Voting control doesn't change management's fiduciary duty to all shareholders. The founders retaining voting control has worked out fine for Alphabet shareholders.
> The founders retaining voting control has worked out fine for Alphabet shareholders.
Only after the cofounders brought in veteran "adult supervision" who offered guided the company with a steady hand, while Larry and Sergei were safely in their moonshot hobby project play-pens, away from the core products - an arrangement that would greatly benefit shareholders in Musk companies.
Getting together a group of owners with 3% ownership by value or 3% by voting rights both seems do-able, and I'm sure would be done of there was a serious case of mismanagement.
Fiduciary duty is meaningless without recourse. The governance structure denies any recourse. A case of breach of fiduciary duty would never make it to trial under the governance structure.
> The Google founders are, lets say, more reliable than Musk when it comes to making sound business decisions.
I've no idea about that and I won't opine. But every time I see that sort of statement it seems likely motivated by the whole Twitter acquisition. Perhaps that was just a toy or vanity project for him, one he could afford, so even if you think he's running X terribly it might have nothing to do with how he's run or would run any other companies that are not related to social media. In other words, what I read into such statements is "I don't like the politics he's brought to Twitter!", "the board should rein in the guy whose politics I don't like!!". It's like saying Bezos is bad at business because he owns the Washington Post -another vanity project- and you don't like the Post.
Do people not get bored of that sort of take?
Tell me he makes bad business decisions all you want, but in the context of everyone-hates-his-acquisition-of-Twitter I'd like to hear about his other businesses. Tell me something useful, not something political.
And, sure, politics at some point bleeds into business. Maybe Trump is out to get Bezos over Washington Post coverage, or maybe the next Democrat President will go after Musk for his politics. It's possible that X will eventually cost him dearly and personally, and it's a solid argument for these billionaires and trillionaires to stay out of politics. Or maybe it's a good argument for them to stay in because maybe by demonstrating electoral influence and power they can make the POTUS-of-the-day fear them enough to not go after them too hard. But if you made any such argument it still wouldn't say tell me anything about the rest of these billionaires' businesses.
Space GPUs are stupid, so is hyperloop, so is the Vegas Loop; robotaxis don't work, cybertruck sucks, the humanoid robots don't work, the new roadster is nowhere to be seen.
SpaceX blew up an entire launchpad because Musk thought flame diverters are gay, or something.
Every single one of those examples is both valid and - I believe, at least - misunderstood.
Musk has a singular goal as far as I can tell: to make humanity a multi-planetary species. All of those things are testing the boundaries of what's possible in areas that will or could be very important for building a permanent settlement on Mars.
I posit that while there's much room for debate around whether or not those projects are viable, as far as I can tell everything Musk has done has been in service of building the corporate framework, talent pool, skills, and technology necessary to colonize Mars.
Ok. A permanent settlement on Mars. Given the personal control structure at play in his companies giving him autocratic control there, why would anyone believe he wouldn’t be anything but a Martian autocrat, and who in their right mind would willingly submit their own sovereignty to Emperor Musk the First of Mars? It’s not exactly like you could change your mind and walk away. You’d be literally putting your life in the hands of this wildly erratic person.
It's really not a public company at all in the sense people are accustomed to. The super voting shares plus the 3% rule for a lawsuit plus the arbitration clause make Musk almost totally unaccountable. It certainly should not be included in stock indices that are used for passive investing, because it is a different category of asset.
I haven't read the prospectus but I would be interested to know, when he dies, to what degree the "... control the outcome of matters requiring shareholder approval" part will be inherited. Does that facility just go along with the Class B super-voting shares? And if it does what does it mean if more than one person inherits his shares?
On the subject of the governance structure this [1] is worth a read ...
"The company significantly limits shareholders' rights to sue. SpaceX's bylaws will make it clear that anyone who owns shares "irrevocably and unconditionally" waives all rights to pursue a jury trial. Shareholders will also be prohibited from bringing class actions against the company, its directors, officers, controlling shareholders or bankers tied to the IPO, according to the filing.
Instead, shareholders will be subject to mandatory arbitration, which had long been illegal in the U.S. The Securities and Exchange Commission reversed its position, opens new tab in September, allowing companies to adopt mandatory arbitration policies, which are private proceedings overseen by arbitrators."
... I can't remember how much he spent in Pennsylvania but you might argue it was money well spent.
The voting issue is problematic, but the limits on shareholder class-actions seems like a good idea. Do you know of any shareholder class-action lawsuit that actually benefited the shareholders? They only ever seem to benefit the plaintiff lawyers pursuing the case.
That's because they often don't go far enough, and that's because of limits on things like shareholder class-actions.
If you haven't wiped out their corporate savings and sent the stock price tumbling, you haven't really done anything to get the needed recompense and to discourage the behavior in the future. Right now, many companies are effectively sole proprietorships or partnerships with window dressing made to look like there's real accountability. If it becomes impossible to oust the CEO, you're not a shareholder, you're a bagholder.
This should frankly be disqualifying for any company trying to go public. Super voting shares have their place but there's no scenario in which overall control of the company can be retained by super voting shareholders who make up a small minority of the overall shareholders.
The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction, in particular by offering escape hatches like being able to eject a CEO who's lost their mind and is no longer acting in the fiduciary best interest of the shareholders, which will so obviously happen here.
> The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction
The point is to raise money from investors. The investors get a voice in exchange.
I'm pretty sick of everyone labeling points they don't like "whataboutism". The reason I brought it up is if you're going use that as a reason to get the SEC or Congress or whomever more involved you're going to have to come up with a reason beyond "I don't like Elon Musk".
Technically, it is described. It's described in the S-1. Trouble is that most (active) investors don't read the S-1.
Fund managers and the like do, which covers a lot of passive investors, which is good until a company joins one of the major indices at which points funds may be obligated to buy in.
It's a deeply distressing moment, and I see it as a time to renew calls for consumer-protecting regulations and antitrust laws with more teeth in the markets where this kind of behaviour's currently flourishing.
- Take business for himself. SpaceX gets a rocket deal? Musk can say "I'll do it at Tesla instead"
In theory (were we talking about any other man, in any other time) that's very strictly illegal with a whole area of law dedicated to it (fiduciary duty).
I think this is a very big issue. If SpaceX is very successful, will he pay out dividends, or will he spend everything on a mission to mars at a massive loss or something like that?
If SpaceX is very successful he will spend everything on a mission to mars. He's pretty up front about this. If it costs a lot and the company runs at a loss then it costs a lot and the company runs at a loss. Read the S-1
> We believe that our current space efforts will catalyze transformative breakthroughs that could reshape terrestrial industries and lead to the emergence of new trillion-dollar markets on the Moon, Mars, and beyond. In particular, we believe our goal of establishing a lunar presence will enable terawatt-scale annual AI compute growth, support deeper space exploration and industrialization, and serve as a stepping stone to establishing a civilization on Mars.
There is no secret about this. If this scares you, do not invest. Mars is mentioned 60 times in there. That's what he's going to spend the money on if it comes to it. If you don't want to lose your money on a Mars mission then the guys who are saying they're going to spend your money on a Mars mission are not the guys for you.
I wonder if the scammers have been doing this already. Remember when you could buy naming rights to a star, or acreage on the moon? Elon selling lots on Mars might not feel far fetched to at least one demographic he already caters to.
That talks about trillion dollar markets. Nothing wrong with investing in Mars if money can be made. The problem is if he decides to create a mars base just because it's cool, not because it's profitable.
And yes, I don't plan to invest unless SpaceX stock somehow becomes cheap, which is very unlikely.
SpaceX has gotten reduced cost engineering since its inception, due to telling their employees that the entire purpose of SpaceX is to put humans on Mars. Everything was about making money while developing the technology to do, and then using that money to achieve that goal. Going public in this way fundamentally creates a conflict there. Given that Musk has already used SpaceX to bail out his Twitter acquisition, it feels like both investors and hopeful engineers are going to lose.
The one thing you can say though, is that “benefits himself” does not mean: buying a super yacht, a casino, an island, etc.
So yeah, he’d YOLO and do the Mars trip before any of the above. Which is what most nerds on HN would love, except their blind hatred for Musk would make them despise even that.
He’s certainly said things to deserve some hatred. I’m also lost why anyone thinks his mars trip is real. He has a long history of promising and not delivering.
There's no way in hell I'd even remotely consider trying to build a Mars base if i had all that money, either. It's a fucking stupid way to waste money.
Truly, in the face of this, caveat emptor has never been truer.
If/when Musk’s misadventures turn his companies to shit, I may spare a thought for the collaterally damaged, but not a single tear will I shed for the shareholders.
This isn't even a theoretical concern and it goes well beyond unfettered control of a single company. Look at the history:
1. One of Elon's companies (Tesla) bought out another of Elon's companies (Solar City) that was going bankrupt because it owed a lot of money to yet another of Elon's companies (SpaceX) [1];
2. Elon diverted $500M of NVidia H100 GPUs reserved for Tesla to xAI [2];
3. Elon made a buyout agreement for Twitter then tried to back out. Twitter sued (for specific performance) and a Delaware judge agreed. Elon completed the purchase before the court ordered him to [3]. That purchase was secured by his Tesla shares. He ran Twitter into the ground and then created xAI in 2023 [4]. Both Tesla and SpaceX "invested" billions into it. Elon ultimately used the funds to buy out Twitter at an inflated price (and still less than he paid) [5]. He ultimately then bailed out the xAI investors by having SpaceX acquire xAI [6]. IMHO this made SpaceX a significantly worse company. It was also used to inflate the value of SpaceX by using some wildly optimistic made up numbers about the AI total addressable market; and
4. The Cybertruck has been an unmitigated financial disaster. It's a terrible car and sales are awful. But that's OK because Elon uses SpaceX to buy Cybertrucks [7].
At least with the Google founders and Mark Zuckerberg, they only had one company so they weren't playing corporate shell games or using it as a personal slush fund on this scale.
It's quite simple. xAI bought a shit ton of GPUs for Grok thinking they would be competitive. When that didn't pan out they found themselves with either giving away Grok for mostly free or renting out the capacity to someone else for a shit ton of money. They chose a shit ton of money.
Tons of people are already buying you don't have to sell it to them.
I'll happily take Musks proven and superior leadership with guarantees over letting the company decline chasing short term sugar hits that destroy it long term.
>I have to wonder if Elon has spent too much social capital for this kind of cult of meme stock strategy to work again.
If social capital was an indicator , then Tesla stock would've cratered 2 years ago. Despite demand for tesla vehicles dropping. I don't think social capital matters these days.
You can absolutely level this claim against Tesla too. When deliveries dropped a year ago, the stock price didn't go down. Tesla's stock is disconnected from the fundamentals and every stock investor today knows this.
Why would SpaceX be any different? If anything it would be even more disconnected from the fundamentals than Tesla is, given how much more control it gives Elon.
