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The SpaceX Investment Thesis: Where We Are Now · In the Loop AI

0:00
Ejaaz: Four days. That's how long SpaceX has been a public company.
0:03
Ejaaz: And in those four days, it's broken just about every single IPO record that there's ever been.
0:08
Ejaaz: They blew past Amazon and Microsoft's valuation, reaching a $3 trillion valuation.
0:13
Ejaaz: It is the fourth most valuable company in the world.
0:16
Ejaaz: But Elon also became the world's first trillionaire. He made more money in one
0:20
Ejaaz: day than Warren Buffett has made in his entire life. Just absolutely insane.
0:25
Ejaaz: The stock itself, Off the price is already 50% above its IPO price,
0:29
Ejaaz: and they've already made their first acquisition, $60 billion to acquire Cursor
0:34
Ejaaz: to become the number one frontier AI lab
0:37
Ejaaz: it's not all unstoppable for
0:39
Ejaaz: SpaceX right now. Only 4% of the stock supply is available to purchase.
0:43
Ejaaz: And the company is valued at 107x its earnings. This is the largest gap that
0:48
Ejaaz: we've seen for any Mag 7 company or top Fortune 500 company.
0:52
Ejaaz: And there's an aggressive unlock schedule, which we'll get on later in the episode.
0:55
Ejaaz: But the number one question that's on my mind, and I'm sure a lot of your minds
0:58
Ejaaz: is, is SpaceX the investment of the century? Or is this the strongest signal that we in an AI bubble.
1:05
Josh: Well, according to Elon, it is. He just posted that they're going to have a
1:07
Josh: trillion dollars of revenue by the end of the decade.
1:09
Josh: That is going to be a tremendous amount of upside. And retail seems to agree.
1:13
Josh: I was looking at this chart just before we started recording that showed over
1:16
Josh: the last two trading sessions, retail investors bought nearly as much SpaceX
1:20
Josh: as every other single US stock combined.
1:24
Josh: And it's been amazing. The first day of trading, it was up, what is it, 20%?
1:28
Josh: Second day, 20%. Third day, 5%. Today, as we're recording, this is up another 5%.
1:33
Josh: The thing has been up only. It eclipsed a $3 trillion market cap,
1:36
Josh: making it the fourth most valuable company in the world over Microsoft.
1:40
Josh: I mean, look at this chart. It's crazy. We have NVIDIA, Alphabet,
1:43
Josh: which is Google, Apple, SpaceX, and Microsoft in the top five.
1:47
Josh: It's unbelievable that this new company comes on the scene and is immediately among the top five.
1:52
Josh: And it has been doing really well for good reason. There's a very strong outlook
1:56
Josh: on revenue, on guidance, on the actual company.
1:58
Josh: But man, like you said, Ejaz, it's very expensive and there's a lot to get into
2:03
Josh: with this as it relates to how expensive this is but it's a double-sided sword,
2:08
Josh: because this premium that the stock has allows it to do really interesting things
2:13
Josh: like for example purchase a company for 60 billion dollars effectively for free
2:19
Josh: and that has some upside for the stock as well so there's a lot of really exciting
2:22
Josh: things that have been happening with spacex it's doing well i think the answer
2:24
Josh: that i want to give by at the end of this episode is,
2:28
Josh: Should you be investing in this now? And what is our kind of forward outlook?
2:31
Ejaaz: So let's get into what exactly happened. On Friday, they IPO'd 555.6 million
2:38
Ejaaz: shares were released for trading.
2:41
Ejaaz: That's around 4.3 to 4.7 of the entire share supply. So not that much.
2:47
Ejaaz: And we'll get into why that might be problematic later, but at a fixed price of $135.
2:53
Ejaaz: Now, immediately upon listing, it hit $160.
2:56
Ejaaz: And by the end of trading on Friday, I think it was sitting just above $200.
3:00
Ejaaz: And then like you mentioned, it's been on a subsequent run that has put it just
3:03
Ejaaz: around 50% above its IPO $135 price.
3:09
Ejaaz: Now, this is absolutely insane, because as I mentioned earlier,
3:13
Ejaaz: There's a large discrepancy between what SpaceX generates as a company.
3:17
Ejaaz: Just last year, they generated around $15 to $18 billion.
3:21
Ejaaz: Now, it's positioned above Amazon and Microsoft, but above Amazon,
3:25
Ejaaz: which comparably generated, I believe, $770 billion last year,
3:30
Ejaaz: of which $80 billion was actual revenue that they earned.
3:34
Ejaaz: Compare that to SpaceX, they lost $4.9 billion.
3:37
Ejaaz: So the multiples are kind of like reaching for a moment, but it was the most
3:41
Ejaaz: insane wealth-creating event ever.
3:44
Ejaaz: Over 4,400 SpaceX employees became millionaires, with I think well over 100
3:49
Ejaaz: of them earning $100 million just from this singular event.
