00:00:00
I thought I would share a little bit of how we as investors think about SpaceX. The number one driver correlated to the
00:00:06
valuation of SpaceX is cadence of launches, which intuitively makes sense. If your business is the launch business,
00:00:12
the more you launch, the higher your value should be. So, I think we see that in the data. But, there's another
00:00:17
fundamentally different ratio that I'm going to point you to, which is what if we took the valuation, we divided it by
00:00:23
the number of launches, what would that look like? Well, you can see it was kind
00:00:27
of in a fixed range for a while, and then it really started up. And we believe that markets are rational, and
00:00:33
so we started thinking, well, why is it that the market is valuing SpaceX higher
00:00:38
on a per launch basis when it's launching more than when it was just starting out? And my fundamental view,
00:00:45
and we'll kind of call this our code two framework, is that the reason is that the quality of SpaceX's business model
00:00:52
increases the more you launch. So, in phase one, which we call pre-constellation, you're just trying
00:00:57
your rockets. And we know rockets are hard, and maybe you have a few government customers, and that's a
00:01:03
one-time revenue business, and it's unpredictable. Then you get into your initial ramp, and now you might have one
00:01:09
constellation. So, why is a constellation important? Well, it's an end market, and it's a recurring revenue business.
00:01:17
The more satellites you put up, the more subscribers you have, the more revenue,
00:01:21
etc. Now, you can move from ramp into scale. Now, you don't just have one constellation, you have multiple
00:01:28
constellations. So, now you move into being a scale business, which ultimately becomes a
00:01:33
platform. And we know how valuable these platforms are in this technology age. And platform means not only do you have
00:01:41
many more customers in your core business, but you also have new businesses. It could be space data data centers, it
00:01:48
could be the optionality of the moon and Mars and other space applications.