SpaceX stock is a bet on Elon, full stop. It has nothing to do with space, data centers, AI, or whatever technology they're currently working on; it's a bet that Elon will figure something out.
(and if you need any example of this, just look at Twitter--he engineered an exit for his X shareholders at a higher valuation [at the expense of SpaceX, but a positive exit nonetheless])
Yeah you can’t go into this with any expectations or later complaints. Everyone knows at this point that he’s going to do whatever the fuck he wants. If you give him money, that’s what it’s for.
I say this entirely neutrally. Some people want to invest in that—and he’s made a boatload of money for those who have thus far!—while others find it insane.
If you have ETFs or index tracking funds in your 401k you're going to buy it. In fact, you'll buy more of it than is going on sale. Since they only need to issue 5% of the stock for it to show up as a 20% market cap in the QQQ index and tracking funds own over 20% of the market, they pretty much have to buy all the shares. Welcome to market manipulation 101.
I 100% agree SpaceX (and Tesla) is a bet on Elon, completely divorced from the fundamentals. But I don't think people realize just how risky this is.
Tesla is only one administration change away from going bankrupt. Ask yourself what would happen to Tesla if BYD could freely import cars.
This might not even take an administration change. Elon very famously had a public falling out with Donald Trump, going so far as to call the sitting president of the United States a pedophile, basically [1]. Now, as a Tesla investor, what to make of this? Elon is technically risking the entire company on a childish outburst.
SpaceX at least has some competitive advantages. Falcon 9 as a launch system is unmatched. Nobody can currently compete with the track record and cost per launch (factoring in booster reuse). That may change but the next company has to compete with the Falcon 9 and develop a proven track record. Also, SpaceX is American so it has guaranteed business from the US government for national security reasons.
But, space operations are a rounding error in the valuation model for SpaceX. All of the AI stuff is bullshit, basically, particularly space-based data centers. STarlink is interesting but is dependent on Starship and will have to compete with 5G operators.
He is not popular. I am sort of reminded of folks from hollywood or tech who collide with politics... and not everybody becomes ronald reagan.
Also, someone doesn't get to be the richest man without controversy.
But controversial or not, I think he has been a net positive.
Would we so profoundly have electric cars if tesla hadn't shaken the status quo? Sure, now ford has cancelled the lightning, but they now have people who know about EV technology deep within their stodgy ICE stronghold.
Right now there are 14,000+ satellites in earth orbit, 11,000+ are from the US, and 10,000+ of them are from spacex.
By any objective measure, he has figured stuff out. And he has shaken things up.
I really don't see how you can be sure of that. Who would want to live in a steel cave for their entire life? Anything we need from Mars could be extracted with automated machinery.
> Even at $63 per share, we give SpaceX a lot of benefit of the doubt in two of the three scenarios, in which we assume the company can achieve a rapidly reusable Starship rocket enabling multiple launches per week and successfully commercialize data centers in space.
> In our downside scenario, orbital data centers won’t work or offer any advantage over terrestrial ones. We surmise that the company, having invested tens of billions to find this out, would cut bait on the project sometime around 2028, the way management walked away from plans to build multiple small-car factories at Tesla.
The orbital data center thing is really strange. Without some kind of massive technological breakthrough the physics of an orbital data center make no sense. Napkin math for a single data center including solar panels, radiators, compute and structure is somewhere on the order of ~6500 tonnes. Let's say Starship can put 100-150 tonnes into orbit per launch, that is somewhere between 40-65 launches for just one single orbital data center.
I'm pretty sure he's full of shit and has zero real intention of building orbital data centers. It makes for a good headline, which is what these AI companies are in the business of. The math doesn't math and the logistics of maintaining and building the datacenter seem insane.
Which claims? I’ve been a SpaceX investor for about 8 years now, I’m completely satisfied with their progress, even despite the Starship setbacks, they’ve done astounding work on all fronts. I’m not holding my breath for humans on Mars or us becoming a Kardashev 2 civilization, if that’s what you’re asking.
It looks like they're taking on $20B in debt to clean up xAI's debt, and then paying it off with the equity raise? Do you feel that's very significant for them? 1% dilution takes care of it.
The video they posted today outlines their specs. They are gonna be smaller. About 100T. Based on Starlink architecture but with way larger radiators and solar panels. Apparently the design is simpler than existing Starlinks because it has fewer different parts.
That cooling system is … aggressive. 110m^2 of radiator to dissipate 120kW average heat. That’s about 1.1kW/m^2, which works out to very close to 100C at the radiator under absolutely perfect conditions (absolute zero ambient temperature, emissivity 1, no adverse geometric effects).
Radiating into 300K ambient, it’s 134C. (300K ambient is about what you get if the sun is visible or if a large fraction of what the radiator can see is the Earth.)
You can slightly fudge the 300K case with a spatially or specially selective system, which would add weight and complexity. (Well, you can’t get rid of the problem of the Earth being warm by spectral selectivity — it’s the same spectrum as the radiator.) You cannot fudge the absolute zero case — the Stefan-Boltzmann law is extremely unforgiving. [0] And you need some headroom for the system that gets the cooling fluid to the radiator.
The thermal qualification temperature of an H100 is 87C and the associated HBM is 95C.
So I don’t see how this can work short of using higher-temp chips. I have no idea how SpaceX expects to source any such thing in any meaningful volume.
[0] This includes heat pumps. A heat pump makes it worse.
This isn’t that big a win. If you put the radiator in the shadow of the solar panels then a good fraction (which depends on the geometry) of the radiated heat from the side facing the panels hits the panels and warms the panels, and the radiated heat from the back of the panels warms the radiator. And the panels themselves are less efficient when they’re warmer.
On the flip side of all this, the Starlink satellites work, and I would expect SpaceX to have some idea what they’re doing. Starlink satellites have largish power systems (smaller than these proposed AI satellites, but not outrageously so). They presumably turn a smaller fraction of their power into low-temperature heat: the ion thrusters and the various transmitters emit a good deal of non-thermal power. A good fraction of Starlink’s electronics way well function at rather higher junction temperatures than 100C. And I imagine that Starlink satellites are economical to operate at an average of much less than 100% power. So I don’t really know what’s going on. It’s plausible that Starlink gets away with a cooling system that’s not so great for a compute satellite.
Is the equilibrium temperature in orbit not somewhere between freezing and room temperature? If so spreading the heat evenly across the solar panels must necessarily be sufficient. Issues only arise if you try to get away with a smaller radiator or expose the radiator to direct sunlight or commit some other own goal.
I feel like we are going to relive the hyperloop-decline with the specs of proposed orbital datacentres. But the hyperloop was in one regard a success, in that it built temporary hype. Maybe it was even named after that.
He's sending the weirdest mixed signals. If we want to hit anywhere near 1 on the Kardashev scale we're gonna need a planet wide high speed rail system. They should just give the major tech companies naming rights to the stations for 35 years for like 2-3 billion a pop and scale up construction 5x.
I don't get the slow roll on this thing. The stations in LA and SF are gonna end up sort of like Tokyo station for the Shinkansen. A giant mall area with a huge amount of commerce. Why isn't this thing done yesterday?
Relax man. He's a bipolar weirdo who isn't always likable but progress doesn't always come from likeable people. And the fact of the matter is he has actually delivered on a bunch of stuff I thought I'd never see in my lifetime.
Let's see. If Paypal was his only legacy he would have already done 99% more than most people but then he went on to build a car company that was the best selling electric car brand in the world for a decade and in the process standardized not just electric charging but the plug we're all using today. Then they released a home battery with a sub 10 ms ATS which is necessary for seamless in-house grid/off grid transition. Finally the push for a reusable rocket booster was entirely a management decision on his part. If the next words out of your mouth are "he didn't do that, his engineers did" please come up with something more original. This isn't reddit.
Land rights. Environmental reviews. Various suits attempting to exert extra compensations for tangential (at best) issues. Basically the California around.
Planet wide high speed rail doesn't make much sense, it is better of medium sized trips. Flights are will always be better for intercontinental trips. Vacuum trains could be faster but would be so expensive to build. Issues would be big deal in evacuated tunnels.
CA HSR is slow partly because the state government has limited funds and giving out slowly. The federal government should have been contributing more. The other problem is it kept getting delayed from legal issues, mainly from acquiring land. Going forward is bad because they decided to do the easy part first and leave the hard tunnels for later.
There should be a high speed rail for every minor leg along the way. Efficiency is relative. People should be able to ship their car by this system instead of renting if they chose. Or use it to go sight seeing in any direction along it's web. The whole point is freedom to move around.
The cost of the HSR is tiny and inconsequential. For the 40 million residents of California it amounts to about $20 a month over the 10 years the fund has been going. It hasn't even spent 50% of the total fund yet. If construction was even 2x the current rate we would already have the central valley done. So I know they are slow rolling it. That's my point. They can speed things up even just a little.
Would you trust the operators of an orbital ring with your life though? The modern world seems to mostly be able to do sky scrapers at this point but ... ehh. We still struggle a bit even with just airliners.
Pinning CAHSR jobs program as hyperloop's fault is pretty funny. Maybe he did intend to upset it but since both turned out to be massive boondoggles doesn't seem like it worked - they managed to delay it themselves just fine.
Whether he was the only reason for high speed rail being derailed and delayed isn't really the point. He intentionally worked against mass transit, and lied repeatedly about hyperloop as part of that.
Certainly not a Musk fan, but IMO the real point of hyperloop was more that it's on a route that could be constructed within our lifetimes. (Unlike CAHSR, check their website.) Of course, California knows this because that's where they built Interstate 5.
I think you've missed the point - that wasn't the reason at all. In a way he was right too - we'll have fully autonomous buses and private vehicles capable of making the full trip down the I-5 long before they complete even the middle of nowhere section they currently have planned.
They're basically not building anything, and what they are building will be borderline unusable because of the route they chose so the car will be faster, cleaner and more convenient. If you want fast you can take the plane. So unless the problem is "how do we siphon as much tax dollars as possible banana republic-style?" I really can't agree here.
I'm not convinced that's the case. I tend to think he just saw something he found cool and triggered his narcissism so he had to come up with something he thought was cooler. That something turned out to be BS and he just dropped the idea and moved on.
The state government of California was doing a bang up job of destroying this project on their own. He didn't really need to help them. Moreover given the rise of remote work I'm not sure it has as much value as it would have had it been constructed when it was designed.
> but he's not dumb enough to actually believe all the bullshit he spouts.
Yet he's not afraid of the consequences either. This seems more telling to me.
The consequence of becoming the world's richest man? Oh, the horror. The very wealthy do not face consequences for their actions.
He lies every day about his companies, and no one ever does a thing about it.
DOGE killed a few hundred thousand children for no reason at all; it didn't even save money. He did it purely for the joy of killing black and brown children in the global south. No one with any power to deliver has ever suggested he should face consequences for it.