3:53
Ejaaz: Elon himself, as I mentioned, became the world's first trillionaire.
3:58
Ejaaz: And of course, his wealth is mixed up in a lot of different companies.
4:01
Ejaaz: But now SpaceX, his baby, formerly it was Tesla, has now become his main a source
4:08
Ejaaz: of value creation. So the question in everyone's mind is, what are you going
4:11
Ejaaz: to do with all this money?
4:14
Ejaaz: Now, there was an option that we spoke about a few episodes ago around SpaceX
4:18
Ejaaz: potentially acquiring this different company that will allow them to leapfrog
4:22
Ejaaz: and become a frontier AI lab. Turns out that's exactly what Elon did.
4:27
Josh: Yeah, it's pretty amazing how they effectively got it for free.
4:31
Josh: When I think about acquisitions that were made, we can remember the ex-acquisition
4:34
Josh: of Twitter at the time. Yeah. And how it was considered to be this humongous
4:38
Josh: amount of money for 40-something billion dollars that was spent.
4:42
Josh: Cursor just got acquired for 60 billion dollars. And we have to give congratulations
4:46
Josh: in order first to the four co-founders who are now worth over 5.5 billion dollars each.
4:52
Josh: Allegedly, we have a great photo, actually, of them we could show.
4:55
Josh: Because these are these are not they're not like grown-ups these like young
4:59
Josh: people they're in their 20s these.
5:01
Ejaaz: Are kids they're kids and
5:03
Josh: They're all multi-billionaires so to these four people on the screen congratulations
5:07
Josh: you have permanently escaped the underclass for life and for probably the next
5:11
Josh: 50 generations of life you created an incredible product congratulations,
5:16
Josh: so elon bought it and the way that they bought it was really interesting and
5:19
Josh: also just some backstory for those that don't know cursor is that thing that
5:22
Josh: we talk about a lot called the harness It is basically the,
5:25
Josh: operating system, the body that will embody the Grok and the XAI and probably
5:30
Josh: cursor models in the future.
5:31
Josh: So cursor, incredible company, really a remarkable comeback.
5:35
Josh: And Elon essentially was able to acquire them for free. How?
5:39
Josh: Well, if you remember back earlier this year in April, SpaceX locked up an option
5:43
Josh: to either pay $10 billion for a partnership or buy the whole company for $60 billion.
5:48
Josh: At the time, SpaceX stock was not that high. It was still private.
5:52
Josh: It was maybe sub $100 at the time or just above $100, whatever it may be.
5:58
Josh: Fast forward to today, that stock is now worth $211. Each stock is worth so
6:03
Josh: much more than it was at the time.
6:05
Josh: What effectively what that means is because they're buying this in all stock,
6:08
Josh: it allows them to basically just grant a significantly less amount of stock
6:12
Josh: to these founders because the price is so much higher. So that option that they
6:16
Josh: paid for earlier in the year is really paying off dividends.
6:19
Josh: And the result is that they got a really steep discount on buying cursor because
6:22
Josh: if they would have bought it just a couple months earlier, the price would have
6:24
Josh: been over double effectively.
6:26
Ejaaz: Yeah. So Elon basically bought this amazing frontier AI lab with an inflated
6:32
Ejaaz: currency that was SpaceX stock. And the way he was able to do this was because
6:35
Ejaaz: there's only a 4% float supply for the shares itself.
6:39
Ejaaz: Now, I just want to talk about the option very quickly.
6:42
Ejaaz: It was $10 billion that Cursor would pay them if they decided to not acquire Cursor.
6:48
Ejaaz: And they had 30 days. SpaceX had 30 days from the start of the IPO to decide
6:53
Ejaaz: whether they wanted to acquire Cursor or not for an all-star transaction or whatever that might be.
6:58
Ejaaz: Elon exercised that within day four, or actually day three. That was yesterday.
7:02
Ejaaz: This happened yesterday.
7:03
Ejaaz: So he just acted very quickly. And the reason for this is it's not just Cursor's
7:08
Ejaaz: harness on its own. So for any of you who have used Cursor, it's probably the
7:12
Ejaaz: first product that you interacted with to start Vibe coding different types of products.
7:16
Ejaaz: It's the thing that arguably made Vibe coding a very viral thing.
7:20
Ejaaz: At one point, Cursor, the product itself, accounted for 40% of Anthropix coding
7:26
Ejaaz: usage for Claude specifically. This was before Claude code became like a viral sensation itself.
7:31
Ejaaz: So Cursor at the time, I think, was making around 1 billion ARR,
7:35
Ejaaz: and now it's like making between 2 to 3 billion ARR.
7:38
Ejaaz: So a really good purchase. But the point is, Elon was able to acquire it using
7:42
Ejaaz: stock at an inflated price, which effectively makes it free. Now, get this.
