptions being national security launches that require validating the launcher, or Dragon launches for similar reasons. Even those categories are likely on a countdown the moment starship is rapidly reusable.
> Starship at $170B is pure option value on technology still in advanced testing.
The argument that Starship is somehow an experimental/unproven technology that might fail to materialise was absurd but plausible sounding before flight 1, there were many new technologies simultaneously being deployed to a single launch system in one go.
But after 3 tower catches of the booster demonstrating centimetres of guided precision of the entire stack, this is becoming a tired argument.
I know the author is not making that case at all here, but it seems like one the core reasons to undervalue SpaceX is that Starship might not work out, and this all sounds exactly like how reusability might not work out for the Falcon 9 from 10 years ago.
The question is not even whether or not Starship works. Starship is, in theory, designed with the idea of getting many, many payloads to Mars. However, getting payloads to Mars is not currently something that anyone is paying for; even NASA isn't going to focus on Mars for at least another decade (likely more). And in the meantime, it's not like we don't have rockets capable of getting payloads to Mars (the Saturn V was fully capable of doing so in the 60s). Likewise in the meantime, the Artemis plans that look to require a dozen+ launches for a single moonshot aren't painting Starship in a favorable light.
So what is the near-to-medium-term economic prospect of Starship? That's the question. You can't just say "bigger rocket make more money", because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice. To use an analogy, we have jumbo jets, but most flights are not on jumbo jets.
The Saturn V payload to LEO is large, but the payload to the Moon was much smaller (the Eagle lander was less than ten tons on touchdown, with a couple of tons of cargo). Starship might be able to put 100 tons on the Moon, because of orbital refueling, which is the reason they need several Starship launches.
It’s not really sensible to compare a single spacecraft with what is essentially a fleet of ships with an order of magnitude greater cargo capacity. It’s the possibility of refueling that unlocks the ability to push really large payloads beyond LEO, and many of the more audacious plans (like a Moon base) do require a lot of cargo well beyond LEO.
> because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice
This is only true because we are so completely beholden to the tyranny of the rocket equation with the current status quo. With the $/kg (and payload volume) that Starship would unlock, the entire ELO/GEO/Interplanetary/Deep Space market looks very different.
Labs in space. Hotels in space. Weapons in space. Much more interesting satellites in space. More government science missions. Privately funded science/research missions. etc
How many space telescopes better than anything we currently have can we put up when launch costs are <$50m?
A huge synthetic telescope in orbit with an aperture the size of the planet?
How many private earth observation satellites?
The market is huge when weight constraints largely go away and $/kg drops so hard.
The question is whether those markets are not already adequately served by Falcon 9. Once again, just because you have a jumbo jet that can fly 500 people from New York to London does not mean that everyone flying out of New York wants to go to London, and it doesn't mean that it's worth flying that jumbo jet from New York to Pierre, South Dakota with only one passenger on board.
> The question is whether those markets are not already adequately served by Falcon 9
What does that even mean? Almost every single Falcon 9 customer will prefer launching on Starship if/when it is available, because the cost will be much lower. A very small segment who have payloads that are exactly Falcon 9 sized and want a very particular orbit might still be better served by F9, but maybe not.
Beyond that, much lower cost unlocks previously untenable opportunities that you have not sufficiently imagined, as stated earlier.
Like imagine how much better the James web could have been with such a large and cheap launch vehicle.
That's not how this works. The JWST was limited by the size of its faring, but increasing the size of the faring doesn't mean they'd ship a less complex telescope with the same functionality; they'd ship an equally-complex telescope with more functionality. Better for science, yes, but that doesn't translate to more expenditure that could be captured by the launch company. And that still relies on a government that gives a damn about funding science, which is not not the direction that the US is heading in.
> that doesn't translate to more expenditure that could be captured by the launch company.
Of course it does. With Starship, SpaceX could've charged NASA/ESA more to launch a bigger JWST than the cost to launch with Ariane 5, with huge profit margins.
On top of that, with a much larger fairing, you could almost certainly simplify the telescope and increase capability. A significant part of the JWST's complexity is the unfolding sequence, which could be simplified with a fairing that is more than double (triple? quadruple?) the volume.