Why should he be afraid of consequences? There will never be any for him, as long as he is protected by unimaginable wealth and a power structure designed around serving those with wealth.
After articles on how starship is never getting off launchpad, I'm sceptical of news regarding elon, pro and anti. Sure, things like FSD are hopium or scam, but not everything could be. Haven't seen hard science estimates on their new ai satellites.
The issue with AI datacenters in orbit is not science or engineering but economics. There is no practical reason why it can't be done, but why would anyone want to buy compute from such a datacenter when they could pay substantially less money for better capacity on Earth?
Orbit is a bad place for a datacenter. Your equipment will be hot and bombarded with radiation. You can't do any repairs. Even with reusable rockets you still have to pay for fuel to launch everything into orbit. You get a small benefit of more efficient power generation but it's not worth all the downsides.
If you want to have solar-powered AI datacenter that you can't service, you'd be way better off building the power generation in a coastal desert and building your datacenter underwater.
With the rockets, it was more, “wow that seems impossible, but incredible if you can pull it off versus existing options.”
With the space data centers, it’s more, “Okay yeah so let’s say you do…why?”
It just seems like a really hard thing to do when the available options are, like, the Chinese building data centers on the Tibetan plateau where it is cold, ample renewable energy, tons of land, and, like, oxygen.
150 kW is tiny, that is a single rack. Would have to launch a huge number of them to match the GW data centers being built. There is also a lot of overhead for each one.
If Starlink didn't exist, then it could make sense to put edge data centers in orbit. But Starlink means can put edge computing everywhere on the ground.
In 2025, SpaceX put 3,200 Starlink satellites into orbit with 122 Falcon 9 launches. That's about 2,000 tonnes. In about 2 more years, as the Starlink constellation reaches its licensed size limit, it should transition from growth mode to maintenance mode, freeing up over 1,000 tonnes of extremely reliable launch capacity.
What could that 1,000 tonnes per year get your in terms of sell-able data center capacity, and how does that compare to terrestrial build-out time frames?
According the the X post, each 150kW satellite is a bit over 2 tons, so a full year of launches would get you 75MW. Thats not much when AI datacenters are GW-class.
I think it comes down to scaling and removing the bottlenecks.
If you build one data center on earth, you did just that.
If you build one in space and make it work and cost effective, you can scale infinitely (which is why SpaceX is uniquely positioned), until you hit the next bottleneck (which is why Tesla is building a fab).
Tangential: If you play Factorio or Satisfactory, this is _all_ you do. Removing bottlenecks.
> If you build one in space and make it work and cost effective, you can scale infinitely
"If we can just keep consuming massive amounts of capital, at some point, we'll turn a profit. Maybe even a big one."
It's not 2019 anymore, but this mindset acts like it still is.
SpaceX, along with its wanna-IPO classmates OpenAI and Anthropic, are going public because there's basically no more private investor money left and there's no political will (outside of whatever the hell is going on in Donald Trump's head) to lower interest rates to what they were in the golden age of blitzscaling.
They have to ask the public for more money. They just don't have enough humility to do it on decent terms, as evidenced by the IPO deals they're floating.
If this fails to produce what you're talking about - which is likely given things like "speed of radio transmissions", "thermal conductivity in a vacuum" and other things governed by those pesky laws of physics - the game's over.
I think that's looking at it the wrong way. Just view it as a fleet of satellites with computers in them that exist for the purpose of selling capacity. I don't see any issues with the physical fundamentals but the economics in terms of dollars either per flop or per bit transferred is where I don't understand how it's supposed to work.
Satellites are really expensive and electricity on the surface is relatively cheap. What hypothetical prospective customers are willing to pay the necessary rates? I understand that bandwidth back to the surface is expensive but are we really expecting so much raw data to be trapped in space that it justifies sending computers into orbit in order to crunch it at the source?
What is the equilibrium temperature of a panel of black sheet metal hanging out at an orbit of 1 AU? Because if the thing is solar powered then it cannot exceed that temperature on average (ie across the entire mass) due to energy being conserved. You can do goofy things like using solar power coupled with a heating element (such as a GPU) to shift more heat to one part of the panel or another (ie employ an insufficient heat spreader design) but you fundamentally cannot exceed the equilibrium temperature on average.
I see it as a hedge against NIMBYs. If terrestrial data centers literally can't be built then orbital is cheaper by definition. If not, just don't build them.
Worse, it’s “don’t worry, the next data centers will be in space, so it’s okay if the ones we are building right now destroy the environment, there won’t be anymore!”
Which is irrelevant to SpaceX bottom line. Launching GPUs into space, whether by twos or by tons is not going to be a profitable venture.
It's just a wildly expensive bad idea, and it is obvious to anyone that understands how much it costs to put things in space. A man who runs a rocket company knows how much it costs. He knows it's dumb as hell. But, he also knows the average investor is even dumber, because TSLA still trades at ~357 PE.
Disclaimer: I suspect "data centers in space" is just blatant market manipulation by Elon, exactly the same as he'd done dozens of times before with self-driving, etc.
Having said that... it might justify the valuation if every other data centre build-out gets blocked by insufficient power supply.
Bear in mind that you could take the solar panels that you would have launched into orbit, use the launch costs to purchase additional solar panels, batteries, and some additional land, and build a data center plus solar farm plus grid scale battery bank on the ground for probably (almost certainly) less than the combined launch costs.
I think the only way compute in space works out financially is if there's so much bulk data already up there that downlink bandwidth becomes a serious bottleneck.
Why? It seems to me to be much cheaper than a building. Musk's aim is for the cost of one Starship launch to be under $10 million in the long run. 50 rocket launches would be less than half a billion dollars. Can you get a datacenter built on the ground for half a billion dollars?
The comparison isn't half a billion for a datacenter, it's half a billion for a big shed (and some solar panels). The problem of space based data centers is that the only effort they save you is building a big shed to put the GPUs in (and potentially cheaper power at the cost of more expensive cooling)
You haven't built a data center for half a billion mate, you've just launched rockets. You still have to build the data centre! Only not from bricks, it's going to be complex modular units made of radiators and solar panels and you have to buy the gpus too, and the whole thing will be bombarded with cosmic background radiation but you can't replace or repair any part of it.
The cheapness of the building is not the problem that is being dealt with.
The construction of the building w/ zoning and the political fights and utilities arguments and years of time and whatever is what is being dealt with by putting it in orbit.
I bet you could build a fully off-grid DC that didn't guzzle water for less money than launching a rocket today, and there would be thousands of people lining up down the block to sell you more than enough land to do it a thousand times for cheap. This just isn't happening yet because it is still quite possible to build on-grid DCs supplied with fresh water for cooling despite what some people would have you believe.
And then when you build on the ground you could even send people to it to swap hard drives and GPUs when they inevitably fail or upgrade them to keep them current. At lower rates of failure than they would in space because we have a planetary magnetosphere protecting us from cosmic rays.
It would be extremely funny if putting things in space is cheaper and faster than dealing with zoning and local politics.
It implies that China, which can cut through much red tape and has great (and improving) utilities and infrastructure, lots of energy, can just build normal datacenters and save the cost of dozens of space flights.
Building in space adds engineering complexity. Heat output requires radiators. Radiation damages equipment without shielding. Repairs require a spacewalk. All this for what, better solar panels? If you think local zoning challenges are an obstacle, then you have 194 other countries to build in. Going to space is probably the worst option. Even putting a data center on a boat is probably a better choice and that still sounds like a stupid idea.
No, you've got the burden of proof backwards: We haven't even begun to talk about maintenance issues, space-proofing the equipment, power-generation, cooling, etc.
They'll do smaller satellites, and if they can get an order of magnitude improvement on cooling and power generation to weight ratios, it'll be close to the same order of magnitude cost-wise as a terrestrial datacenter. 10x the cost is likely not enough to make it all work, so it's a bad idea, but it's possibly less bad than using lead ballast for starship launches... maybe.
I still don’t see it. The equipment is very, very expensive, is subject to shortages, and has residual value after five years. But these very low Earth orbit satellites literally burn up when they run out of fuel for station keeping.
Even if you pay a bit more to position them in a higher, more stable orbit, you still can’t physically get to them to repurpose equipment.
> In our downside scenario, orbital data centers won’t work or offer any advantage over terrestrial ones
Technologically, will they work? Shovel enough money at the problem and there's no reason they shouldn't. Rack up some GPUs in a shipping container, attach a couple of solar panels to the outside, zip-tie a Starlink to the door. Except for the little problem of heat. Space isn't cold, it's more of a giant Thermos bottle, and they gotta park in full sunlight, which is famously the only thing supplying the heat that keeps the entire planet alive. Good luck to them with their radiator setup.
But economically? There's no chance. Too expensive to get into space, too many auxiliary systems required, no maintenance is possible, and, given the lead time of prepping payloads for launch versus the rate of new developments in AI hardware, likely badly behind the times if not outright obsolete on the day of liftoff.
There is no shortage of land despite what some in the media would have you believe. Those same solar panels work at ground level. DCs don't have to be water guzzlers or grid destabilizers. They'd be better off by every metric solving terrestrial problems for the same money.
Of course they won't work. It's ludicrous that we have to even entertain the thought of otherwise.
And the fact that it doesn't matter and won't impact demand for shares illustrates how increasingly and dangerously untethered the stock market is from reality.
> ...and dangerously untethered the stock market is from reality.
"Disconnected from historical valuation norms" is a more sensible statement.
The idea that the stock market is "detached from reality" is dangerous too because the stock market is...reality. People make and lose real money in it every day.
There are good arguments that the historical valuation norms are reasonable and deviation from them is "dangerous" but there's no actual law that says the stock market needs to behave according to history.
While I personally think the current behavior has significant risk, I also can't dismiss that the role the stock market plays today is different. It's not just about raising capital, providing liquidity, price discovery, risk management and building wealth, for large numbers of laypeople it's also the go-to casino (entertainment) and a platform for expression (way to express dissatisfaction with corporations, politicians, the world, etc.).
For certain values of "reality". It doesn't take a financial analysis to tell you that it is bananas that Tesla (~1.3T) is worth more than four times as much as Toyota (280B), and yet.
But there's no law that says prices must be based on standard financial analysis.
You and I and a million other people might run away from Tesla's valuation but that doesn't mean that the market must.
I think it's very obvious that the historical norms that governed and explained pricing in the stock market no longer apply, for better or worse. Between the massive manipulation of the markets by central banks to the rise of the retail investor (and social media, meme stocks, etc.), there are a lot of factors in play that weren't a thing 30 years ago.
“But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown.” -- Carl Sagan
The problem is, as an investor, you don't know whether you're looking at a genius or a clown when dealing with these types of powerful trends.