7:47
Ejaaz: $60 billion that Elon just spent to acquire this AI company is more money than
7:53
Ejaaz: Elon spent on SpaceX for rockets over its entire lifetime.
7:59
Ejaaz: So SpaceX, the company that was built to create rockets and effectively become
8:03
Ejaaz: the highway to space, just spent the most amount of money acquiring an AI lab.
8:07
Ejaaz: Now, obviously, this makes sense because they merged with XAI.
8:11
Ejaaz: The whole idea is to put data centers out in space to train Grok,
8:15
Ejaaz: which is contained within XAI.
8:18
Ejaaz: Cursor has an amazing product that basically allows Grok to become a super coding
8:22
Ejaaz: model and allow it to compete with Anthropic.
8:25
Ejaaz: They already proved this with the recent Composer 2.5 model, which Cursor released.
8:29
Ejaaz: And Michael Truel, the founder of Cursor, actually spoke on a panel or on a
8:33
Ejaaz: presentation yesterday where he said
8:35
Ejaaz: they've actually trained a foundational model that is releasing in the next
8:39
Ejaaz: few weeks that's been trained from scratch typically cursors models have been
8:42
Ejaaz: fine-tuned on top of a chinese model but trained from scratch and that's definitely grok itself so
8:47
Ejaaz: tldr space is going to come up with a frontier ai model after this acquisition
8:52
Ejaaz: released in a few weeks so it is
8:54
Ejaaz: a huge win to acquire a company
8:56
Josh: Like this yeah and that's not even the most interesting thing about it like
8:59
Josh: it's amazing how many different pillars that exist with this company and i think
9:03
Josh: one of the things you mentioned was how much money they spent and how much money they raise.
9:07
Josh: And I want to highlight a few key numbers with the cumulative spend versus the IPO raise.
9:11
Josh: They raised $85 billion in this IPO.
9:14
Josh: For reference, they spent $15 billion on the entire Starship program.
9:19
Josh: When you think about the Starlink program that is running a global constellation
9:23
Josh: of satellites that is beaming down internet to earth with lasers,
9:26
Josh: they spent $20 billion on that.
9:28
Josh: The total between Starship, which is the Martian rocket that's going to go build
9:32
Josh: this base on moon, and Starlink, the global internet provider, is $35 billion.
9:36
Josh: They raised almost triple that in money.
9:40
Josh: And that means that the scale and the scope of what they're going after is just
9:44
Josh: so huge. But before we get into the grand scheme of things, we have to talk
9:47
Josh: about the price now because that's what everyone wants to know about.
9:49
Josh: That's what all the interest is about.
9:51
Josh: And I think to do that, we should start with the share float,
9:54
Josh: which is an important thing that I'm not sure a lot of people have really kind
9:58
Josh: of focused on or are really aware of. So basically, when a company is traded,
10:02
Josh: there are a certain amount of shares that are available to be traded on a public marketplace.
10:05
Josh: In the case of SpaceX, this number is actually very low. It comes out to about
10:09
Josh: 4.2 to 4.3% of the total shares being actually tradable.
10:13
Josh: What does this look like? Well, yesterday during the trading session,
10:16
Josh: I think half 50% of all of the shares traded hands in a single trading session.
10:20
Josh: There's not a lot of liquidity, or I shouldn't say that there's,
10:24
Josh: there's a lot of liquidity, but there's not a lot of shares to be pushed around.
10:27
Josh: Meaning if there is more demand, it is able to push the price higher,
10:30
Josh: much quicker because there's less of that float that it needs to churn through.
10:34
Josh: As a result, the stock has done very well and hasn't met much resistance.
10:37
Josh: I mean, every day it's been seemingly up only.
10:40
Josh: When does this change, is the question, because right now there's a very little
10:43
Josh: amount. There's a lot of hype and demand, but there is a very clear and perhaps
10:48
Josh: concerning unlock schedule in which that float is going to grow to be much larger than 4%.
10:54
Ejaaz: Yeah. Listen, like I'm a SpaceX bull. I bought stock at IPO.
10:58
Ejaaz: I will be holding this stock for a long time. I believe in Elon being able to
11:02
Ejaaz: pull this off, but you can't ignore the mechanics.
11:06
Ejaaz: Now, I have a visual on the screen right now. If you're listening to this, I'll explain it to you.
11:09
Ejaaz: Right now, around 4.2% of the stock supply is available to trade.
11:15
Ejaaz: So that's what is available on the market. That's why the price is so volatile
11:18
Ejaaz: and is going either up or down, mainly up over the last few days.
11:21
Ejaaz: Over the next 90 days, 4.4x, the entire current flow, so that's 2.4 billion
11:29
Ejaaz: shares will get released onto the market in a staggered way.