Weapons in space, yes. Government constellations are SpaceX's best opportunity. As for anything else, the market for anything bigger than Falcon 9 is very small. Elon Musk didn't even want to proceed with Falcon Heavy because there isn't much market for even that, but Shotwell managed to convince him that having Falcon Heavy would actually help sales of Falcon 9, by inducing the government to take SpaceX more seriously.
Agreed. The real bull case for SpaceX is that the US government will use it to aggressively militarize LEO.
> there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice
Well, they are going to live with multi-customer payloads if Starship can do it for a tenth of the price. There's already a large market for ride-sharing and it's only going to get bigger.
> There's already a large market for ride-sharing and it's only going to get bigger.
Except that at some point this stops being true. Induced demand is not infinite. There's no telling when we'll reach that point, or indeed if we've already reached it.
The booster is definitely looking good, just like the Falcon 9 booster is very reliable. The big question for me is the upper stage, and whether they will be able to reuse anywhere near as often as they claim. It is so much more complex than the Falcon upper stages, which aren't reusable very quickly. It seems they have a lot to learn about upper stage reusability.
Yeah, I might have stated this poorly. In the forecast it's just a question of expected value, I don't give almost any probability to "Starship is worthless".
My 50% CI on Starship's fair market value at IPO time is $123b - $227b, with a 80% CI even wider, not based on my own modeling, but based on anchoring to analysts that give credible arguments.
> and this all sounds exactly like how reusability might not work out at all for the Falcon 9 from 10 years ago
I think a lot of it depends on whether they can make the reuse of the second stage work without having to redo stuff constantly like the shuttle. Reusing the booster will obviously save tons of money and make launches cheaper, but they're competing with themselves here. How big is the launch market with cheaper launches? We don't actually know.
The viability of direct to cell connectivity at scale is unproven. This is actually the core value of SpaceX in the next 3-5 years.
The other core value generation product will be financial transactions. It is unproven whether X money will be adopted for friction free transactions across national boundaries and whether the company can compete in the financial services sector.
How are they doing with their mass to orbit projections?
The tower catches are great, but the payload rating has been reduced several times now[1] and with it the economic argument for how Starship will make launching much cheaper than today as well as suitability for lunar/Mars launches. For Starship to be revolutionary enough for this kind of valuation it has to not just work, but outperform current solutions.
SpaceX has basically admitted as much by promising Starship 2 & 3 with larger payloads (that Starship 1 was already supposed to deliver).
[1] https://www.americaspace.com/2024/04/20/starship-faces-perfo...
That article is two years old. In traditional space launch terms that is a very short amount of time, but in SpaceX terms that's quite a while. They've already progressed to Starship 2 since then and are going to launch Starship 3 imminently (slated this month), which has Raptor v3 engines onboard and come with the efficiency gains you are talking about.
Compared to Falcon 9 Starship has still more quality issues than the Falcon 9 at the same test stage
They caught it 3 times already!?
I missed 2 and 3 it seems.
I know it’s easy to sit at home being indignant at the internet, but how on earth does an ISP with 10M subscribers and the most expensive infrastructure in the solar system ever come out to be worth $300B? They even have to routinely replenish their “cell towers” as their orbits decay.
Any mid-sized country would have multiple cellphone and Internet providers with larger customer bases and less upkeep.
They are pushing business-to-business service too, like ships, airlines, and retail/office backup. Plus smartphones can talk directly to their satellites. A lot of countries will use them for military use. Whether it adds up to a reasonable IPO I can't tell - market irrationality is hard to measure.
It's the only ISP that reliably works globally but especially in war zones with zero competitors. How much is your life/sovereignty worth to you?
How much would it cost you to run wires to the northern tip of Greenland and Antarctica? How about the middle of the Pacific? All of Africa? At the end of the day, that is the alternative. If you think normal ISP ground stations don't need maintenance (especially power), you're missing a lot. Also I know people who have cell towers on their property, and they get paid over a hundred thousand a year just for that.
Grok: lots of competitors & my 4th choice in LLM models.