Markets allow people to bet on it. So one would assume the author is taking the revenue from his $70/year subscriptions and shorting the bubble he sees (or at least positioning himself to do so).
Bitcoin has a 1.5T market cap with 0 revenue. I think Musk really got his eyes opened when he started playing with Dogecoin a few years ago. He applied the lessons successfully with Tesla, making the company an empty shell PR vehicle to support the TSLA "token".
There is a simpler explanation: passive investing in index funds turned out to be too effective and ruined the game for active investment management. Now the banks have figured out how to exploit passive investors and turn them into involuntary bag holders. That is why the IPO will go out at the stated price and the underwriters face little risk.
> And the fact that it doesn't matter and won't impact demand for shares illustrates how increasingly and dangerously untethered the stock market is from reality.
Part of the reason for this demand is the fact that index tracking funds like QQQ will be forced to buy up massive volumes of shares. Not only that but other non index tracking funds that track large cap stocks will also have to buy. Vanguard large cap for example manages trillions of dollars. That in itself will have 100s of billions worth of buy orders.
Does this not follow from the basic 401k structure in this country? Most people will be defaulted into a fund like Vanguard and from what I can gather from my co-workers, none of them are particularly wild about taking their retirement money and playing the day trading casino to try to increase their performance.
It's better than what preceded it but we still manage retirement wealth poorly.
On a tech site, pessimism like this make me sad. I'm a nerd. I have been dreaming of a future where humanity finally takes its place among the stars since I was young enough to have dreams.
I am looking forward to buying a little piece of it. I plan on putting a couple thousand into the IPO. I view it like buying into D.D. Harriman in "The man who sold the moon." I plan on taking those shares and forgetting about them for a couple decades. Maybe leave them to my grandchildren. This is the longest of plays and I hope it works out.
Maybe SpaceX will fail, but this is the first time since I was a boy that there is any real hope that humanity will step into that future, and I want to be part of it. Maybe Musk is suckering in dreamers like me, but I'll bet on a better future. This is it. This is our shot. Godspeed.
I mean the market is seemingly completely detached from the reality of financial performance. However, it’s VERY MUCH attached to the reality that is investor whims. You’re not betting on a company doing well, you’re betting that other investors won’t want to sell it en-masse. That’s it.
As far as I can tell, that’s exactly how it works. Reality is investor emotions. If it shouldn’t be that, I mean the whole system needs a rework.
Short-term, you are correct. However long-term, the stock market does tend to weigh value heavily. That is something that people who aren't familiar with the stock market often get confused because how can people who are in the short term and the wrong term have such different outcomes.
One of the obvious problems with the short-term thinking is you can trade on feelings all you want, but if things go really bad the company goes bankrupt and suddenly the court say no more trades allowed anymore and your and your value goes to zero.
Let's go check on the cautionary tales of the Tesla shorts.... poor folks, we let them run around in the yard of the asylum without a fence because they have lost the motivation even to run away. They just keep mumbling about PE ratios....
From my perspective it's more of a "stay away" type of stock (short or not). The price is not supported by business finance fundamentals, and seems to be pushed upward via the retail market, driven by Elon's gift for selling futurism to the masses. To me, the value of Musk's companies is dangerously dependent on one single person, in a way that I can't think of for any other current company. It makes "investment" in the company more speculative, and closer to other "retail mass" phenomena like "meme stocks" or cryptocurrency.
As an example here, in the 2022 (relatively mild) stock market downturn, when the S&P 500 gave back about 20%, TSLA dropped from a peak in the low 400s, to a low of 122... roughly a 70% drop peak to peak. It's back to ~400 now, and it could go higher again. But, in the next downturn, it could go a lot lower.
We can print more money, but it's not about "affording" it, the money printing at most changes the value of the dollar (i.e. inflation/deflation).
The rest of the world wants dollars, and as long as they do, the US benefits massively from that demand, and it would be foolish not to satisfy that demand, as it's pure benefit to the US.
It seems that many are devoted to ending the status of the dollar as the reserve currency of the world, but it's a strange and subversive thing for any US resident to want or desire.
A lot (everything?) hinges on orbital data centers. If they don't work, SpaceX is overvalued.
SpaceX plans to launch 120 kW satellites, each weighing 1.7 tons. Let's be conservative and say it ends up being a 100 kW satellite massing 2 tons. Let's be conservative and say Starship can launch 50 tons to orbit for $20 million ($5 million more than a Falcon 9 launch).
50 kW per ton x $400K per ton = $8,000 per kW = $8 million per megawatt in launch costs.
That means a 100 megawatt orbital data center will cost $800 million to launch.
You need about 833 satellites for 100 megawatts, so let's round up to 1,000 satellites. Let's say one of these satellites cost $3 million (that's probably high, but let's go with that for now). That's about $3 billion for satellite manufacturing.
Bottom line: It will cost SpaceX $4 billion to launch a 100 megawatt data center.
Anthropic is paying SpaceX roughly $50 million per megawatt per year. SpaceX could sell access to its data center for $5 billion per year. Assuming the satellites last for 4 years, that's $20 billion in revenue from $4 billion in costs.
Please correct my math/assumptions, but this rough calculation shows that SpaceX could be right and Morningstar could be wrong.
1) You forgot to include the actual costs of the GPUs and other equipment, you are just calculating launch costs which will always come on top of the other stuff
2) Datacenters require repairs and hands-on attention, and space provides extra challenges like radiation to deal with
3) They have not provided any evidence that they can solve the heat diffusion issue, which could kill the whole project
4) Musk's track record for outlandish tech is poor (hyperloop, fully autonomous driving, Mars trips, etc. were significantly delayed or not achieved yet), and unlike some of these other things no one else seems to think this is economically feasible
I think starlink made intuitive sense; we already use satellites to transfer data for phone service and TV channels, a satellite can "see" a large area to service, the technology was there already, etc. Starlink provides a service you can't really get without going to space (coverage in remote areas).
The space data center doesn't make intuitive sense to me. Why put it in space? Wouldn't it be better just... on the ground? The technology doesn't feel like it's there either, and there would be significant competition from existing or new data centers that don't have all the drawbacks of orbiting the planet.
The US power grid is not able to keep up with demand, it's mired in red tape. There's also a populist revolt against DCs and the infra upgrade costs being dumped on ratepayers. That's the main benefit I see of their plan, from a US perspective. I think China probably will have a significantly easier time.
He sort of is. I believe people aren't very happy with his gas turbines powering Colossus near Memphis. There's also currently a >5 year backlog for nat gas turbines for combined cycle plants.
Solar takes up an enormous amount of space to get to reasonable base load, because you have to massively overpanel in order to carry it through winter. You need a large multiple of the panels you'd need in space to get to reliable baseload, plus batteries. During grey winter weeks, our home array is frequently making like 1/6 what it does during summer, and even summer days have night/weather/etc compared to sun sync orbits.
Nuclear is hilariously expensive and slow to build. But I have some hope for small reactors and Commonwealth Fusion Systems/Helion.
>What about the other 94% of the Earth's landmass?
Geopolitical concerns, infrastructure/power availability, security, since these things are full of incredibly valuable hardware.
> Geopolitical concerns, infrastructure/power availability, security, since these things are full of incredibly valuable hardware.
The market decides that, not Elon. Do customers want to pay $X for compute in Iceland (or wherever), or do they want to pay $kX for compute in space?
What premium are customers willing to pay for compute in space? I would guess that the premium is actually negative because the quality of computation in space is worse than under the sweet embrace of Earth's atmosphere which provides a natural protection against radiation.
No premium, it's just a question of whether people can and are willing to build enough in those other places. Space is a bet that they can't. Also, I don't think bitflips are a huge deal in space for neural nets, we already build in randomness via temperature. A little more shouldn't make things noticeably worse. Higher energy particles could be a problem over time, but when I looked into it, it looked like the incidence of very damaging particles for a given area was surprisingly low.
Morningstar does think it's a possibility that Starship ends up being highly successful as a reusable platform and that orbital data centers end up being very successful, they just assign a 7% chance for that outcome.
I need to understand what possible benefit there is to doing DCs in space. The cost would be, no pun intended, fucking astronomical. The cooling situation would make no sense at all -- the major up-and-coming application of DCs, LLM training, has absurd cooling requirements even here on earth where convective cooling is an option, to the point where many DCs use open-loop cooling. Latency might be better, in some cases, I guess, but probably not by some groundbreaking amount.
Who is this product for? How the hell did "data centres in space" make it into the prospectus at all?
More to the point, why is Morningstar being so generous with their interpretation of that line of business? It's plainly insane, and you don't need an advanced degree in physics to understand why.
It's easy to see the benefit in DC's in space if you look at a few ingredients:
1. The recent Iran drone attacks on AWS data centers
2. Growing anti-AI and anti data center sentiment at home, plus Larry Fink (ceo of Blackrock) in a recent interview being terrified of dissident groups using consumer drones to attack data centers.
3. Anthropic, Grok, and other AI vendors becoming more and more integrated into defense and military, plus increasingly reliance on AI for other national surveillance systems
Data centers are and will be targets, both for national military attacks as well as home grown dissident attacks, so they are proposing to move some of the critical workloads to somewhere that the only group that can attack the data center hosting the workload is a nation state with space launch capabilities. That significantly reduces the number of actors that can attack the data center. And if the US wants to they can probably bomb all the other space rocket launch facilities worldwide in less than 24 hours, leaving extremely limited capability to attack a space hosted DC.
Is it insane? Probably, but the US has done insane things with military budget before, and will continue to do so for a long time. If you are Elon, its a great time to milk that US defense budget for some more R&D, and even if the main project doesn't work out, he's still going to be able to keep some innovations within the company and apply them to Starlink and other more realistic endeavors.
If the only benefit of space-based datacentres is a hedge against infrastructure attacks in a world war then we are in an awful place.
I'm not disagreeing with you but peace is far more prosperous for humanity than blowing the worlds' retirement funds on datacentres-in-space as a military endeavour.
Also. I would not fully trust argument that all possible adversaries are incapable of attacking them. Possibly with cascading effects at least when you get size of satellites planned.
Even with this benefit of the doubt, even stretching our suspense of disbelief as far as it can go, we are basically talking about a niche military application that inherently has a limited market value.
In other words, we can just assume this concept is possible and makes sense some level of financial sense for military, government, and high sensitivity use cases.
Well, find me a military contractor worth $1.5 trillion. Lockheed Martin is worth 1/10th of that.
Put Lockheed Martin and AT&T together and you’ve got about 1/5 of a SpaceX IPO target valuation.
Even if we make this assumption that the technology is marketable and has merit, it’s not like every company or government agency is going to want to switch to this technology. There are already a number of alternatives that can mitigate many to all of the risks that it solves.
The cost and complexity right now to deploy global services and their disaster recovery replicas to multiple distant data centers in the terrestrial world is already extremely low. Often, these features are offered as an off-the-shelf service.