11:33
Ejaaz: And this releases from friends and family that invested earlier,
11:37
Ejaaz: as well as early investors that such as funds or institutional funds that got
11:41
Ejaaz: access to invest in SpaceX's earlier rounds.
11:44
Ejaaz: Now, over 180 days, which is
11:47
Ejaaz: basically six months, you'll have a total of 56% of the supply released.
11:53
Ejaaz: So that is this year, by the end of this year, you have an additional 56% of
11:57
Ejaaz: the current float that is being traded.
11:59
Ejaaz: That is TLDR, a ton of And so the main question on everyone's mind is,
12:06
Ejaaz: where's this money going to come from?
12:07
Ejaaz: You need money to absorb that supply release in order to maintain the current
12:13
Ejaaz: price that we're looking at.
12:13
Ejaaz: So if we're looking at like, say, a $220 price per share, you're going to need
12:19
Ejaaz: multiples more of the current money that is in the supply right now.
12:24
Ejaaz: Just prop up that price, not even just send it higher. So the concern here is
12:29
Ejaaz: this is a very abnormal unlock schedule.
12:31
Ejaaz: This is not particularly normal. I'll show the step ladder over here.
12:35
Ejaaz: Typically, when a company IPOs, they IPO around 40% to 50% of the available
12:42
Ejaaz: supply, and then the rest unlocks after a one-year cliff. That's typically the
12:46
Ejaaz: standard that everyone's shown.
12:48
Ejaaz: With Elon's IPO, with the SpaceX IPO, everything has pretty much changed.
12:52
Ejaaz: For the unlock schedule, it happens a lot sooner and a lot more frequently.
12:56
Ejaaz: Equally on the buy side of things, and I think this is important to point out,
13:00
Ejaaz: Elon has been able to wrangle a very effective,
13:04
Ejaaz: call it a scheme, where you have a lot of the pension funds,
13:07
Ejaaz: the S&P 500 purchases, the people that buy these indexes from pension funds
13:12
Ejaaz: and other sort of instruments that will have this constant buying pressure on SpaceX's IPO.
13:17
Ejaaz: So the balance of these two will effectively determine what that ultimate price is going to be.
13:23
Ejaaz: But right now, it's looking pretty intimidating.
13:25
Josh: Yeah, well, to say that it needs to absorb the sell pressure is implying that
13:29
Josh: there will be sell pressure. And I think it's also important to know who the
13:32
Josh: people are who are currently locked up.
13:34
Josh: If your shares are locked up, you are an insider, you are early in SpaceX, you are in the green.
13:38
Josh: So there's a high probability that there is some sort of incentive and urge
13:42
Josh: to want to sell to take your money off the table.
13:44
Josh: And by December 9th of this year, about 60% of all the shares will become available,
13:50
Josh: with the remaining 50% or 40% being available in June of 2027.
13:55
Josh: So there is a very clear projected path to a lot of potential sell pressure.
14:01
Josh: Now, I think it's important to note the types of people that are invested in
14:03
Josh: SpaceX and the people that share the vision of SpaceX being very bullish and very long term.
14:09
Josh: A lot of these investors invested in Elon, the founder, they invested in SpaceX,
14:13
Josh: the deca trillion dollar company, not the two to three trillion dollar company.
14:17
Josh: So while there is going to be selling pressure, there's certainly a case to
14:20
Josh: be made that a lot of these early supporters still believe that they're early
14:23
Josh: and are using this as an option to just continue to hold to not sell so while
14:27
Josh: there will be sell pressure it is not necessarily going to be
14:31
Josh: a bad thing it is possible not necessarily and elon seems to be fueling this
14:36
Josh: fire he just posted a few days ago that spacex might be able to reach approximately
14:41
Josh: one trillion dollars in revenue,
14:43
Josh: by 2030. And he would be surprised if it were not above $1 trillion by 2031.
14:49
Josh: A trillion dollars in revenue is unheard of.
14:53
Josh: No one makes a trillion dollars in revenue. If SpaceX just trades at 10 times
14:56
Josh: their revenue, they're trading at a $10 trillion valuation. That gets you there in four years.
15:01
Josh: So there is this very clear bull case based on these pillars that they have
15:05
Josh: between Starlink and Starship and selling their AI compute and just owning their
15:10
Josh: own AI infrastructure through the acquisition of cursor and through
15:12
Josh: their data centers that they have that makes it incredibly compelling for people who
15:17
Josh: maybe if you're investing over the next six months could be rocky but that like
15:20
Josh: multi-year trajectory still seems to be like very optimistic and very bullish.
15:25
Ejaaz: Yeah yes and no like i do want to try and like ground it a little bit which
15:31
Ejaaz: is like okay like let's go back to this chart right effectively on like day
15:34
Ejaaz: one you've got around like 3.7 billion dollars worth of sell pressure.
15:39
Ejaaz: This is like after that initial 90-day period, right?
