Latest / In the Loop AI / SpaceX Stock Crashed. Starship Flight 13 Didn't.

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SpaceX Stock Crashed. Starship Flight 13 Didn't. · In the Loop AI

0:00
Ejaaz: Since they IPO'd six weeks ago, SpaceX stock has absolutely crated.
0:05
Ejaaz: It's down more than 50% from its all-time high. And as we're recording this,
0:09
Ejaaz: it reached a new all-time low of $107 per share.
0:12
Ejaaz: So the question on everyone's mind is, is SpaceX done for? Was it massively
0:17
Ejaaz: overpriced? Will this company make it? Well, this might be a hot take,
0:21
Ejaaz: but I think that the market is incredibly wrong about SpaceX.
0:24
Ejaaz: And I think it's an incredibly mispriced asset.
0:27
Ejaaz: Think about it from two simple perspectives. In order to get the best AI model
0:32
Ejaaz: out there, you need the most energy. Where do you get the most energy?
0:34
Ejaaz: From the sun. In order to do that, you need access to space,
0:38
Ejaaz: cheap access to space. SpaceX is the only company that has the advantage here.
0:42
Ejaaz: And they recently had Flight 13 for their new spaceship, which was a massive
0:47
Ejaaz: success. And they launched Starlink V3. It was an incredible test.
0:51
Ejaaz: We're gonna get into that.
0:52
Ejaaz: The bull case and the bear case is gonna be a sobering take on Limitless,
0:55
Ejaaz: which is, you know, unique for us on why SpaceX is a generational company.
1:00
Josh: The bull case is mostly determinant of just the baddest technology that they
1:03
Josh: are producing now. And I think we're going to talk about that a lot in terms
1:06
Josh: of actual market sentiment.
1:08
Josh: It's tough, right? It's like the stock IPO and it was incredible.
1:11
Josh: It went up to $225 per share.
1:14
Josh: That's over two and a quarter trillion dollar market cap, which,
1:17
Josh: you know, that's unreasonable. That is so much money. The multiples on the returns
1:21
Josh: in terms of how much revenue they're making are just astronomical. It doesn't make sense.
1:25
Josh: It's not just the public market that can't figure out how to price this.
1:29
Josh: There's a lot of values from these privately held banks that are trying to put
1:34
Josh: price per share estimates on it.
1:35
Josh: And they still can't figure it out either. I think this is the widest distribution
1:39
Josh: of what banks are kind of valuing the company at. We have Morningstar putting it at $63.
1:43
Josh: And then we have Morgan Stanley on their bull case putting it at $600.
1:47
Josh: And to me, that signals that this company is mostly misunderstood.
1:50
Josh: People don't know how to value it. They don't know how to value a company that
1:53
Josh: is planning to change the world today.
1:55
Josh: Because a lot of the value is promised in the future. So how do you trade that?
1:58
Josh: What multiple does that trade at? And maybe in order to better understand that,
2:01
Josh: we could talk about the real technology that they're building that's going to
2:04
Josh: get them to this spectacular market cap. Because I can be empathetic.
2:08
Josh: I mean, if you bought this a couple weeks ago at 225, it's been a tough ride.
2:12
Josh: I think we're here to provide a little bit of reassurance that like,
2:15
Josh: hey, short-term, unsure, but long-term, there's some really compelling cases
2:18
Josh: to be made for why Starship, for why SpaceX in general, there's going to be
2:22
Josh: a lot of star naming in this episode.
2:24
Josh: Is a really spectacular company. And it has monopolies across the board and
2:28
Josh: things that other companies just can't really compete on.
2:30
Ejaaz: I think it's important to lay out the bear case for SpaceX, because we've been
2:35
Ejaaz: incredibly bullish about Elon Musk and all of his companies on this show.
2:39
Ejaaz: And in fact, I think both of us bought the IPO when it did an IPO.
2:42
Ejaaz: So we're in it with everyone. If you're an investor that bought that IPO, we're here with you.
2:46
Ejaaz: We feel your pain. So let's walk through the bear case. Well,
2:50
Ejaaz: I'm definitely also unbothered, but we'll get to the bull case a little later.