California could sink into the ocean and my users wouldn’t even see a blip of downtime. Unless they live in California.
Heck, build some data centers underground in deep fortified bunkers if you want. That would be cheaper than launching them into space. They might even be easier to defend than satellites and space DCs because a foreign adversary can’t just launch a missile up in the sky to get to it.
Going back to not really suspending disbelief as much, I also think performance and latency is going to be an insurmountable problem. Right now as we speak Starlink residential service is about 10x slower than my home fiber connection at the same price. How is this technology going to compete with data center level infrastructure even in an optimistic scenario?
I can toss pennies per hour at Amazon for a relatively small VM with like 4GB of RAM and they’ll give that thing a 15 gigabit connection.
> Starlink residential service is about 10x slower than my home fiber connection at the same price. How is this technology going to compete with data center level infrastructure even in an optimistic scenario?
Where I live in New Zealand the only good internet provider is Starlink, so all my internet is through Starlink. The latency is about 20ms, so while yes you are technically correct that is 10x slower then 2ms, it isn't a major deal breaker.
You are probably thinking about light and fast API calls, where latency is more noticeable. But if you are doing an inference or LLM job that is going to take several seconds of token generation before the full response is available then the difference between 3.002s and 3.020s is negligible.
> build some data centers underground in deep fortified bunkers if you want.
This is the defensive build. The US has a tendency to optimize for offense.
Let's roll forward another few decades, and imagine a classic dystopia scenario: pervasive worldwide surveillance systems, armed drones and robots everywhere, etc. Where does the data from those surveillance systems get crunched, and where do the drones and robots get controlled from? Probably not from one central system in one place. That would ironically be too high latency. These systems would most likely end up as generic shells with minimal on board smarts, controlled by AI "brains" up in LEO, 20ms away via radio. The AI observes from overhead via it's surveillance systems, and it acts via it's robot bodies down on Earth.
It sounds like sci-fi, but you have to remember the world is full of megalomaniac nerds. They love this type of stuff, and if they think someone might be able to build it, then they want to be the one to build it.
I think that vision you paint of satellite-commanded robots makes reasonable sense. At the very least, we can assume it does.
But then I go back to my original question where I ponder whether that vision results in a gigantic company.
I look at some of the contracts I found some news articles about: Space Force has a $437 million (not billion) contract with ViaSat and SES, the Pentagon is said to be spending $13 billion on LEO satellite programs.
And we can’t forget that SpaceX doesn’t actually make any of the robots. They only make the communications stack.
AT&T has a market capitalization of about $150 billion, for comparison.
It’s trivial to attack things in space if you also have stuff in space. Just ram your cheap satellites into the other guy’s. Do it right and the destruction will cascade.
How easy is jamming starlink? I don't think it is as easy as jamming gps. As I've seen numerous warning from Russia that they providing starlink to Ukraine is bad idea. That they're going to shut it down etc. But, starlink is still being used in Ukraine.
Prior to these events, the prevailing consensus in the defense community was that Low Earth Orbit (LEO) satellite constellations like Starlink were nearly impossible to jam effectively. Their defense relied on the satellites' constant rapid movement and their ability to "frequency hop" to avoid static interference. The blackout in Iran has shattered this assumption.
There is no benefit, and they aren't going to actually do it in any meaningful way. When was the last time Elon Musk made a factual forward looking statement about one of his companies or products? It's all just bullshit, no need to dig deeper than that.
It's so you don't have to ask anybody for permission. That's it.
Right now, 70% of the country is at least skeptical of DCs and at worst absolutely hate them. NIMBY is basically the rallying cry. That's why you go "up" (if they can make starship work). The physics is "hard" but doable, you can keep them cool enough in a sun synchronous orbit. The math pencils out. It's not my field, but back of the envelope math seems to work. Scott Manley has a video on it if you're skeptical.
But, people keep thinking about this like "return on investment" is the only thing driving this play. They're literally the only company with a mostly reusable system (unless you count that company trying in China?). They're the closest company to a fully reusable launch vehicle. They have a ton of government contracts with star shield. After Bezos' rocket blew up last week, there's basically nobody close to competing with starlink...
I am not a Musk fanboy, but, like, there is literally no other serious space competitor right now. I mean, "maybe" Boeing? But not really - they're years away...
So, like if you read about the Memphis Datacenter - Colossus I think? They're unable to get power, they're pulling in power from Mississippi to keep the thing running. You know how many times they have to ask permission for that? The infrastructure costs there just to power it start to get absurd too. Then the unending line of approvals and environmental impact studies and permits. For all the people saying, "it'd be cheaper on earth" it might be in terms of dollars, but if you can basically iterate entirely unfettered in space, it's the obvious choice if you can make it happen.
Like, seriously, go try to build something, there are a LOT of rules outside of rural areas. It's literally why my wife and I decided to build our cabin where we are building, because there were basically no restrictions. Meanwhile in town, my buddy's deck was a nightmare to permit... it was a deck, not bridge. Seriously, to all the people saying, "it's easier" go try to get something built in a big city or where you have to fight through permit hell.
These tech oligarch guys view this (I think rightly - it's one of the only things I view them as right on) as a race to AGI against the Chinese. We're in the lead right now, cool, but the Chinese have excess kilowatts and we don't. In fact, we don't have adequate power plant infrastructure at all and we couldn't get the power plants built if we wanted to (the Ezra Klein and Derek Thompson book Abundance touches on this topic if you're curious as to why). It's not going to happen.
But up? No NIMBYs in space (yet). So they're going to go where nobody will tell them "no." At least, that's what I would do if I owned a literal rocket company.
People are all looking at this stuff through the lens of "money" as if that matters hardly at all after AGI, lol. The analysts are looking at this like it's 1995. I mean, PE ratios are important, don't get me wrong, but after 2016, and Trump, and the applications of transformers, and the war in Ukraine (and current shit show in Iran), and the rising price of fuel, and, well I'll stop, the list goes on and on, but acting like the "normal" rules of investment apply is just silly. This stuff is about power, and he who controls access to orbit is worth a basically unlimited amount of money...
Do I wish it was happening differently? Yup. But hey, we decided to give up on space as a country like 50 years ago, maybe we can try to do cool stuff in space now.
> It's so you don't have to ask anybody for permission. That's it.
I would think this is a very temporary victory. You only don't have to ask permission right now because nobody is doing it. But space does actually belong to people, as in there are a lot of different stakeholders with their own motivations. And, that also naturally includes every country's military. I don't foresee everyone just rolling over and accepting massive amounts of space junk without at least getting their piece of the pie.
I also don't think we gave up on space as a country. We have Artemis. I think we sort of realized that there isn't much in space. Outside of science-y stuff and research, there's really nothing to do. There's no products to be made, and our country revolves around consumerism. I think space DC's will be the same story. Does it make sense from a money perspective? Because I think that's really the only perspective that matters.
>> It's so you don't have to ask anybody for permission. That's it.
This doesn't make sense because there's one party whose permission you always must ask, and that's the government. They are the ones who get to decide whether you can launch your rockets.
A more accurate version of your claim would be: datacenters in space allow you to deal with one party (i.e. the government) instead of many. So long as your relationship with that one party is good, your business plan is safe.
Fair (at least for now, maybe in a decade we will be manufacturing stuff up there, but for now, yeah).
Totally fair - and with Star Shield and basically SpaceX being the only reasonable launch provider, and a Musk-Friendly government currently in the executive… then I think my thesis holds. The only people who can tell SpaceX no at that point are like 3 nation states with ASAT capabilities?
Regardless, he won’t have to ask the “city” counsel of Asslick Indiana if he can “please build here pretty please!”
Why are we considering data centers in space? What problem does it solve? I don't understand this concept at all.
Surely putting server racks in orbit where you can't do basic maintenance without sending someone up there is a terrible idea?
It just always puts me in mind of the story of an IT guy having to travel for two days to go to a premises and turn on a server that three separate people ensure him was already on.
The only people considering data centers in space are those too out of touch to remember that their vacuum flask retain heat for hours. At any usable capacity we'd be talking about massive field of dissipators, which can't be possibly profitable considering there are far more lucrative payload compared to dumb panels. Some would pretend there's a just around the corner tech to solve the heat waste, but if such tech really exists one of the criticisms of terrestrial data center (wasting stupid amount of water) would've been solved anyway making space data centers even less viable.
And there's also bitflips. Acceptable for astronauts carrying normal laptop to watch movies, but in a data center? Solving it through redundancy easily cut the usable capacity to half, and there's not enough shielding with any competition for the payload slot.
The usual criticism of Mars colonization is maintaining a base in Antarctic is already a heroic effort despite being relatively easier. Google and Microsoft mostly abandoned their "data center underwater in nearby shore" plans even though in those the tech would've only sat for few minutes going down or alternatively waiting for the problematic module being floated to the surface.
The real question is whether or not the stock will be more overvalued, immediately after the IPO. My brother earned a bunch on the Rivian IPO, despite considering it overvalued, because he figured it likely wasn't overvalued enough.
From SpaceX's S-! it bases its valuation on the total addressable market of 3 markets, which is made up of:
1. Space operations: $370 billion;
2. Connectivitiy: $1.6 trillion, roughly split between mobile and broadband; and
3. AI: $26.5 trillion, which includes $22.4T in AI Enterprise applications, $2.4T in AI infrastructure, $760B in subscriptions (ie Grok) and $600B in digital advertising.
So immediately we see the limits of the space market. SpaceX did 170 launches in 2025. At $100M each, that's $17 billion in revenue and Falcon 9 launches just don't cost that much. That brings Starship into the picture but that program is arleady at $15 billion spent without a single dollar in revenue. So we know from the outset that only the other markets can really justify the STarship prgoram because you have to remember that STarship has to compete with Falcon 9. Or, even worse for SpaceX, a Falcon 9 competitor.
Now, as for Starlink, this one is interesting. Starlink has a big advantage when you need mobile broadband (eg planes, boats) as there's nothing really equivalent, Yes, there's 5G and that's fine in populated areas on, say, RVs and such. But the receivers are expensive.
I think Starlink is going to have a hard time competing with 5G, mainly because 5G already exists and Starlink handhelds are predicated on STarship being able to launch sufficient low-altitude V3 Starlink satellites, which themselves have a more limited life because they are lower altitude. And you're still going to have to deal with per-country licensing, marketing, regulations, etc.
I wonder how much of this is predicated on military applications.
But let's get to AI as that's the most hand-wavy (IMHO) of all this.
First, digital advertising. Well, when Elon bought Twitter it had $4.5B in ad revenuie. Now it's $1.8B. I also think Twitter is fundamentally limited so that's just not going anywhere. Twitter just isn't 10x'ing it's audience (IMHO).