15:42
Ejaaz: These guys, these early investors that you mentioned, I agree are long-term
15:45
Ejaaz: holders, but they're also up over 100x.
15:48
Ejaaz: If you're up over 100x, you're probably cashing some of this out.
15:51
Ejaaz: Now, there are ways that they would cash this out. Maybe they don't sell the equity itself.
15:55
Ejaaz: Maybe they borrow against it. There's loads of fancy ways to manage your wealth in that way.
15:59
Ejaaz: And these people will probably exercise some version of that.
16:02
Ejaaz: But I do think there will be some form of sell pressure. And then the main question,
16:06
Ejaaz: therefore, on my mind is, is there enough hands to exchange that?
16:10
Ejaaz: Now, initially, I think actually there will be.
16:13
Ejaaz: I think there's a lot of retail demand for this thing. I think there was something
16:15
Ejaaz: like $250 billion worth of purchasing power from retail alone,
16:22
Ejaaz: just through the likes of Robinhood and all the retail trading accounts from banks on day one.
16:27
Ejaaz: So there's that. And then there's also the constant buying pressure from
16:30
Ejaaz: The institutions that buy S&P 500 indexes and stuff like that.
16:35
Ejaaz: So I think it'll balance out eventually, but there is an abnormal amount of
16:40
Ejaaz: potential selling pressure that will come from some of these early investors.
16:43
Ejaaz: And I don't think it's as easy as saying like all of them are going to hold
16:46
Ejaaz: when they're up like massively. So I just want to kind of like put that out
16:50
Ejaaz: there. I'm not a bear in any way, but there are some contingency plans that
16:55
Ejaaz: probably need to be made.
16:57
Josh: Well, okay, that's fair. so in six months from now i guess we could look at
17:01
Josh: this like there's two types of investors maybe we could address here the the
17:04
Josh: shorter term traders that are looking to make money before the end of the year
17:07
Josh: and then there's the longer term traders that are looking on a five to ten year,
17:10
Josh: kind of scope so for the six month traders for the people that want to buy a
17:15
Josh: really nice gift for christmas maybe buy a brand new performance tesla tax should they buy yeah yeah,
17:21
Josh: should they buy spacex stock in order to get there do we think it's going to
17:24
Josh: be a bullish a positive six months.
17:27
Ejaaz: Yeah honestly i think there's so much demand for this thing that people will
17:32
Ejaaz: just buy it anyway, because the people that are buying it now are probably there
17:36
Ejaaz: for the long term, they know that they weren't able to get involved in like
17:38
Ejaaz: some of the private deals.
17:40
Ejaaz: I also think people are going to be staring at the unlock schedules.
17:43
Ejaaz: And they're going to think, hmm, okay, I've got until this time until this amount
17:47
Ejaaz: unlocks, I'll play the game up until there.
17:49
Ejaaz: So I think more of the short term minded things that maybe want to make a trade
17:52
Ejaaz: and like, be able to afford a Tesla by buying SpaceX stock probably have a good odds of doing that.
17:57
Josh: And then you have to assume that the unlock schedule may get front run.
18:00
Josh: People are all aware of it. Everyone's watching these dates.
18:03
Josh: It's going to be an interesting game theory dynamic applied to that,
18:06
Josh: but it seems like things are pretty stable. I mean, this is very expensive.
18:09
Josh: I could very easily see a world in which it trades somewhat near the IPO price,
18:13
Josh: like sub 200 for, for a while, while it just kind of clears through insurance
18:16
Josh: that, but the longer term, like someone who wants to own this through 2030,
18:21
Josh: say for the next four years, what do you think about that?
18:24
Ejaaz: Oh i mean it's the same thesis that i would have with my investment which is
18:27
Ejaaz: like i think overall spacex will be up but again
18:30
Ejaaz: it it not everyone can hold through volatility right like if you see if you're
18:35
Ejaaz: an amazon holder right let's let's take the company that spacex literally just
18:39
Ejaaz: surpassed on day two right um
18:42
Ejaaz: if you've been holding it for the last three years you've been in utter hell
18:45
Ejaaz: right uh but the idea is if you look at amazon's fundamentals it is absolutely
18:49
Ejaaz: killing it way more than SpaceX, right?
18:51
Ejaaz: I mentioned earlier, $700 billion last year in revenue, and they made about
18:55
Ejaaz: $80 billion of actual profit off of that. SpaceX comparably made a fraction
18:59
Ejaaz: of that and had a net loss, right?
19:01
Ejaaz: So the fundamentals don't really make sense, but the people who held Amazon
19:06
Ejaaz: is currently down more than the people who bought SpaceX on day one.
19:08
Ejaaz: So that kind of dichotomy is kind of crazy to understand. And maybe it's just
19:14
Ejaaz: up to market dynamics and public interpretation.