2:53
Ejaaz: But let's let's look at the bad case let's see what the armchair critics are
2:56
Ejaaz: saying online the i told you so's okay so there's a few things happening right now number one
3:01
Ejaaz: the fact that SpaceX was probably massively overvalued. We know that Elon Musk,
3:06
Ejaaz: in order to execute on his vision of turning civilization into a Kardashev type
3:10
Ejaaz: one civilization, you need a lot of money to do that.
3:13
Ejaaz: Space travel is incredibly expensive. So he tried to raise as much money as he can.
3:18
Ejaaz: That's what he eventually did. The market is now showing us that it wants to
3:21
Ejaaz: kind of reprice it to what it's actually valued at.
3:24
Ejaaz: And so it IPO'd at $135. It's now sitting at an all-time low at $107.
3:29
Ejaaz: I think as we're looking at our screens right now, it's at like $111 at the time of recording.
3:34
Ejaaz: Another big critic is only 4% of the share supply was revealed or made available
3:41
Ejaaz: for everyone. That is out of, I think it's around 16 billion shares.
3:45
Ejaaz: And I think another 1 billion worth of shares gets unlocked in about a week's
3:52
Ejaaz: time, August 6th, I believe, which is two days after their first quarterly report.
3:57
Ejaaz: So there's a lot of things going on here. People are speculating,
4:00
Ejaaz: is the Q3 report going to be very good, or is it going to be bad?
4:05
Ejaaz: Well, if you look at their financial statements from 2025, it's kind of sobering.
4:10
Ejaaz: They took a net loss of, I think, $4.5 billion.
4:15
Ejaaz: The Grok models, as we know, hasn't been able to keep up with the frontier until
4:18
Ejaaz: recently with Grok 4.5. We have a lot of information on that going forward as part of our bull case.
4:22
Ejaaz: But the point is, there is a very low float.
4:25
Ejaaz: And if the stock price isn't able to keep up and maintain its high price on
4:31
Ejaaz: a small float, how do we expect it to do it on a large float?
4:33
Ejaaz: For the rest of the year, I think something crazy like 56% of the rest of the
4:38
Ejaaz: stock supply is aiming to be unlocked and you need purchases to be able to support that.
4:42
Ejaaz: So we understand the bear take, but there is also a lot of good things that
4:47
Ejaaz: are expected for this company.
4:49
Ejaaz: And as we said on our ball case episode around the SpaceX IPO,
4:53
Ejaaz: this is a long-term investment.
4:56
Ejaaz: If you believe that space travel, harnessing the sun's energy,
4:59
Ejaaz: Training AI models on infinite energy is incredibly important.
5:02
Ejaaz: If you believe that robotics, if you believe that Tesla and SpaceX are going
5:06
Ejaaz: to have a merger eventually or that they're synonymous companies run by the same CEO,
5:10
Ejaaz: then you believe that SpaceX is going to be a fundamental and once in a generation
5:15
Ejaaz: type company 10 years out from now.
5:18
Josh: In summary, I mean, SpaceX is trading at about 80 times sales,
5:21
Josh: which is incredibly high. I mean, Palantir is the next highest.
5:24
Josh: Everyone freaks out about that, trading at about 60 times. This is a huge multiple on the future.
5:28
Josh: Here's the future that they're building. And this is where I want to talk about
5:31
Josh: the kind of technical features of SpaceX as a company.
5:34
Josh: And there's four key pillars that we could talk about here. One being Starship.
5:37
Josh: The second being Starlink, the satellite network above our heads currently flying right now.
5:42
Josh: The third is the AI opportunity. And the fourth is their ability to manufacture
5:46
Josh: physical things better than everyone else. So maybe we should start with Starship
5:49
Josh: because Starship launch flight 13 just happened last week and it was glorious.
5:55
Josh: Starship, for those who are not aware, this is the Mars rocket.
5:59
Josh: This is the moon rocket. Now, it's mostly known as the lunar rocket because
6:02
Josh: the plan is to get a Martian base, get a mass driver, a lot of sci-fi stuff.
6:05
Josh: But to bring it back down to what just happened, basically, 407 foot skyscraper went into space.
6:12
Josh: This was their 16th attempt and it actually worked about as well as it could have been.
6:16
Josh: So there's a few things that they're testing for each one of these launches.
