Latest / Best of Business / Sam Dickie: Fisher Funds expert on what the SpaceX IPO launch means for investors

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Sam Dickie: Fisher Funds expert on what the SpaceX IPO launch means for investors · Best of Business

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  Speaker 2: Let's just go through this IPO which is coming up
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  Speaker 2: with Sam Dickey from Fisher Thuns. Hello Sam Andrew.
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  Speaker 3: Good evening.
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  Speaker 2: So SpaceX has changed. So what would you call it today?
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  Speaker 3: Yeah, you are right. People assume he just launches rockets,
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  Speaker 3: but it is communications company. XAI was the big recent move.
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  Speaker 3: They've smashed that big AI kind of data infrastructure company
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  Speaker 3: together and they're literally planning on building data centers in space.
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  Speaker 3: So you talked about the other two that have been listed.
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  Speaker 3: This is the only company that is truly vertically integrated.
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  Speaker 3: So it builds the rockets that launch the satellites, that
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  Speaker 3: operates the satellites that deliver the connectivity and data and
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  Speaker 3: the increasingly positioning that satellite network to kind of supercharge
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  Speaker 3: its massive Earth based AI infrastructure. And Starlink is the
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  Speaker 3: cash machine, so that's the step satellite into THEE. They
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  Speaker 3: account for about sixty percent of space Ex's total revenue,
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  Speaker 3: but they have a sixty five percent ebit DA marginal
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  Speaker 3: earnings margin, so it's pretty powerful.
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  Speaker 2: Yes, we can see how you know, working with a
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  Speaker 2: telco here in New Zealand that styling cans actually go. Yeah,
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  Speaker 2: it's a competitive advantage. The thing about Elon Musk, I mean,
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  Speaker 2: there was a review a couple of weeks ago. He
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  Speaker 2: makes goals. He made six hundred goals a while back
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  Speaker 2: he only achieved a third of them. He's a big thinker.
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  Speaker 2: So you tell me, why would anyone want to or
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  Speaker 2: why would anyone just build a AAA data center in space?
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  Speaker 3: That's a good point. I think that there's many reasons,
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  Speaker 3: but there's two primary reasons, and that's power and cooling.
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  Speaker 3: So a massive data center on Earth, so think a
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  Speaker 3: massive Google campus the size of fifty five Eden Park
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  Speaker 3: Rugby fields lined up side by side, that burns through
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  Speaker 3: electricity like a small city. So it's on the power side.
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  Speaker 3: And then you need to cool all those in video
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  Speaker 3: computer chips that run red hot. So that's another thirty
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  Speaker 3: to fifty percent of operating costs gone to chillers and
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  Speaker 3: water pumps in space. There are a few physics challenges
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  Speaker 3: to overcome, which we won't have time for tonight. But
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  Speaker 3: solar power is nearly continuous, so there's no clouds, there's
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  Speaker 3: no night, there's no filtering and cooling is literally free,
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  Speaker 3: so you just pump the heat out into the freezing
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  Speaker 3: vacuum of space. Now, the key here is the cost
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  Speaker 3: per megawatt of compute capacity. That sounds very technical, but
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  Speaker 3: it's just the standard metric to build a data center
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  Speaker 3: on Earth one of those Google campuses is about thirty
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  Speaker 3: to forty million dollars per megawatt, and then there's another
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  Speaker 3: annual running cost of ten million bucks for electricity. In space,
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  Speaker 3: there is a higher upfront cost, but there's near zero
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  Speaker 3: annual power cost. So the mas maths works if Andrew
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  Speaker 3: and this is a very big if you can launch
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  Speaker 3: the components to create the data center in space cheaply enough.
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  Speaker 2: Yeah, So instantly I was thinking, how big are these things?
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  Speaker 2: It's going to be? Because you put it, they put
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  Speaker 2: it eating park in space. I'm sure someone's going to
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  Speaker 2: say it's blocking my view. That's the first thing. And
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  Speaker 2: the second thing is you can't build a need in
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  Speaker 2: park in space really because of the critical cost per
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  Speaker 2: kilogram to launch. So what's happening there? How big are
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  Speaker 2: these things? And how much is it going to cost
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  Speaker 2: to get it off off the planet through the gravity
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  Speaker 2: and into space.
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  Speaker 3: Yeah, on the cost side. I think that's the critical thing.
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  Speaker 3: So the and this is where he really does it
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  Speaker 3: and his stripes. Elon he has a history of solving
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  Speaker 3: really really hard things, so landing rockets backwards first to
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  Speaker 3: build mass market electric vehicles profitably when everyone else said
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  Speaker 3: he couldn't do it, and the global set like the Internet,
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  Speaker 3: to connect the whole planet. So solving a low enough
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  Speaker 3: launch cost is the absolute lynch pin of this whole
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  Speaker 3: SpaceX story. So for context, Andrew before SpaceX back in
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  Speaker 3: the day, it costs about fifty thousand dollars per kilogram
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  Speaker 3: to launch kind of mass into orbit. Today with Falcon nine,
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  Speaker 3: it's a few thousand dollars. And this is Elon's big
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  Speaker 3: bet with Starship, which is still in development, he will
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  Speaker 3: get that down to one hundred bucks per kilogram. So
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  Speaker 3: at that price, a data center that costs thirty to
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  Speaker 3: fifty million dollars to build on Earth suddenly costs ten
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  Speaker 3: to thirty million dollars in all. Butit no land, no
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  Speaker 3: cooling bills, no electricity, and no grid dependency. Now they're
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  Speaker 3: not going to be as big as fifty five Eden parks,
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  Speaker 3: and they're going to be modular based but you are
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  Speaker 3: going to have some pretty big data centers up there eventually,
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  Speaker 3: and an Elon's bet is we're going to have them
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  Speaker 3: starting to be built in two to three years. He
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  Speaker 3: is an optimist.
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  Speaker 2: However, yeah, I know when I first heard this thought, well,
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  Speaker 2: he's got rocks in my in his head. But at
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  Speaker 2: the same time, the way you've explained it, this is
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  Speaker 2: actually sounding perfectly feasible and that creates excitement about the IPO.
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  Speaker 2: So what will this mean for investors?
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  Speaker 3: Well, it is exciting times. The scale and ambition are impressed,
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  Speaker 3: and people will definitely write books about this time. But
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  Speaker 3: as has been well documented, this comes with really eye
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  Speaker 3: popping value and I'm sure you guys have talked about that.
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  Speaker 3: So any buyer of SpaceX needs to have their eyes
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  Speaker 3: wide open.
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  Speaker 2: Thank you so much that, Sam Dickey from Fisher Firms.
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