19:18
Ejaaz: But that being said, if you're on a long term, if you're looking at fundamentals,
19:20
Ejaaz: if you believe that SpaceX will bring the cost of traveling out to space to
19:24
Ejaaz: 200K per launch, then it's an easy bet. It's a long-term hold.
19:28
Ejaaz: But it's whether you can handle the volatility.
19:30
Josh: That's the main thing. That's kind of the advice that I've been giving to friends.
19:32
Josh: A lot of people have been reaching out and asking like, hey,
19:33
Josh: what do you think about SpaceX stock? And I tell them, if you are comfortable...
19:37
Josh: Investing long-term and just putting your money away and slowly building a position
19:41
Josh: or quickly building a position in a company that you believe in,
19:43
Josh: then it's a great investment, a remarkable investment even.
19:46
Josh: Because I mean, companies at the scale continue to do pretty well.
19:50
Josh: And when you think about the companies at the scale and who they're run by,
19:53
Josh: there's, there's none with the more cracked engineering team,
19:56
Josh: leadership team, entrepreneurship team, then SpaceX. When you look at these
19:59
Josh: top five, it's like Microsoft.
20:02
Josh: Are you really more bullish on Microsoft than SpaceX, even though they're priced
20:05
Josh: the same? Like when you look at Microsoft, what they're working on.
20:07
Ejaaz: Like Boomer Tech, Josh, you know this now.
20:09
Josh: Yeah, it's like, really when you look at these companies, which companies are
20:13
Josh: going to change the world five years from now and which companies are not?
20:16
Josh: And if I'm just comparing based on market caps, the answer is certainly not
20:20
Josh: Microsoft. It looks a lot more like SpaceX. And there's a chart that I wanted to show.
20:24
Josh: It looks a little funky on the screen share. You're gonna have to work with me here.
20:26
Josh: But basically there is this presentation by this guy named Thomas LaFont. He's an investor.
20:30
Josh: I saw this on the All In podcast where he was talking about the probability
20:34
Josh: of a company continuing to do well once they reach a certain valuation.
20:38
Josh: So in the case of a unicorn, the odds of a unicorn going from a $1 billion company
20:43
Josh: to a decacorn, a $10 billion company is 8%.
20:46
Josh: It's possible, but not probable.
20:49
Josh: The same doubles in the case that a decacorn goes to a centacorn.
20:53
Josh: So if a company is worth $10 billion, the odds of it going to $100 billion, a 10x multiple.
20:59
Josh: Go from 8% to 13%. And then from Decacorn, which is 10 billion to a hundred
21:04
Josh: billion, Ascenticorn, they almost triple and 30%.
21:08
Josh: So one in three companies who reach $10 billion will make it to a hundred billion
21:14
Josh: dollars. And you could see how this chart kind of trends in a very clear trajectory
21:17
Josh: where it's nearly exponential.
21:19
Josh: And you have to assume if a company can reach a trillion dollars in market cap,
21:23
Josh: the probability of it hitting a decatrillion dollars is probably double it's
21:28
Josh: at least 60 so that means over one in every two companies that have hit
21:32
Josh: one trillion dollars in value are likely to hit 10 trillion dollars in value
21:36
Josh: and when you look at the companies that are centicorns today is that what they're called like
21:40
Josh: trillion dollar companies there's not a ton of them and when you look at the
21:43
Josh: ones that do exist the ones that are most interesting that are most compelling
21:46
Josh: to look forward to in terms of
21:48
Josh: products that they're going to make are companies like spacex are companies
21:51
Josh: like tesla who are going to revolutionize what the physical world looks like
21:55
Josh: in a way that we've never seen before.
21:56
Josh: And that's why I'm particularly excited. That's why I am recommending to my
21:59
Josh: friends like, hey, not financial advice, but I'm very bullish.
22:02
Josh: I'm all in on this company for the next, however, pretty much an infinite amount
22:05
Josh: of time until things change.
22:07
Josh: And that's kind of the reasoning is there's just a high probability that the
22:10
Josh: success they've had will continue.
22:12
Ejaaz: I think with a lot of these companies, it's also
22:14
Ejaaz: So it's just time-based, and it's based on whether they're going to execute on the entire vision.
22:20
Ejaaz: Like, a lot of us don't actually accurately predict what the world's going to
22:24
Ejaaz: look like six months from now.
22:26
Ejaaz: Like, who knows? Like, we could have AI models that cost a fraction of what
22:29
Ejaaz: they do today that are frontier that would undercut Anthropic and OpenAI and
22:33
Ejaaz: would kind of blow this entire AI bubble up. There's so many different moving factors.
22:37
Ejaaz: Now, with Elon specifically, and I'm talking about Elon and his company,
22:41
Ejaaz: so not just SpaceX, but we're talking about Tesla,
22:44
Ejaaz: they have a huge collective vision to not only build out the number one AI company
22:49
Ejaaz: and AI model, but to also own the infrastructure and highway to space, as well as the
22:54
Ejaaz: world's largest gigafab chip fab on earth,
22:58
Ejaaz: as well as manage all the humanoid robotic side of things as well,
23:02
Ejaaz: the physical manifestation of AI.