6:19
Josh: The first is the ability to actually get the rocket into space,
6:22
Josh: which clearly it did very well.
6:23
Josh: The second is to land both of the objects back on Earth.
6:28
Josh: Those went well. We'll talk about that in a second. And the third is the ability
6:31
Josh: to actually distribute payload into orbit.
6:33
Josh: And for the first time ever, that went well with real production hardware.
6:38
Josh: So we've seen these Starship launches before. We've got the Starship into space and it's distributed.
6:43
Josh: They use this thing called the Pez dispenser, which is a funny way of just kind
6:46
Josh: of distributing these Starlink satellites.
6:48
Josh: One thing noteworthy about this is for the first time ever, Starship launched
6:52
Josh: active Starlink version 3 satellites into space. These weren't dummy units.
6:55
Josh: They were actual real pieces of hardware that are now connected to the Starlink
7:00
Josh: network and have all of the capabilities available.
7:03
Josh: Of direct to sell and much more bandwidth than we're used to traditionally with
7:07
Josh: the Starlink terminals.
7:08
Josh: The other thing that it did really well and that we're watching on this launch
7:12
Josh: video right here is that it actually landed back on the ocean softly for the
7:16
Josh: first time. You'll notice that it landed so soft that the rocket actually didn't explode.
7:21
Josh: It was incredible and it's been floating there. I think it was floating there
7:23
Josh: for like over two days, almost three days, just floating around in the ocean
7:27
Josh: because it landed so softly it didn't blow up.
7:29
Josh: And then there is the booster, which we've seen them land before a few times on those arms.
7:34
Josh: It didn't do that this time, that wasn't in the test, but it had a pretty decent
7:37
Josh: landing to the point where they'll be able to test that again.
7:39
Josh: So this launch went about as good as it could have been.
7:42
Josh: You'll notice the heat shields on this video that we're seeing, that did well.
7:45
Josh: A big part about re-entry when you're rapidly deploying these rockets is making
7:49
Josh: sure that you can rapidly deploy these rockets.
7:52
Josh: And a big part of that is protecting your rocket ship from the re-entry burn.
7:55
Josh: The ship is going like at many times the speed of sound through a very dense
8:00
Josh: atmosphere, and it causes a lot of heat.
8:02
Josh: You'll notice that from flight 10 all the way on the left to flight 13 all the
8:05
Josh: way on the right, that heat shield is doing really well. So all the signs are
8:08
Josh: pointing towards rapid reusability coming up quickly, so much so that the next
8:12
Josh: Starship launch flight, they're going to test the landing of the actual ship.
8:17
Josh: So we're going to get a video, probably, of the ship actually landing back on those chopstick arms.
8:22
Josh: And I think that's going to be spectacular. So everything so far is working fairly well.
8:27
Ejaaz: My major takeaway from this is the technology is so far advanced at SpaceX for
8:33
Ejaaz: spaceship flight, at least, versus any other company.
8:36
Ejaaz: I think their nearest competitor is Jeff Bezos' Blue Origin,
8:39
Ejaaz: that Elon is just in a field of his own right now. But I think what a lot of
8:44
Ejaaz: the market and investors are thinking right now is, I don't see how this materially
8:48
Ejaaz: impacts my life today. So why should I care about this?
8:51
Ejaaz: How do I price in what these rockets are eventually going to bring to me?
8:54
Ejaaz: I don't have that kind of an effect on myself right now in my day-to-day life.
8:59
Ejaaz: And I think that's probably a fair take, but it's also, in that very same sense, a mispriced take.
9:04
Ejaaz: I mean, look at this thing. This thing is like larger, we're launching things
9:07
Ejaaz: that are larger than the Statue of Liberty, for reference here, right?
9:10
Ejaaz: And then we're putting like thrusters on these things, 33 Raptors,
9:13
Ejaaz: and we're just sending these things with massive payloads.
9:15
Ejaaz: I think it's like 5,000 tons into space to release these Starlink satellites.
9:20
Ejaaz: I think it released 20 V3 Starlink satellites, which is more broadband connectivity
9:26
Ejaaz: than Starlink has had in its previous generation. So it's just insane how much
9:31
Ejaaz: Power and innovation is in these actual things.
