Latest / Black Box Theory Podcast / BBT #17 Snippet | The SpaceX IPO Skeptic's Case
Transcript
- Malcolm: Like when SpaceX IPOs, it will be more valuable than meta. Like like off the rip. And it's just I personally I actually am not I per I am not actually gonna I don't think I'm gonna partake in the SpaceX IPO personally. ⁓ I think I'm gonna wait a few months, probably probably f six to eight months before I do actually invest. I think that I'm sure like a lot of people understand like when it comes to IPOs, more times than not, they they tend to be more of like a Kind of like a rug pull, like you see it race to these all time highs. It's trading at all time highs, all time high valuations. Everyone's pumping it, pumping it, pumping it, and then a day or two later, chops back down and then the price is a bit more regulated. That isn't even so much what I'm concerned about. That happens with just about every IPO. the thing I'm concerned about here is that when you actually look at SpaceX, their revenues and what drives the company, they burn cash, bro. They and I and this like I know that's kind of like been the stipulation between a lot of these IPO, like especially with Anthropic and opening up, but SpaceX is on a different is on a in a way different tier to me. When you look at their numbers, and I'm just referencing fiscal year twenty-five, ending December 2025 for like so SpaceX, they have different ⁓ you know, streams of business and and streams of revenue. So obviously their space business. ⁓ operates with a 67% gross margin. Their connectivity business. So Starlink operates with a with a 48% gross margin and then AI. So that includes XAI, Grok, and then X or or Twitter, I guess. And they operate with a 32% gross margin. So you can think of these three kind of I guess streams as like the main sources of of revenue and whatever. And so I'm just gonna break this down really briefly for you guys just so that you can kind of understand like my stance on it, right? So the space business brings in 4.1 billion a year. It's a up eight percent year over year. The connectivity business, so Starlink, that brings in eleven point four billion. ⁓ that that brought in eleven point four billion, so up fifty percent year over year. The AI business brought in three point two billion, which is up twenty two percent year over year. And I'll also give them credit for that because I'm sure you guys, you know, have have seen with the with the ⁓ the major deal that Anthropic signed with Elon Musk is ⁓ his ex AI company. ⁓ They're basically paying them one point two five billion dollars for compute for the next few years. I think a lot into like 2029 or 2030, something like that. So all up, their revenue is eighteen point seven billion dollars. That sounds good. Up thirty-three percent year over year, making money. So let's actually let's let's break this down because you know, companies they aren't don't look at companies just from revenue, right? There's a lot more that goes into it. ⁓ we have gross profit and we have cost of revenue. Gross profit, actually, and I'm I'm gonna actually pull this up so you guys can see. You know, if you're watching the video, so you guys can see the graph that I'm I'm I'm looking through to give you guys a visual. Let me show you guys this really quickly. Okay, can you see this? Yeah. So check this out. Thomas: Yeah. Mm-hmm. Malcolm: Gross profit, 9.2 billion, cost of revenue, 9.5 billion. That out of that gross profit, 9.2 billion, eleven point eight is operating expenses, which means they are losing money every year, every quarter. Eight point six of that is going to research and development, another to S DNA, another to to restructuring, another to impairment. So they are operating on a with an up they are moving with an operating loss of two point six billion, a fourteen percent margin. 17% or 17 point delta year over year. They are losing money and they are coming in more valuable than meta. And it's just like, hmm. You have to sit there and you have to think, like, is this I know we throw the bubble term around I personally would like to be on the sideline for a bit. I'd like to wait this out. ⁓ I think people are really excited because it's Elon's company. It's you know, it's it's it's a it's an opportunity to get into a IPO and ⁓ I'm I'm sure a lot of people will make a lot of money off of this IPO because there are a ton of companies that are also tied into it, like Google as an example. But it's just like I when when I when I look back at it, and I ⁓ I I like to pull this one up as well. Sorry, give me one sec. I'm I'm a sew this one too. So this is Meta's who who who would be considered less valuable than the SpaceX once they IPO. But man. Meta, they're fiscal this is fiscal year twenty four. This isn't even super actually this is just this is as an example. It let's just bottom line here. Meta is net profiting sixty two point four billion dollars year over year. Look at their revenue. Look at how much how much more green there is. SpaceX is literally losing cash, losing billions of dollars a year. Meta makes sixty billion dollars a year. A quarter. Right? Like like this is not ring this is not ring ring an alarm to anybody, bro. Like is is anybody not like like somewhat scared of these valuations? They are coming in and being immediately priced above Meta, which controls pretty much Everything you look at, the entire ecosystem of apps, messaging and social media. I don't know, man. That's my personal sentiment. I know ⁓ there are other people out here who are like super excited for what can come of the IPO. And ⁓ like I said, I think it's gonna be it's gonna pump the market a lot, but ⁓ I personally will not be getting over leveraged or even getting a position into this IPO. I'd I'd like to wait for for quite some time for this one.