23:04
Ejaaz: Now, those are kind of vaguely the correct ambitions to kind of carve out what
23:09
Ejaaz: the world's going to look like in the future.
23:11
Ejaaz: Now, can one man pull it off between two or three companies?
23:15
Ejaaz: That remains to be seen. His track record so far has proven that he is able
23:19
Ejaaz: to scale hardware from zero to one.
23:21
Ejaaz: He has yet to prove it with software specifically. And this cursor acquisition,
23:25
Ejaaz: I believe, is going to be a good test of that.
23:27
Ejaaz: And then following that, it's whether he is able to merge all of these together.
23:31
Ejaaz: A lot of that is going to be based on time. And so unfortunately or fortunately,
23:35
Ejaaz: a lot of this is going to be speculation. It's going to be hearsay until we actually see the goods.
23:39
Ejaaz: And we're not going to see some of the goods until as early as maybe a few weeks
23:43
Ejaaz: for the new crop model, but a few years in terms of space travel,
23:47
Ejaaz: putting AI data centers in space, and training frontier models for a fraction of the cost.
23:51
Ejaaz: So it's going to be a time thing. If you're patient, if you're a long-term investor,
23:55
Ejaaz: then buying SpaceX stock at any price right now kind of makes sense.
23:59
Ejaaz: But if you want to
24:01
Ejaaz: I'm not again, not investment advice, but the way that I would kind of like
24:04
Ejaaz: approach this is just kind of like purchasing chunks over time over the next
24:08
Ejaaz: six months, there will be again, 54% of the supply to 54 to 60% of the supply
24:13
Ejaaz: unlocked by the end of the year.
24:15
Ejaaz: That's a lot of supply, there'll be a lot of volatility.
24:18
Ejaaz: Right now we've seen the volatility go up for the price, but it'll equally go
24:22
Ejaaz: down as well is my expectation. So just be careful out there and you know,
24:26
Ejaaz: make sound decisions. That's it.
24:27
Josh: Yeah, I'm gonna be hyperbolic again, like I have been and just continue to say
24:32
Josh: that Tesla and SpaceX will be the most valuable company in the world.
24:35
Josh: It's like, I'm looking at this list right now and there's NVIDIA,
24:37
Josh: Google, Apple, Microsoft, Amazon, SpaceX, TSMC, Broadcom, Saudi Aramco, Samsung, and Tesla.
24:43
Josh: And when you think about those companies and the products they're going to make
24:45
Josh: and the future trajectory of them, none of them are even close to one,
24:49
Josh: the operational capability in the terms of like physical hardware.
24:52
Josh: And then two, just in terms of leadership and what the people have actually
24:54
Josh: been able to accomplish.
24:55
Josh: And when you consider a world in which SpaceX and Tesla get rolled into a single
24:59
Josh: entity, and those are competing against NVIDIA, who's currently the most valuable
25:02
Josh: company in the world, it's like, come on, there's, it's like not even close.
25:06
Josh: And a $10 trillion valuation in that world seems bearish.
25:10
Josh: I'm like, 10 trillion? Dude, they're going to hit a trillion dollars in revenue
25:13
Josh: just with one of those two companies four years from now.
25:16
Josh: If it's trading at 100 times the revenue, that's like, I mean,
25:19
Josh: the numbers get pretty large really quick.
25:20
Josh: And I think this is an important thing to note that this has happened many times
25:24
Josh: in the past. I mentioned Saudi Aramco currently sitting at number nine.
25:27
Josh: At one point in time, it was the most valuable company in the world by far.
25:30
Josh: And that was the ceiling of the perceived market caps that a company could reach.
25:33
Josh: It's like, okay, Saudi Aramco is number one. Let's say Apple,
25:36
Josh: for example, surely Apple can't be worth more than Saudi Aramco.
25:40
Josh: They make oil, they power all the energy of the world.
25:42
Josh: The reality is that Apple released the iPhone, Apple became the new most valuable
25:46
Josh: company in the world, and they quadrupled Saudi Aramco.
25:49
Josh: And the perceived ceiling of what these companies are able to reach in terms
25:52
Josh: of market cap continues to go up as they continue to unlock new value in the world.
25:57
Josh: And what company is more likely to unlock more value than one that is exploring
26:01
Josh: both domestically, but also interstellarly?
26:04
Josh: And I know it's just it's an exciting company to bet around.
26:07
Josh: There is an incredibly compelling case for a really fun and very valuable future
26:12
Josh: when these plans work out.
26:13
Josh: And there's no team better equipped to actually execute on that vision.