9:34
Ejaaz: That being said, it's an expensive endeavor and there is a high error rate.
9:39
Ejaaz: But if there's one man to pull it off, it's Elon. And he's repeatedly shown
9:41
Ejaaz: this with his other companies at Tesla.
9:43
Ejaaz: And he's done this at SpaceX for over 20 years now. So is the market mispricing
9:48
Ejaaz: this asset? Yes, potentially.
9:50
Ejaaz: But also, this is over a long time horizon type of thing.
9:54
Ejaaz: If you're investing in this and you're looking at this for over,
9:56
Ejaaz: say, a six-week period, this is probably not the right kind of asset to invest
10:01
Ejaaz: in. This is a long-time thing, and this is something that I personally have
10:04
Ejaaz: a lot of conviction on. But one thing to mention about this company is
10:08
Ejaaz: it's not just about SpaceX anymore. It's not just about space in any kind of material sense.
10:14
Ejaaz: It is about AI and a number of different other things.
10:17
Ejaaz: So as we know, SpaceX and XAI merged about, I think a couple of months ago,
10:24
Ejaaz: Pre-IPO, and they are currently in ownership of all the Grok models.
10:29
Ejaaz: And Grok actually came out with a new model, 4.5 recently. And while Grok 4.5
10:34
Ejaaz: isn't necessarily a frontier model, it is about 80 to 90% of a frontier model,
10:39
Ejaaz: and it's incredibly cheap, and it's very fast to use.
10:42
Ejaaz: And in this current world, where a lot of enterprises are spending tens to hundreds
10:46
Ejaaz: of millions of dollars on AI every single year, they're looking at ways to cut
10:49
Ejaaz: down costs. And Grok 4.5 is a really good way to do that.
10:53
Ejaaz: But the second major thing is Elon has built one of the largest compute clusters
10:57
Ejaaz: for GPUs, better than anyone and everyone. He's aggressively expanding it.
11:01
Ejaaz: He announced, I think, Colossus 4 a few weeks ago. Now, the reason why this
11:05
Ejaaz: is important is Thank you.
11:06
Ejaaz: The scaling laws haven't changed. More compute equals better AI models.
11:10
Ejaaz: So if you are Mark Zuckerberg or if you are Elon Musk, who have the largest
11:14
Ejaaz: data centers right now, you have a good shot of taking on the likes of Anthropic
11:18
Ejaaz: and OpenAir at some point.
11:19
Ejaaz: And this is shown in the model release cater. So we have Grok 4.5 right now,
11:23
Ejaaz: but in two weeks' time, as of this recording, you're going to have Grok 4.7.
11:27
Ejaaz: And then two weeks after that, you're going to have Grok 5. And each of these
11:31
Ejaaz: models are successfully much larger than its predecessor, which means it's more
11:35
Ejaaz: intelligent and more effective and arguably could catch up to the very capable
11:39
Ejaaz: Fable and Mythos models that come from Anthropic
11:42
Ejaaz: And GPT 5.6 that comes from OpenAI right now. So that's another major business unit.
11:47
Ejaaz: Then the final thing is the fact that when you have all this compute,
11:50
Ejaaz: what's the best thing to do with it if you're not training your own models?
11:53
Ejaaz: It's selling it to other businesses. And SpaceX has indirectly become one of
11:57
Ejaaz: the largest neoclouds out there to the tune of, I think it's like they're selling
12:02
Ejaaz: $60 billion worth of compute over the next, I think, nine to 12 months.
12:07
Ejaaz: Anthropic is one of their largest purchases, paying them $1.25 billion per month.
12:12
Ejaaz: So the point is, whilst it might be losing money right now, while space travel
12:16
Ejaaz: might be a very expensive business, it has all these other business units which
12:20
Ejaaz: are looking to be incredibly profitable in the near future. And I don't think
12:23
Ejaaz: people are pricing that in.
12:24
Josh: Yeah, the iterative nature of SpaceX is, I think, something that only people
12:27
Josh: who observe it on a regular basis witness.