Subscriptions? I think this is a dead market. For everyone. Why? There'll be a race to the bottom, hardware will get cheaper, eventually AI agents will be run locally (even on phones, eventually) and it's just not the cash show OpenAI, SpaceX or Anthropic think it is.
Let's also dispense with orbital AI data centers. It's a completely dumb idea. it's going nowhere. Don't believe anyone hyping it up. It makes zero sense and it will never amount to anything.
SpaceX seems unable to monetize their AI investments thus far. How do I know this? Because you don't lease DC space and GPUs to Google if you have a better use for them. So it not only looks like you're falling behind but you also need the cash. Also, this is dependent on getting enough GPUs. Published details about the Google deal seems to allow Google to cancel or revise the deal if SpaceX is unable to deliver so there is a huge risk here.
What none of these companies (SpaceX, Anthropic, OpenAI) seem to be addressing is what happens when future generations of hardware come out? What happens when running models locally becomes more and more viable? What if there is no expensive hardware moat? What happens when AI models get commoditized? I personally believe this last one will happen and China will make sure it happens.
So all in all there are a ton of risks here. I am skeptical about the long-term prospects of OpenAI in particular and Anthropic less so but I think xAI's (ie Grok's) future is way more uncertain.
I'm actually most confident in Google's future here because they haven't bet the company's future on AI not imploding.
> There'll be a race to the bottom, hardware will get cheaper, eventually AI agents will be run locally (even on phones, eventually) and it's just not the cash show OpenAI, SpaceX or Anthropic think it is.
That’s why we are seeing pushes for regulatory capture, safety fear mongering, large government contracts, and even potentially the government taking stakes in these companies. It’s a sprint to cash out before they get commoditized.
Everyone says SpaceX IPO price is too high, but it's the most interesting IPO in a long time, it's critical to the US government, and America is, frankly, addicted to gambling. I'm not convinced it's going anywhere but up for a long while.
Very little of the IPO is related to anything government, or space for that matter. It's mostly a rental service for some GPUs that were hoarded, with the promise that somehow in the future the $2B/month that Anthropic and Google are paying SpaceX for compute infrastructure will somehow grow, that somehow SpaceX will grab valuable GPU real estate before others and continue renting it to others who actually make productive services.
Even SpaceX's own documents estimate the space stuff to only have an addressable market of $370B, and it's not like it's a document full of conservative estimates considering they estimate their AI at approximately the entire GDP of the United States.
80% of all mass launched from Earth in 2025 was launched by SpaceX, and 95% of those launches were with reusable systems.
That dwarfs all other launch capabilities on Earth, including all governments. Short and medium term value may be shaky if you evaluate SpaceX as a typical business.
Compute in orbit is "stupid" only to those who don't think it through. Their biggest initial customer for that feature will be Google, and through Google, Apple; two of the highest value tech companies on Earth. Seems like a fascinating flywheel to me.
Also see Aswath Damodaran’s updated analysis. It’s not quite as dire as Morningstar but is still lower than what musk wants.
> At the rumored pricing of $1.8 trillion for the company, it is too richly priced for my tastes, given my valuation of $1.25-$1.35 trillion for the equity in the company.
If SpaceX is indeed overvalued (which I have no opinion on), it above all else demonstrates how unimportant spaceflight still is.
SpaceX has been the only game in town for quite a while now, to such an extent that the intelligence agencies of foreign governments have no alternative but to launch with SpaceX. They now do more orbital launches than the entire rest of the world combined. If they really are worth less than Microsoft, then it seems space just doesn’t matter that much, because SpaceX is space for all practical purposes.
I think this is right. For example, GPS is tremendously useful, but you can use it for free. Similarly, while there are commercial weather services, a lot of people access the ad-supported versions[0] or get it from their government’s weather agency.
[0]: which obviously provide some revenue, but much less than the value provided.
Part of the problem with this argument is that for them to be worth a lot, you need both the amount of stuff launched into space to go up massively and for no one else to be able to build a rocket that's anywhere near as good. Spacex is doing really well now, but if Rocket labs, China, Blue Origin, or anyone else manages to make a rocket that's half as good, spacex needs to maintain a monopoly despite not having anything especially magic.
SpaceX is not being valued based on the space part, it's being valued based on Musk's claim that the market for their AI is the entire GDP of the United States. The space stuff is only estimated as about 1% of their addressable market
The real immediate economic value hasn't really changed for decades. Starlink is the most recent significant innovation in that area, and it's worth less than 3% of Google's revenue.
The hyped up reasons for space mattering are all completely speculative and at the limits, stretch the bounds of a sane person's credulity: asteroid mining - ok, there may be an economic case for that, but it's far future; colonies on the Moon and Mars - there's no economic case for those, it's purely a dubious expenditure of tax dollars that has no meaningful economic purpose. Etc.
So, what makes spaceflight "important" beyond what it's already used for and has been used for, for decades?
This is the most white collar “we call bullshit” type of writing I’ve seen in a long time and I’m here for it. Not a good sign for the next two AI IPOs either. SpaceX had the hubris to release their S-1 publicly and whatnot. This is going to be “Hot Garbage Summer” in the equities market lmao. GG VCs.
>However, we assign this scenario, in which both Starship is reusable and scaled orbital data centers are highly successful, a 7% chance of happening
I may agree with their overall sentiment, but I think this sort of formulation is just silly nonsense from analysts who build models instead of companies.
Okay, but if someone is going to invest money into companies they need some way of deciding what they think a company is likely to do in the future.
Are these kinds of reports mostly a lot of window-dressing around a gut-feel about what might happen in the future? Yea, of course. But, there's not really other options. Pretty much all the other options for predicting how much money a particular company is going to make in the future will also boil down to a gut-feel.
And the prospectus says it plainly: "Mr. Musk will be able to control the outcome of matters requiring shareholder approval."
Musk holds over 85% voting power through Class B super-voting shares (10 votes/share). Public investors combined will have 15%.
What Musk Controls:
- CEO removal = his consent. You can't fire him even if he destroys the company
- Take business for himself. SpaceX gets a rocket deal? Musk can say "I'll do it at Tesla instead"
- 85% voting forever. No expiration, no time limit, permanent control
- Board elections. You have no power to elect directors you trust
Voting control doesn't change management's fiduciary duty to all shareholders. The founders retaining voting control has worked out fine for Alphabet shareholders.
> The founders retaining voting control has worked out fine for Alphabet shareholders.
Only after the cofounders brought in veteran "adult supervision" who offered guided the company with a steady hand, while Larry and Sergei were safely in their moonshot hobby project play-pens, away from the core products - an arrangement that would greatly benefit shareholders in Musk companies.
Yeah but SpaceX says you need 3% of the company to sue, so that fiduciary duty is never going to be enforced.
Getting together a group of owners with 3% ownership by value or 3% by voting rights both seems do-able, and I'm sure would be done of there was a serious case of mismanagement.
Fiduciary duty is meaningless without recourse. The governance structure denies any recourse. A case of breach of fiduciary duty would never make it to trial under the governance structure.
It raises the bar to the courts for shareholder control.
The Google founders are, lets say, more reliable than Musk when it comes to making sound business decisions.
> The Google founders are, lets say, more reliable than Musk when it comes to making sound business decisions.
I've no idea about that and I won't opine. But every time I see that sort of statement it seems likely motivated by the whole Twitter acquisition. Perhaps that was just a toy or vanity project for him, one he could afford, so even if you think he's running X terribly it might have nothing to do with how he's run or would run any other companies that are not related to social media. In other words, what I read into such statements is "I don't like the politics he's brought to Twitter!", "the board should rein in the guy whose politics I don't like!!". It's like saying Bezos is bad at business because he owns the Washington Post -another vanity project- and you don't like the Post.
Do people not get bored of that sort of take?
Tell me he makes bad business decisions all you want, but in the context of everyone-hates-his-acquisition-of-Twitter I'd like to hear about his other businesses. Tell me something useful, not something political.
And, sure, politics at some point bleeds into business. Maybe Trump is out to get Bezos over Washington Post coverage, or maybe the next Democrat President will go after Musk for his politics. It's possible that X will eventually cost him dearly and personally, and it's a solid argument for these billionaires and trillionaires to stay out of politics. Or maybe it's a good argument for them to stay in because maybe by demonstrating electoral influence and power they can make the POTUS-of-the-day fear them enough to not go after them too hard. But if you made any such argument it still wouldn't say tell me anything about the rest of these billionaires' businesses.
Space GPUs are stupid, so is hyperloop, so is the Vegas Loop; robotaxis don't work, cybertruck sucks, the humanoid robots don't work, the new roadster is nowhere to be seen.
SpaceX blew up an entire launchpad because Musk thought flame diverters are gay, or something.
And, yes, Twitter is now a shithole.
Every single one of those examples is both valid and - I believe, at least - misunderstood.
Musk has a singular goal as far as I can tell: to make humanity a multi-planetary species. All of those things are testing the boundaries of what's possible in areas that will or could be very important for building a permanent settlement on Mars.
I posit that while there's much room for debate around whether or not those projects are viable, as far as I can tell everything Musk has done has been in service of building the corporate framework, talent pool, skills, and technology necessary to colonize Mars.
It’s a noble effort for sure, but he’s burned so much goodwill with most people because of his deep alignment with persons of questionable character.
How about we get our own house in order before messing with other planets?
Ok. A permanent settlement on Mars. Given the personal control structure at play in his companies giving him autocratic control there, why would anyone believe he wouldn’t be anything but a Martian autocrat, and who in their right mind would willingly submit their own sovereignty to Emperor Musk the First of Mars? It’s not exactly like you could change your mind and walk away. You’d be literally putting your life in the hands of this wildly erratic person.
This doesn’t even include the whole taking money from people for FSD that was JUST 2 years away…
Just wait until 2022 when SpaceX is ready to launch their first mission to Mars.
I guess I’m not going to make it to your launch party four years ago.
If you do so many things, some are bound to be stupid.
While it is true that a broken clock is right twice a day, the inverse is not.
And, you know, regular use of ketamine.
Just to add that to the crazy pile.
It's really not a public company at all in the sense people are accustomed to. The super voting shares plus the 3% rule for a lawsuit plus the arbitration clause make Musk almost totally unaccountable. It certainly should not be included in stock indices that are used for passive investing, because it is a different category of asset.
This category is affectionately known as a “meme stock”.
I haven't read the prospectus but I would be interested to know, when he dies, to what degree the "... control the outcome of matters requiring shareholder approval" part will be inherited. Does that facility just go along with the Class B super-voting shares? And if it does what does it mean if more than one person inherits his shares?
On the subject of the governance structure this [1] is worth a read ...
"The company significantly limits shareholders' rights to sue. SpaceX's bylaws will make it clear that anyone who owns shares "irrevocably and unconditionally" waives all rights to pursue a jury trial. Shareholders will also be prohibited from bringing class actions against the company, its directors, officers, controlling shareholders or bankers tied to the IPO, according to the filing.
