$50B Fund Manager Breaks Down SpaceX’s Soaring Valuation
Ask about All-In Podcast
Episode Description
Thanks to our partners for making this possible!
EY - Great tech starts with a big idea. From startup to scale, EY helps tech founders get financials right early so they can focus on what’s next. https://www.ey.com/en_us/tech-sector/tech-startups?WT.mc_id=3501317&AA.tsrc=sponsorship
NYSE - Thank you to our partner, the New York Stock Exchange - a modern marketplace and exchange for building the future. It all happens at the NYSE. https://www.nyse.com
Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg
Follow on X: https://x.com/theallinpod
Follow on Instagram: https://www.instagram.com/theallinpod
Follow on TikTok: https://www.tiktok.com/@theallinpod
Follow on LinkedIn: https://www.linkedin.com/company/allinpod
Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg
Intro Video Credit: https://x.com/TheZachEffect
Brief Summary
SpaceX's valuation is driven by launch frequency and evolving business model phases, impacting investor perspectives.
Key points
- Valuation and Launch Cadence. The correlation between launch frequency and SpaceX's valuation is crucial for investors.
- From Ramp to Scale. Transitioning from initial launches to multiple constellations signifies growth and potential.
Episode highlights
Transcript
I thought I would share a little bit of how we as investors think about SpaceX. The number one driver correlated to the valuation of SpaceX is cadence of launches, which intuitively makes sense. If your business is the launch business, the more you launch, the higher your value should be. So, I think we see that in the data. But, there's another fundamentally different ratio that I'm going to point you to, which is what if we took the valuation, we divided it by the number of launches, what would that look like? Well, you can see it was kind of in a fixed range for a while, and then it really started up. And we believe that markets are rational, and
so we started thinking, well, why is it that the market is valuing SpaceX higher on a per launch basis when it's launching more than when it was just starting out? And my fundamental view, and we'll kind of call this our code two framework, is that the reason is that the quality of SpaceX's business model increases the more you launch. So, in phase one, which we call pre-constellation, you're just trying your rockets. And we know rockets are hard, and maybe you have a few government customers, and that's a one-time revenue business, and it's unpredictable. Then you get into your initial ramp, and now you might have one
constellation. So, why is a constellation important? Well, it's an end market, and it's a recurring revenue business. The more satellites you put up, the more subscribers you have, the more revenue, etc. Now, you can move from ramp into scale. Now, you don't just have one constellation, you have multiple constellations. So, now you move into being a scale business, which ultimately becomes a platform. And we know how valuable these platforms are in this technology age. And platform means not only do you have many more customers in your core business, but you also have new businesses. It could be space data data centers, it
could be the optionality of the moon and Mars and other space applications.