12:30
Josh: And from the people who aren't there on the outside it just looks like these
12:33
Josh: products don't really change or evolve much but when you see them on a per product basis how
12:37
Josh: quickly they iterate and how strongly they grow it's really amazing when you
12:41
Josh: think about the raptor engines the engines that power starship from version one to version three
12:46
Josh: the efficiency has gone two to three
12:48
Josh: x every single time the cost has gone absolutely ridiculous in terms of
12:52
Josh: the downwards direction this happens with the starlink terminal satellites like
12:55
Josh: you mentioned it has every one of these version 3s is equivalent to 20 times that of a version 2.
13:01
Josh: Same thing happened with their Starlink terminal. They're now on version five.
13:04
Josh: The new version is 60% more efficient.
13:07
Josh: And all of these increases compound in a way that adds a tremendous amount of
13:11
Josh: value to each one of these verticals.
13:12
Josh: In the case of the AI argument, the AI pillar of this company,
13:16
Josh: I mean, you mentioned that no one's really able to build as fast as they are
13:20
Josh: and iterate again, as fast as they do.
13:23
Josh: They built that Colossus data center in what, 160 something days,
13:26
Josh: which is like many many hundreds of days faster than any other company can yeah
13:31
Josh: by a long shot and the next one's going up even faster and the iterative nature
13:35
Josh: of their ability to build hard hardware products
13:38
Josh: is i think one of the most compelling values and it gets kind of into that fourth
13:41
Josh: pillar of manufacturing
13:42
Josh: where a company who's able to move atoms in an organized way efficiently and
13:47
Josh: effectively is so much more valuable than a company that isn't because we've
13:51
Josh: gotten good over the last 20 years at building
13:53
Josh: software really well and when you think about the most valuable companies in
13:56
Josh: the world a lot of it revolves around their ability to create software i mean
13:59
Josh: look at all the ai labs we talk about
14:00
Josh: on a daily basis not a single one of them has released any compelling pieces
14:04
Josh: of hardware it's all just been bits on a screen and it's really difficult to
14:08
Josh: manage supply chains and move these things around and that's why we see companies
14:11
Josh: like anthropic companies like google going to spacex and asking them like
14:15
Josh: hey could you give us some of that compute we don't quite know how to build
14:18
Josh: it as fast as you do but we'd love to use it and spacex is the company that
14:21
Josh: can do that and in fact if spacex was just an ai company.
14:25
Josh: It would be the most remarkable AI company in the world because of its ability
14:27
Josh: to manufacture data centers at scale and to do the things required to do so.
14:31
Josh: Remember the episode we filmed a few weeks ago, or even last week,
14:34
Josh: I think it was, where Elon personally purchased a billion dollars worth of power
14:38
Josh: just so he could plug in a Colossus data center and get that online faster.
14:41
Josh: And their ability to do that at scale is something that's really compelling
14:45
Josh: and highly competitive because they can build anything.
14:48
Josh: And when you think about what comes down the line for these companies.
14:51
Josh: You think about, in the case of Tesla, we have CyberCab and Optimus,
14:54
Josh: and there is certainly a world in which these new companies are going to merge.
14:57
Josh: We see a lot of the crossover happening where now cybercabs are equipped with
15:00
Josh: Starlink terminals and Starship is using the cold rolled stainless steel that is used in Cybertruck.
15:06
Josh: And all of this, this hard physical labor is really going into creating a really
15:10
Josh: compelling company, a really compelling manufacturing story,
15:14
Josh: I think more than anything else, and doing so all mostly domestically.
15:17
Josh: There's been this battle to move things back here to the United States and everything
15:22
Josh: that these companies make is right here on U.S. soil. And it's,
15:25
Josh: they just do an amazing job of doing it.
15:27
Ejaaz: I do think to a certain degree, you have to be sort of crazy or delusional to
15:33
Ejaaz: believe in the vision that SpaceX and any Elon Musk company is pitching out there.
15:37
Josh: It's crazy. It is crazy.
15:39
Ejaaz: It's quite out there. And like, I don't blame you for critics that I see in
15:43
Ejaaz: the comments for a lot of our videos where we talk about SpaceX in particular.
15:46
Ejaaz: They're like, you know, you know, this guy's crazy. Like, he's not gonna be able to pull this off.
15:50
Ejaaz: And, you know, as a normal, sensible person would agree with you.