26:16
Josh: And that's why I cannot recommend SpaceX enough to all of my friends.
26:20
Josh: Again, not financial advice, but like, holy shit, this is the best chance you
26:23
Josh: have as we go into this like next generation of just like humanity in general
26:29
Josh: reality. It's very exciting. Clearly, I'm excited. Clearly, I'm a big fan.
26:31
Josh: I'm sure people disagree with a lot of these takes, but hey,
26:34
Josh: come catch me in five years, buddy.
26:36
Ejaaz: Yeah, I mean, I'm going to take not the other side of that, but I'm just going
26:40
Ejaaz: to point out that there are names on this chart that haven't IPO'd yet.
26:44
Ejaaz: You're going to have Anthropic. I see OpenAI is on here, but you're going to
26:47
Ejaaz: have a ton of other Frontier AI labs that IPO soon.
26:50
Ejaaz: Google is nowhere to be seen here, and they are currently the only vertically
26:54
Ejaaz: integrated company that absolutely nailed distribution and the infrastructure
26:58
Ejaaz: play itself. I think that is very slept on.
27:00
Ejaaz: And then NVIDIA itself, I think a lot of people are counting NVIDIA as just
27:03
Ejaaz: the GPU company, but hey, Jensen's already released his CPU line,
27:07
Ejaaz: which he said he was never going to enter, and now he has, and now it's earning
27:10
Ejaaz: $20 billion of revenue a year.
27:12
Ejaaz: He's already working on the battle-tested, space-proof GPUs that he's going
27:18
Ejaaz: to be putting in Elon's rockets to get out there. So I think there's going to
27:21
Ejaaz: be some competitors in the future.
27:23
Ejaaz: And it's just a matter of keeping an eye of what is going on and how it's all being executed.
27:29
Ejaaz: Again, I think Elon is one of the best executors in the world right now.
27:32
Ejaaz: So very bullish for all his companies.
27:34
Ejaaz: But there'll be some competition. I don't think it'll be a clear road.
27:37
Ejaaz: But ultimately, up only, I think.
27:39
Josh: Yeah, well, I mean, definitely no competition in space. Blue Origin is the next
27:42
Josh: closest. And they got a decade of cash enough to do, especially after that most recent rocket blew up.
27:46
Josh: So in that world, at least they got their monopoly for a good bit of time.
27:49
Josh: But I think that the consensus is generally like all of these companies are pretty remarkable.
27:53
Josh: Like when you look at NVIDIA, Google, Apple, like there's a very clear case
27:56
Josh: that they're going to continue to make more money as this world of abundance gets unlocked with AI.
28:01
Josh: And there's a good chance that everything just continues to go up.
28:04
Josh: And maybe there's certainly going to be some bumps along the way.
28:09
Josh: But the value generation created by these companies is really staggering.
28:12
Josh: So I think that's the update.
28:13
Josh: That is the post SpaceX IPO clarity, perhaps. I'm serious.
28:18
Josh: That's everything that's worth knowing. That's everything...
28:21
Josh: I think that's been going on in
28:22
Josh: the last week. Is there any final updates before we let everyone go here?
28:25
Ejaaz: No, I'm excited about the new Grok model.
28:29
Ejaaz: You know, speaking transparently, Grok has kind of fallen behind pretty massively.
28:34
Ejaaz: And I believe like Anthropoc and OpenAI have pretty much reached escape velocity
28:38
Ejaaz: with Fable 5 and the upcoming GPT 5.6 model.
28:42
Ejaaz: Oh, I hope that comes soon. I know. And these models are effectively building
28:45
Ejaaz: themselves. So once you have a model that builds itself, you know,
28:49
Ejaaz: you kind of like run away with it. you run away with the trophy.
28:52
Ejaaz: Grok is probably, or SpaceX AI, is probably the only company left that could
28:57
Ejaaz: potentially join the ranks.
28:59
Ejaaz: And they're going to do it via the curse acquisition. So I'm excited to try that model out.
29:02
Ejaaz: For those of you who are listening to this, to Josh's relentless bullishness,
29:07
Ejaaz: to my sobriety test, are we wrong?
29:10
Josh: Who's wrong?
29:11
Ejaaz: Who's right here? Come at us. Let's hear you in the comments.
29:15
Ejaaz: Tell us if we're wrong. If you're out there and you're an absolute Elon hater
29:18
Ejaaz: we also love and want to hear your feedback right um if you've listened to this
29:22
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29:25
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29:27
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29:30
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29:33
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29:36
Ejaaz: and we have a newsletter where we post twice a week we almost have a hundred
29:40
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29:44
Ejaaz: uh today as you're listening to this episode, as well as weekly highlights at the end of the week.
29:49
Ejaaz: But aside from that, that is all. And we will see you for our roundup.
29:54
Josh: See you guys so much for watching. We'll see you guys next time. See you.