In part 1, it was all about the facts, presented primarily through infographics. Part 2 is for those who love a good story…and if you’re an investor in Tesla, or SpaceXAI (soon likely to be the same company, but we’ll get to that in part 3), you LOVE a good story.
So if part 1 was the facts, part 2 is the fun, because to understand why SpaceXAI is not just speculative but at a level of speculation that is almost Chamath SPAC-level dangerous, well, it takes a special kind of story… so here it is!
The better the story sounds, the closer you need to check the details
The $1.75 Trillion SpaceX AI IPO – Narrative Gravity vs. Mathematical Reality
Lex: Um, usually when we talk about a medical diagnosis, there's this expectation of like absolute precision.
Val: Right. You want a clear answer.
Lex: Exactly, you break your arm, the X-ray shows that jagged white line, and the doctor just points and says, " You know, there it is.
Val: Yeah, broken or not broken, it's binary.
Lex: It is, and it's comforting, right?
Val: Oh, absolutely. We are totally wired to like things that can be categorized cleanly.
Lex: Right. But then you step into something incredibly complex, and suddenly that x-ray machine is just, uh, it's broken.
Val: Yeah. It doesn't work anymore.
Lex: Right. Because you're looking at this—and this is what we're talking about today. SpaceX's 1.75 trillion dollar IPO.
Val: Trading under the ticker SPCX.
Lex: Exactly, SPCX. And the financial landscape here is just absolute high-stakes ambiguity.
Val: It really is.
Lex: So today, we're taking this incredibly detailed war room analysis that you, the listener, sent us, and we are completely bypassing the romance of, you know, going to Mars.
Val: Which is hard to do, but necessary.
Lex: Right, we're decoding the brutal math of whether this stock will actually make you money.
Val: Because the core conflict running through every single piece of data you provided is a battle between two forces.
Lex: Okay, lay them out for us.
Val: Well on one side, you have what the notes call narrative gravity.
Lex: Narrative gravity, I like that.
Val: Right, and this is the undeniable pull of the hype. It's the rockets, it's Elon Musk, it's the ambition of orbital AI compute.
Lex: It's the story, basically.
Val: Exactly, it's the story. And on the other side, fighting against that, you have mathematical gravity.
Lex: Right, the cold, hard reality.
Val: Yep. Free cash flow, profit margins, capital expenditures, and uh, opportunity cost.
Lex: So narrative gravity pulls you in, but mathematical gravity kind of grounds you in what the numbers actually require to, you know, generate a return.
Val: Precisely. And we aren't here to debate whether humanity should be a multi-planetary species. I mean, that's a great philosophical debate.
Lex: But it doesn't pay a dividend.
Val: No, it doesn't. We are here to figure out whether your capital will compound. Because buying into this IPO at its current unpriced valuation... It feels a lot like trying to buy a house today based entirely on what you hope the neighborhood will be worth, like 50 years in the future.
Val: While completely ignoring whether the foundation of the house is currently sinking.
Lex: Right. You have to know if the underlying machinery can actually survive the atmospheric pressure of the public markets.
Val: Okay, so to understand the pressure we're talking about, we have to look at the sheer scale of this preliminary S-1 filing.
Lex: It is massive.
Val: It is. They are seeking to raise 75 billion dollars in this offering.
Lex: Just to anchor that for a second, the largest IPO in history before this was Saudi Aramco.
Val: And how much was that?
Lex: They raised roughly 29 billion.
Val: Wow.
Lex: Yeah, Alibaba was like 25 billion.
Val: And this is 75 billion.
Lex: Yeah, it's raising 75 billion. But the crucial detail here is that this prospectus is unpriced.
Val: Meaning what, exactly?
Lex: Well, they have left the exact per-share price and the final share counts completely blank.
Val: Which I mean, that's standard for a preliminary filing, sure.
Lex: But it means the reported 1.75 trillion dollar valuation is just kind of sitting in a vacuum.
Val: Exactly, we are at the exact moment of maximum hype and minimum information.
Lex: Right. So let's actually pop the hood on the verified numbers in the S-1.
Val: Let's do it.
Lex: Looking at the consolidated entity, which the notes refer to as SpaceX AI for the fiscal year 2025, they generated 18.674 billion dollars in total consolidated revenue.
Val: Which is an extraordinary top-line number. I mean, it proves this isn't just a speculative science project.
Lex: Right, it's a real business. It's a massive-scale industrial enterprise. But, and there's always a but, revenue is just the money coming in the front door.
Val: Right. You have to look at what's leaving out the back door.
Lex: And according to the filing, the operating loss for FY 2025 was negative 2.589 billion.
Val: Yeah. And the net loss was nearly -5 billion.
Lex: Okay, let's unpack this. If they are losing nearly 2.6 billion dollars from operations, how on earth is the market justifying a price tag of almost 2 trillion dollars?
Val: Well, this is where we have to talk about multiples. Because the disconnect between those losses and the proposed valuation is staggering.
Lex: Right. So if you take that 1.75 trillion valuation and divide it by the 18.674 billion in revenue...
Val: Investors are essentially being asked to pay approximately 93.7 times the company's trailing revenue.
Lex: 93.7 times. Let's put that into context. Because it's a number that just completely defies conventional financial physics.
Val: Yeah, please do because that sounds absurd.
Lex: In a normal market, a mature company might trade at, you know, 2 to 5 times its revenue.
Val: Okay.
Lex: An incredibly successful, hyper-growth, high-margin software company... Maybe 15 to 20 times revenue.
Val: Got it.
Lex: Even at the absolute peak of the dot-com bubble or the height of recent AI euphoria, seeing a company trade at 40 times revenue is a historical anomaly.
Val: And they want 94.
Lex: Right. Asking for 94 times trailing revenue implies that the company is going to grow at a completely unprecedented rate forever. With essentially zero cost of delivery.
Val: Right, and that's the fundamental problem, isn't it? SpaceX AI is not a pure software company where you just, you know, write the code once and distribute it a million times for free.
Lex: Not at all. They are fundamentally, intensely capital-intensive. They are building giant physical rockets out of steel and titanium.
Val: Yes.
Lex: They are pouring millions of tons of concrete to build gigawatt-scale data centers.
Sign in to leave a comment and join the discussion.
Sign Up Free