Starship: zero competitors & potentially makes humans inter-planetary.
Seems crazy if investors put more value on Grok.
“potentially makes humans inter-planetary”
What is the realistic, non-science fiction appeal of this?
I would wager minerals mining and tourism are probably the only meaningful revenue sources in our lifetimes.
Going to orbit is actually useful already, cf starlink
Yeah, I meant in addition to what we’re already doing.
I do think that will reach diminishing returns at some point. Kessler syndrome is a real thing for long-term higher orbits.
These premises may or may not make sense, but the thing that matters is capturable revenue.
Humans being interplanetary would be an amazing technical tour de force. But relatively speaking, there isn’t much revenue there.
These premises may or may not make sense, but the thing that matters is capturable revenue.
European settlers being on the north american continent would be an amazing technical tour de force. But relatively speaking, there isn't much revenue there.
Jamestown was a failure.
The Pilgrims starved their first year.
Okay? The US is the largest country market in the world.
I'm not sure that the continental Colonies brought in much revenue, though. The individual colonists could do quite well, but viewed as an financial investment for the British Crown (which they were not, but that's the OP's analogy) I don't think they were very good. Plus, when they wanted to extract revenue via taxes, the Colonies revolted. Eight years of war probably cost a pretty penny, too.
(Sourcing my claim is difficult. I include this reference [1], which says that the Caribbean colonies were more profitable than all the continental colonies together. It doesn't comment on the cost of the war.)
[1] https://courses.lumenlearning.com/suny-ushistory1ay/chapter/...
America became a success much later.
Anyone in this thread know how much SpaceX investors got diluted when they bought xAI/GROK?
It was 1T post merger with xAI being 250B of it, SpaceX being 750B
Were people overpaying 30% for tesla in 2010?
Yes, and they still do
Tesla's highest market cap in 2010 was $3.3B. Tesla has more net income, sometimes multiples more, per year, from 2021 to 2025.
For comparison, it is routine to see sale prices of 3x to 5x revenue for many, many kinds of everyday businesses that have much less potential than Tesla.
There are very, very few businesses whose shares one could have purchased in 2010 that performed better over the subsequent 15 years. That is about as objective as one can get about determining whether or not something was under or over valued (in 2010).
because not only the shareholders overpaid but the car buyers too.
Is musk derangement syndrome a thing?
Yes, and it makes much less sense to me. It boils down to he's rich on paper, and doesn't put on a fake PR mask.
Once you see it, it's preety funny how these people pick weird little hills to die on.
No.
Related:
The SpaceX IPO: retail investor notes
https://news.ycombinator.com/item?id=47612775
SpaceX files to go public
https://news.ycombinator.com/item?id=47604155
Having never really looked at valuations, my ignorant mind can get from Starlink's 10M subscribers to a $380B valuation. If you make $100/mo/user that's 12B/yr and that with a higher 50x P/E ratio is 60B. If you go to 100x, that's $120B.
Starlink's maritime, roving, airplane, and military options are all much more than $100/mo/user. Not sure how much that closes the gap, but it's _something_.
Source: https://starlink.com/business/aviation ($250->$10k/mo)
https://starlink.com/business/maritime ($250/mo)
https://starlink.com/business/mobility ($65->$540/mo)
Everyone is so confident in their reading of tea leaves
I read your comment as being glib, but in forecasting this I was really puzzled how much to anchor to how analysts tend to value these businesses.
I ended up largely deferring to them, e.g. predicting the public will value xAI at $258 billion ($222b - $310b) at time of IPO, even though I've elsewhere been skeptical that xAI should be valued like a frontier AI lab.
It's a keynesian beauty contest
All these IPOs are extremely bearish and mirroring the 2019 race-for-the-exit IPOs out there.
Of course once again, you are "not allowed" to be early into pre-IPO companies which is where the actual money is made.
The moment several companies start IPOing, you are already too late for those multiples and have to wait for a massive crash until these stocks reach all time lows after IPO.
Wall Street, ICE jobs, bs AI valuations, etc is proof that there are just enough stupid people in this country to ruin it all for the rest of us.
[dead]