15:53
Ejaaz: But one thing I will say is, if you do believe that this vision is able to be
15:58
Ejaaz: executed upon, whether it's Elon, but mostly his team that does
16:02
Ejaaz: A lot of the hard work, then you can feasibly put an investment thesis against
16:09
Ejaaz: not just SpaceX, but any Elon company.
16:12
Ejaaz: I think about it like this. If you purchase SpaceX stock, you're basically buying,
16:17
Ejaaz: what is it, a space launch company
16:19
Ejaaz: a telecom company, you are buying a GPU data center, and you're also buying a Frontier AI lab.
16:27
Ejaaz: All of that comes packaged in once. And if all of it has to work,
16:30
Ejaaz: if one thing doesn't work, then kind of like the thesis gets broken.
16:34
Ejaaz: But then there's also this other company called Tesla, which is now like a Frontier
16:38
Ejaaz: robotics company. It's not just a car company, right?
16:40
Ejaaz: And so what do these robots eventually need? They need some form of a brain
16:44
Ejaaz: to guide them, to scale them in a mass production type of way.
16:49
Ejaaz: Well, you have Grok models, which are trained on a ton of experimental physical data.
16:54
Ejaaz: And Elon Musk is working on that separately. So at some point,
16:57
Ejaaz: you see a lot of synonymous kind of cohesion between these two companies.
17:02
Ejaaz: So you have to be delusional. Now, to kind of like ground ourselves a bit,
17:05
Ejaaz: there is a lot of bearish events, if you want to categorize it like that,
17:10
Ejaaz: happening over the next six months until the end of this year.
17:13
Ejaaz: The main one, in my opinion, is the supply unlock.
17:16
Ejaaz: If you have 56% to 60% of the entire supply for shares for SpaceX getting unlocked
17:22
Ejaaz: by the end of the year, the big question in everyone's mind is,
17:25
Ejaaz: is there enough money to even support the current valuation that there is?
17:30
Ejaaz: Or should I just wait and see for all of these shares to become unlocked?
17:34
Ejaaz: Let the price find an actual, you know,
17:37
Ejaaz: Price that the market thinks is valuable, if that makes sense,
17:41
Ejaaz: and then buy later on when that price is hit.
17:44
Ejaaz: Now, we don't do investment advice here. We just kind of talk about what our general thesis will be.
17:48
Ejaaz: But let's look at some other companies that were in a similar position almost
17:52
Ejaaz: a decade ago. If you look at Meta, when they IPO'd, I believe,
17:55
Ejaaz: in 2012, their stock price went below IPO price for about a year.
18:00
Ejaaz: And since then, it's gone on a meteoric rise. The same thing can be said of
18:04
Ejaaz: Uber over a shorter timeline, privately held. So the point is companies aren't always fairly priced.
18:11
Ejaaz: I think Elon Musk raised a ton of money to be able to execute on this gargantuan
18:15
Ejaaz: vision that he has. And the market is now pricing it more fairly.
18:19
Ejaaz: Keep an eye on the supply unlocks. The first one is going to be August 7th,
18:22
Ejaaz: two days after their first ever quarterly earnings.
18:25
Ejaaz: I'm curious in those quarterly earnings whether they actually turned towards
18:28
Ejaaz: profitability in some forms of ways. I'm going to look at the individual business
18:31
Ejaaz: units, perhaps Grok specifically.
18:34
Ejaaz: And yeah, I guess we'll see where we go from there. But right now,
18:37
Ejaaz: I'm a long term believer in this company. I believe there's only one person
18:39
Ejaaz: that's able to execute and pull this off.
18:41
Ejaaz: And I believe Elon is that moonshot bet.
18:43
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19:35
Josh: And I want to finish the bullish case for Starship with the manufacturing story
19:40
Josh: again one more time, just talking about how quick they're actually going to
19:43
Josh: make this reality happen. Because Ejaz, you did kind of humble us a little bit.
19:46
Josh: This is a sci-fi future that seems impossible. This seems like something you
19:50
Josh: would read in a book more so than witness it with your own eyes.
19:52
Josh: I've seen it happen with Tesla before. I haven't driven a car in a couple of years.
19:57
Josh: Like the Model Y is the best-selling car in the world. They've done Mission
19:59
Josh: Impossible before. This is not anything new to them.
20:02
Josh: And I see a very clear case in which they could do it again.