Instead, shareholders will be subject to mandatory arbitration, which had long been illegal in the U.S. The Securities and Exchange Commission reversed its position, opens new tab in September, allowing companies to adopt mandatory arbitration policies, which are private proceedings overseen by arbitrators."
... I can't remember how much he spent in Pennsylvania but you might argue it was money well spent.
[1] https://www.reuters.com/sustainability/boards-policy-regulat...
Per the S-1, the class B 10x voting shares Elon owns are converted to class A upon transfer or sale.
The voting issue is problematic, but the limits on shareholder class-actions seems like a good idea. Do you know of any shareholder class-action lawsuit that actually benefited the shareholders? They only ever seem to benefit the plaintiff lawyers pursuing the case.
That's because they often don't go far enough, and that's because of limits on things like shareholder class-actions.
If you haven't wiped out their corporate savings and sent the stock price tumbling, you haven't really done anything to get the needed recompense and to discourage the behavior in the future. Right now, many companies are effectively sole proprietorships or partnerships with window dressing made to look like there's real accountability. If it becomes impossible to oust the CEO, you're not a shareholder, you're a bagholder.
But that’s the thing. In that case, the shareholders are the ones who were harmed and now they’re winning by…making their investment worth far less?
What you really need are lawsuits against individuals to be held accountable, otherwise it’s a lose-lose for shareholders.
Unfortunately, articles of incorporation preclude that sort of thing.
Perhaps after a few high-profile cases, IPOs won't be structured to give absolute control to one person.
That, or you make the ousting of the execs in charge the settlement instead of massive monetary damages.
This should frankly be disqualifying for any company trying to go public. Super voting shares have their place but there's no scenario in which overall control of the company can be retained by super voting shareholders who make up a small minority of the overall shareholders.
The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction, in particular by offering escape hatches like being able to eject a CEO who's lost their mind and is no longer acting in the fiduciary best interest of the shareholders, which will so obviously happen here.
> The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction
The point is to raise money from investors. The investors get a voice in exchange.
This is not a new thing. Off the top of my head, I can think of similar arrangements at Meta, Alphabet, and the New York Times Company.
Whataboutism isn't an argument.
I'm pretty sick of everyone labeling points they don't like "whataboutism". The reason I brought it up is if you're going use that as a reason to get the SEC or Congress or whomever more involved you're going to have to come up with a reason beyond "I don't like Elon Musk".
It should be described so buyers can beware, but it's a personal choice to decide whether someone trust Musk and his estate planning
Technically, it is described. It's described in the S-1. Trouble is that most (active) investors don't read the S-1.
Fund managers and the like do, which covers a lot of passive investors, which is good until a company joins one of the major indices at which points funds may be obligated to buy in.
It's a deeply distressing moment, and I see it as a time to renew calls for consumer-protecting regulations and antitrust laws with more teeth in the markets where this kind of behaviour's currently flourishing.
- Take business for himself. SpaceX gets a rocket deal? Musk can say "I'll do it at Tesla instead"
In theory (were we talking about any other man, in any other time) that's very strictly illegal with a whole area of law dedicated to it (fiduciary duty).
If we were a saner society, this would not be a valid way to carry out corporate governance.
This is just sole proprietorship with window dressing.
It's not that different from an NFT.
I think this is a very big issue. If SpaceX is very successful, will he pay out dividends, or will he spend everything on a mission to mars at a massive loss or something like that?
If SpaceX is very successful he will spend everything on a mission to mars. He's pretty up front about this. If it costs a lot and the company runs at a loss then it costs a lot and the company runs at a loss. Read the S-1
> We believe that our current space efforts will catalyze transformative breakthroughs that could reshape terrestrial industries and lead to the emergence of new trillion-dollar markets on the Moon, Mars, and beyond. In particular, we believe our goal of establishing a lunar presence will enable terawatt-scale annual AI compute growth, support deeper space exploration and industrialization, and serve as a stepping stone to establishing a civilization on Mars.
There is no secret about this. If this scares you, do not invest. Mars is mentioned 60 times in there. That's what he's going to spend the money on if it comes to it. If you don't want to lose your money on a Mars mission then the guys who are saying they're going to spend your money on a Mars mission are not the guys for you.
Only a matter of time before SpaceX starts selling parcels of land on Mars, surprised they haven’t yet. It has to be good for a few extra billions.
I wonder if the scammers have been doing this already. Remember when you could buy naming rights to a star, or acreage on the moon? Elon selling lots on Mars might not feel far fetched to at least one demographic he already caters to.
https://pieceofmars.com/
That talks about trillion dollar markets. Nothing wrong with investing in Mars if money can be made. The problem is if he decides to create a mars base just because it's cool, not because it's profitable.
And yes, I don't plan to invest unless SpaceX stock somehow becomes cheap, which is very unlikely.
> Mars is mentioned 60 times in there. That's what he's going to spend the money on if it comes to it.
And yet the vast majority of addressable market they list is enterprise AI apps lol
Market to address, to pay for going to Mars.
SpaceX has gotten reduced cost engineering since its inception, due to telling their employees that the entire purpose of SpaceX is to put humans on Mars. Everything was about making money while developing the technology to do, and then using that money to achieve that goal. Going public in this way fundamentally creates a conflict there. Given that Musk has already used SpaceX to bail out his Twitter acquisition, it feels like both investors and hopeful engineers are going to lose.
Reminds me of 'Open'AI. All for the benefit of humanity, of course...
It’s very simple. You should expect he will do whatever benefits himself.
The one thing you can say though, is that “benefits himself” does not mean: buying a super yacht, a casino, an island, etc.
So yeah, he’d YOLO and do the Mars trip before any of the above. Which is what most nerds on HN would love, except their blind hatred for Musk would make them despise even that.
He’s certainly said things to deserve some hatred. I’m also lost why anyone thinks his mars trip is real. He has a long history of promising and not delivering.
Blind hatred? Given that, among a multitude of other things, he willingly threw out some sieg heils I think the hatred was easily earned.
I only support a Mars trip if he takes it one-way
There's no way in hell I'd even remotely consider trying to build a Mars base if i had all that money, either. It's a fucking stupid way to waste money.
Its going to Mars. You can't play the oblivious share holder victim with this stock and try and sue later saying you didnt know.
Thats always been the plan.
Truly, in the face of this, caveat emptor has never been truer.
If/when Musk’s misadventures turn his companies to shit, I may spare a thought for the collaterally damaged, but not a single tear will I shed for the shareholders.
This isn't even a theoretical concern and it goes well beyond unfettered control of a single company. Look at the history:
1. One of Elon's companies (Tesla) bought out another of Elon's companies (Solar City) that was going bankrupt because it owed a lot of money to yet another of Elon's companies (SpaceX) [1];
2. Elon diverted $500M of NVidia H100 GPUs reserved for Tesla to xAI [2];
3. Elon made a buyout agreement for Twitter then tried to back out. Twitter sued (for specific performance) and a Delaware judge agreed. Elon completed the purchase before the court ordered him to [3]. That purchase was secured by his Tesla shares. He ran Twitter into the ground and then created xAI in 2023 [4]. Both Tesla and SpaceX "invested" billions into it. Elon ultimately used the funds to buy out Twitter at an inflated price (and still less than he paid) [5]. He ultimately then bailed out the xAI investors by having SpaceX acquire xAI [6]. IMHO this made SpaceX a significantly worse company. It was also used to inflate the value of SpaceX by using some wildly optimistic made up numbers about the AI total addressable market; and
4. The Cybertruck has been an unmitigated financial disaster. It's a terrible car and sales are awful. But that's OK because Elon uses SpaceX to buy Cybertrucks [7].
At least with the Google founders and Mark Zuckerberg, they only had one company so they weren't playing corporate shell games or using it as a personal slush fund on this scale.
[1]: https://www.nytimes.com/2026/04/24/technology/elon-musk-spac...
[2]: https://www.cnbc.com/2024/06/04/elon-musk-told-nvidia-to-shi...
[3]: https://www.npr.org/2022/10/06/1127346372/elon-musk-twitter-...
[4]: https://research.contrary.com/company/xai
[5]: https://www.reuters.com/markets/deals/musks-xai-buys-social-...
[6]: https://www.bbc.com/news/articles/cq6vnrye06po
[7]: https://www.businessinsider.com/spacex-bought-tesla-cybertru...
spacex didn't buy x.ai or twitter because they were profitable. the old Elon bailing out Elon maneuver is alive and well.
I'd like to point out something i learned the other day:
Alphabet owns some SpaceX shares, which makes Google's sudden 90-day compute contract with xAI seem a little less than coincidental
It's quite simple. xAI bought a shit ton of GPUs for Grok thinking they would be competitive. When that didn't pan out they found themselves with either giving away Grok for mostly free or renting out the capacity to someone else for a shit ton of money. They chose a shit ton of money.
Tons of people are already buying you don't have to sell it to them.
I'll happily take Musks proven and superior leadership with guarantees over letting the company decline chasing short term sugar hits that destroy it long term.
It is seriously baffling to me who is going to buy shares in this with 1) this structure and 2) at this valuation.
And it is a LOT of money that he is floating ($77B) so there have to be dumb people at scale for this to work.
The structure isn't all that unusual, but I agree on the valuation.
Look at Tesla stock and you have your answer. This will be another meme stock
It will be interesting to see how this actually plays out.
You could either be 100% right, or this could be another exercise in failed human hubris.
I.e., Elon and the financial architects behind this IPO are assuming that it will work just like Tesla.
However, in the back of my mind I have to wonder if Elon has spent too much social capital for this kind of cult of meme stock strategy to work again.
This plan has potential to backfire since this unique IPO scheme became a big news story. The microscope is on the company more than it was for Tesla.
From your lips to god's ear
>I have to wonder if Elon has spent too much social capital for this kind of cult of meme stock strategy to work again.
If social capital was an indicator , then Tesla stock would've cratered 2 years ago. Despite demand for tesla vehicles dropping. I don't think social capital matters these days.
You can absolutely level this claim against Tesla too. When deliveries dropped a year ago, the stock price didn't go down. Tesla's stock is disconnected from the fundamentals and every stock investor today knows this.
Why would SpaceX be any different? If anything it would be even more disconnected from the fundamentals than Tesla is, given how much more control it gives Elon.
SpaceX stock is a bet on Elon, full stop. It has nothing to do with space, data centers, AI, or whatever technology they're currently working on; it's a bet that Elon will figure something out.
(and if you need any example of this, just look at Twitter--he engineered an exit for his X shareholders at a higher valuation [at the expense of SpaceX, but a positive exit nonetheless])
Yeah you can’t go into this with any expectations or later complaints. Everyone knows at this point that he’s going to do whatever the fuck he wants. If you give him money, that’s what it’s for.
I say this entirely neutrally. Some people want to invest in that—and he’s made a boatload of money for those who have thus far!—while others find it insane.