20:05
Josh: When you look at Starship, for example,
20:07
Josh: Do you know how long it takes to build a Starship now?
20:09
Ejaaz: It's two weeks.
20:10
Josh: It's two weeks long to build a Starship. Wow. And they're simultaneously building
20:14
Josh: seven of them at once. Is that for the new one?
20:16
Josh: Starship number 41. Wow. Yes, this is Starship version three.
20:19
Ejaaz: Dude. That's so impressive.
20:20
Josh: Ships 41 through 48 are in simultaneous productions. They're building seven
20:24
Josh: of these at once. They're building one every 14 days currently.
20:27
Josh: And that pipeline is going to be increasing significantly. So for this year
20:31
Josh: in 2026, Gwynne Shotwell, the COO, the godsend of SpaceX, Basically,
20:35
Josh: the effective CEO of SpaceX is saying they're planning to launch one starship every single month.
20:41
Josh: In 2027, they're planning to launch one to 400 starships in the year.
20:47
Josh: So the cadence is going to increase significantly. And the way it works is it's
20:51
Josh: unbelievable. It's like these rolls of steel go in and then a 400 foot rocket
20:55
Josh: just rolls out after a couple of days.
20:57
Josh: And they're going to be doing this over and over.
20:59
Josh: And as they do, the Starlink capabilities are going to multiply 20 fold per launch.
21:03
Josh: And all of these things kind of compound in a way that, again,
21:06
Josh: it's that iterative improvement and it compounding on itself in a way that is
21:09
Josh: so incredibly compelling. And you could see how this is going to happen across
21:12
Josh: the company with data centers.
21:14
Josh: The first one's like 160 something days. The second one's going to take 100.
21:17
Josh: The third one's going to take 50.
21:18
Josh: They're just going to continue to iterate their way down. And before you know
21:20
Josh: it, they have this unbelievable ability to manufacture these very complicated things at scale.
21:25
Josh: So that's kind of what I'm looking for. And when I look at these,
21:28
Josh: it's very difficult to value something on an exponential curve because of how
21:31
Josh: slow that initial exponential is before it kicks up.
21:34
Josh: And then once it does kick up, over the matter of a couple of months,
21:37
Josh: it could change the entire look and feel of a business. And we saw this with
21:40
Josh: Tesla in 2018, where it took a very long time. Tesla, for the people who weren't
21:44
Josh: around, it was the most shorted stock in the market for years.
21:48
Josh: And it had the highest short float of any company in the world.
21:51
Josh: And then over one year, it went up like 10x.
21:53
Josh: And it very aggressively repriced because people realized, hey,
21:56
Josh: they actually are going to manufacture the most popular car in the world and
21:59
Josh: figure out the self-driving thing.
22:01
Josh: We're probably going to see something like that happen with SpaceX.
22:03
Josh: It probably takes a long time because, I mean, like you said,
22:06
Josh: there's a lot of bearish signals that they will have to get through first if
22:10
Josh: you are a short-term trader.
22:12
Josh: If you're someone who's interested in the share price this year or next year.
22:15
Josh: This might be a bumpy ride.
22:16
Josh: I mean, because there is a stat that I read that I was like,
22:19
Josh: oh, that sucks. In the case of IPOs in general, the last 15 largest US IPOs since,
22:28
Josh: drawing down 50% since the IPO and have averaged finishing the year down 33% where they go public.
22:35
Josh: So there is no precedent for strong IPOs really in this case.
22:39
Josh: It has the valuation problem where it's trading at 80 times trailing sales,
22:43
Josh: profit is non-existent, there's a long way for it to go.
22:45
Josh: But if you believe in this future, it is an incredibly compelling version in
22:49
Josh: which this company is worth more than many other of the top companies combined.
22:53
Josh: It just takes a long time and and it's hard and it's going to be a really difficult
22:56
Josh: battle, but it is possible. And if you're a long-term investor,
22:59
Josh: that's kind of the thing to hold on to.
23:01
Ejaaz: It's a big vision, but Elon has proven time and again that he is an amazing
23:06
Ejaaz: zero to one physical infrastructure scale.
23:08
Ejaaz: And that's exactly the opportunity that SpaceX presents, albeit at a very ambitious
23:13
Ejaaz: vision. If you think about it, I think in the optimistic timeline,
23:18
Ejaaz: the SpaceX shuttle business itself could pay for the entire company, right?
23:23
Ejaaz: If you think about its vision of putting AI satellites out there to train models
23:28
Ejaaz: on infinite amounts of energy from the sun, Anthropica will want that.
23:31
Ejaaz: OpenAI will want that. All the competitors will eventually want that.
23:34
Ejaaz: And there's only kind of like one highway to get there in the cheapest,
23:38
Ejaaz: most cost efficient way. And that would be through SpaceX. But again,
23:41
Ejaaz: it's a bet on whether they are able to pull it off.
23:44
Ejaaz: When it comes to the stock price in general, even if you are skeptical on the
23:48
Ejaaz: stock price, if you're a bullish person about this, there is a silver lining
23:52
Ejaaz: where it's like, okay, well, if the supply unlock comes on later this year,
23:56
Ejaaz: maybe there's a better way to get access to this.
23:58
Ejaaz: And maybe you just kind of like wait patiently for them to be able to pull this off.
24:02
Ejaaz: But one thing is for sure, Elon is kind of hell bent on making this a reality.
24:06
Ejaaz: And time will tell whether this is something that is going to pay off.
24:10
Ejaaz: Again, you need a lot of time to figure this stuff out. And AI is probably the
24:14
Ejaaz: most mispriced asset in general, because no one knows what any of this is going to do.
24:21
Ejaaz: The point of the kind of like mispriced valuation that we're seeing right now
24:24
Ejaaz: is there's not enough market to uphold these prices. You've got the anthropic
24:28
Ejaaz: OpenAI IPOs coming on later this year, so we're going to need even more money for that.
24:33
Ejaaz: And I think a big precursor to SpaceX going up in price in general will be,
24:39
Ejaaz: does AI create enough GDP value across the entire globe?
24:44
Ejaaz: And that is a question mark, albeit a small one, because it's impacting so many
24:48
Ejaaz: sectors at the same time.
24:49
Ejaaz: So we'll get more clarity over time. But again, once clarity is achieved,
24:54
Ejaaz: you're kind of like a little bit late to that eventual trade.
24:56
Ejaaz: So I understand the bear case. I understand the bull case, but one thing is
25:00
Ejaaz: going to be for sure, Josh and I are going to be up 24-7, racking our brains
25:04
Ejaaz: around this thing until we figure it out, and we'll be reporting on it live
25:08
Ejaaz: on this show every single week.
25:10
Ejaaz: So I think that brings us to the end of this episode. Thank you so much for
25:14
Ejaaz: listening. This was an incredibly exciting episode to do because,
25:17
Ejaaz: you know, we were kind of going against some of our bull cases that we had of
25:19
Ejaaz: the previous one that we had around SpaceX.
25:22
Ejaaz: But thank you so much for listening. If you're listening to this on YouTube
25:24
Ejaaz: and you aren't subscribed, what's happening?
25:26
Ejaaz: Please leave us a comment subscribe turn on notifications it helps us out massively
25:30
Ejaaz: if you're listening to us on spotify or apple music or any way that you're listening
25:33
Ejaaz: to us please leave us a comment or give us a rating it helps us out hugely um
25:37
Ejaaz: but i think that's it is anything else josh
25:39
Josh: Yeah no it's just it's exciting like stars this company feels very very easy
25:44
Josh: to understand if you if you read sci-fi books and you understand the future
25:48
Josh: and you're like oh man this is this is the only company in the world that kind of makes makes me feel,
25:52
Josh: a certain way when I go out and watch these launches.
25:55
Josh: And there's like no one trying to capture and build the future like they are. So it's exciting.
26:00
Josh: And I don't know if it's going to work. It's a really ambitious project.
26:02
Josh: So by betting on the company, you're kind of betting on this really uncertain future.
26:05
Josh: But hey, it's a lot more exciting if it does work than if it doesn't.
26:09
Josh: And I think that's what I'm most excited about. So yeah, like you said,
26:11
Josh: thank you all so much for watching. Don't forget to share it with a friend who might also enjoy.
26:16
Josh: And yeah, we'll see you guys in the next episode.