But you don’t get to buy into this and complain.
If you have ETFs or index tracking funds in your 401k you're going to buy it. In fact, you'll buy more of it than is going on sale. Since they only need to issue 5% of the stock for it to show up as a 20% market cap in the QQQ index and tracking funds own over 20% of the market, they pretty much have to buy all the shares. Welcome to market manipulation 101.
It's only being added to the Nasdaq 100, not the SP500, and only a very small number of people have their 401K tied to the Nasdaq
Edit: Actually, I didn't realize that it's being added to MSCI, so I was wrong: https://www.reuters.com/business/media-telecom/msci-confirms...
Any sane index will float adjust their holdings
I 100% agree SpaceX (and Tesla) is a bet on Elon, completely divorced from the fundamentals. But I don't think people realize just how risky this is.
Tesla is only one administration change away from going bankrupt. Ask yourself what would happen to Tesla if BYD could freely import cars.
This might not even take an administration change. Elon very famously had a public falling out with Donald Trump, going so far as to call the sitting president of the United States a pedophile, basically [1]. Now, as a Tesla investor, what to make of this? Elon is technically risking the entire company on a childish outburst.
SpaceX at least has some competitive advantages. Falcon 9 as a launch system is unmatched. Nobody can currently compete with the track record and cost per launch (factoring in booster reuse). That may change but the next company has to compete with the Falcon 9 and develop a proven track record. Also, SpaceX is American so it has guaranteed business from the US government for national security reasons.
But, space operations are a rounding error in the valuation model for SpaceX. All of the AI stuff is bullshit, basically, particularly space-based data centers. STarlink is interesting but is dependent on Starship and will have to compete with 5G operators.
[1]: https://thehill.com/homenews/administration/5387380-elon-mus...
He seems pretty good at figuring stuff out.
You are downvoted, but I think you are right.
He is not popular. I am sort of reminded of folks from hollywood or tech who collide with politics... and not everybody becomes ronald reagan.
Also, someone doesn't get to be the richest man without controversy.
But controversial or not, I think he has been a net positive.
Would we so profoundly have electric cars if tesla hadn't shaken the status quo? Sure, now ford has cancelled the lightning, but they now have people who know about EV technology deep within their stodgy ICE stronghold.
Right now there are 14,000+ satellites in earth orbit, 11,000+ are from the US, and 10,000+ of them are from spacex.
By any objective measure, he has figured stuff out. And he has shaken things up.
Like how he figured out how to destroy half the enterprise value of Twitter?
Like how he figured out how to promise full self driving cars in about six months? For eight years running?
Like how he figured out how to cut USAID programs that prevented and treated malaria and tuberculosis with no plan or warning?
There is never going to be a long-term colony on Mars. It is the most childish conceit imaginable.
> There is never going to be a long-term colony on Mars
No there will be. But I don't think it'll be in our lifetimes.
I really don't see how you can be sure of that. Who would want to live in a steel cave for their entire life? Anything we need from Mars could be extracted with automated machinery.
> Even at $63 per share, we give SpaceX a lot of benefit of the doubt in two of the three scenarios, in which we assume the company can achieve a rapidly reusable Starship rocket enabling multiple launches per week and successfully commercialize data centers in space.
> In our downside scenario, orbital data centers won’t work or offer any advantage over terrestrial ones. We surmise that the company, having invested tens of billions to find this out, would cut bait on the project sometime around 2028, the way management walked away from plans to build multiple small-car factories at Tesla.
The orbital data center thing is really strange. Without some kind of massive technological breakthrough the physics of an orbital data center make no sense. Napkin math for a single data center including solar panels, radiators, compute and structure is somewhere on the order of ~6500 tonnes. Let's say Starship can put 100-150 tonnes into orbit per launch, that is somewhere between 40-65 launches for just one single orbital data center.
I'm pretty sure he's full of shit and has zero real intention of building orbital data centers. It makes for a good headline, which is what these AI companies are in the business of. The math doesn't math and the logistics of maintaining and building the datacenter seem insane.
They claim they want to get to a gigawatt per year by the end of next year, so we won't have to wait long to see.
He also claimed in 2015 that nobody would be driving their own cars by 2018. Meanwhile I've seen a driverless car once in my life.
Sure, I think everyone knows he's not batting 1000. I've used Waymos and FSD, and they were both great, so I don't think we're too far off now.
My man, it's 2026.
How long will you have to wait for the spacex claims to become "not too far off now"?
Which claims? I’ve been a SpaceX investor for about 8 years now, I’m completely satisfied with their progress, even despite the Starship setbacks, they’ve done astounding work on all fronts. I’m not holding my breath for humans on Mars or us becoming a Kardashev 2 civilization, if that’s what you’re asking.
Do you hold hopes for finding a revenue stream to outweigh the massive influx of AI debt Musk glued onto SpaceX?
It looks like they're taking on $20B in debt to clean up xAI's debt, and then paying it off with the equity raise? Do you feel that's very significant for them? 1% dilution takes care of it.
I have seen 3 people use iPhones in 18 years.
The video they posted today outlines their specs. They are gonna be smaller. About 100T. Based on Starlink architecture but with way larger radiators and solar panels. Apparently the design is simpler than existing Starlinks because it has fewer different parts.
Specs: https://x.com/SawyerMerritt/status/2064108916611420273?s=20
That cooling system is … aggressive. 110m^2 of radiator to dissipate 120kW average heat. That’s about 1.1kW/m^2, which works out to very close to 100C at the radiator under absolutely perfect conditions (absolute zero ambient temperature, emissivity 1, no adverse geometric effects).
Radiating into 300K ambient, it’s 134C. (300K ambient is about what you get if the sun is visible or if a large fraction of what the radiator can see is the Earth.)
You can slightly fudge the 300K case with a spatially or specially selective system, which would add weight and complexity. (Well, you can’t get rid of the problem of the Earth being warm by spectral selectivity — it’s the same spectrum as the radiator.) You cannot fudge the absolute zero case — the Stefan-Boltzmann law is extremely unforgiving. [0] And you need some headroom for the system that gets the cooling fluid to the radiator.
The thermal qualification temperature of an H100 is 87C and the associated HBM is 95C.
So I don’t see how this can work short of using higher-temp chips. I have no idea how SpaceX expects to source any such thing in any meaningful volume.
[0] This includes heat pumps. A heat pump makes it worse.
Maybe they count them twice? That would work out to 41C if both sides are in shade (or 69C if one is shaded and one on the sunny side)
I assume the radiators will be in the shadow behind the solar panels and never facing the sun. That's seems like the easiest quick win.
This isn’t that big a win. If you put the radiator in the shadow of the solar panels then a good fraction (which depends on the geometry) of the radiated heat from the side facing the panels hits the panels and warms the panels, and the radiated heat from the back of the panels warms the radiator. And the panels themselves are less efficient when they’re warmer.
On the flip side of all this, the Starlink satellites work, and I would expect SpaceX to have some idea what they’re doing. Starlink satellites have largish power systems (smaller than these proposed AI satellites, but not outrageously so). They presumably turn a smaller fraction of their power into low-temperature heat: the ion thrusters and the various transmitters emit a good deal of non-thermal power. A good fraction of Starlink’s electronics way well function at rather higher junction temperatures than 100C. And I imagine that Starlink satellites are economical to operate at an average of much less than 100% power. So I don’t really know what’s going on. It’s plausible that Starlink gets away with a cooling system that’s not so great for a compute satellite.
Is the equilibrium temperature in orbit not somewhere between freezing and room temperature? If so spreading the heat evenly across the solar panels must necessarily be sufficient. Issues only arise if you try to get away with a smaller radiator or expose the radiator to direct sunlight or commit some other own goal.
The radiators then need to be protected from earth's heat/light if you want to reach 0K. I agree with GP, it doesn't seem great.
I feel like we are going to relive the hyperloop-decline with the specs of proposed orbital datacentres. But the hyperloop was in one regard a success, in that it built temporary hype. Maybe it was even named after that.
The hyperloop was a huge success...in delaying actual transit options like trains.
What, you don't have a Tesla elevator on your street yet? https://www.youtube.com/watch?v=j70GvgXt-lE
It also achieved Musk's actual goal: derailing and delaying mass transit initiatives, the California High-speed Rail project, in particular.
He knew it was bullshit. He's dumber than most people realize, but he's not dumb enough to actually believe all the bullshit he spouts.
He's sending the weirdest mixed signals. If we want to hit anywhere near 1 on the Kardashev scale we're gonna need a planet wide high speed rail system. They should just give the major tech companies naming rights to the stations for 35 years for like 2-3 billion a pop and scale up construction 5x.
I don't get the slow roll on this thing. The stations in LA and SF are gonna end up sort of like Tokyo station for the Shinkansen. A giant mall area with a huge amount of commerce. Why isn't this thing done yesterday?
He doesn't actually want progress. He wants power and wealth for himself. Public transit is an equalizer, it serves normal people.
Relax man. He's a bipolar weirdo who isn't always likable but progress doesn't always come from likeable people. And the fact of the matter is he has actually delivered on a bunch of stuff I thought I'd never see in my lifetime.
What kinds of things he's delivered do you have in mind?
Let's see. If Paypal was his only legacy he would have already done 99% more than most people but then he went on to build a car company that was the best selling electric car brand in the world for a decade and in the process standardized not just electric charging but the plug we're all using today. Then they released a home battery with a sub 10 ms ATS which is necessary for seamless in-house grid/off grid transition. Finally the push for a reusable rocket booster was entirely a management decision on his part. If the next words out of your mouth are "he didn't do that, his engineers did" please come up with something more original. This isn't reddit.
> in the process standardized not just electric charging but the plug we're all using today
Wat? Are you talking about NACS? If so, a minority of non-Tesla EVs currently on the road use it in the US, and AFAIK zero outside of North America.
And even in the US, the vast majority of EV charging stations are AC and use J1772, a SAE standard that predates Tesla's existence.
His company was bought by PayPal and he was fired shortly thereafter. giving him credit for that is a stretch.
"fired" https://en.wikipedia.org/wiki/PayPal_Mafia
> Why isn't this thing done yesterday?
Land rights. Environmental reviews. Various suits attempting to exert extra compensations for tangential (at best) issues. Basically the California around.
Planet wide high speed rail doesn't make much sense, it is better of medium sized trips. Flights are will always be better for intercontinental trips. Vacuum trains could be faster but would be so expensive to build. Issues would be big deal in evacuated tunnels.
CA HSR is slow partly because the state government has limited funds and giving out slowly. The federal government should have been contributing more. The other problem is it kept getting delayed from legal issues, mainly from acquiring land. Going forward is bad because they decided to do the easy part first and leave the hard tunnels for later.
> Vacuum trains could be faster but would be so expensive to build
Vacuum trains are what high altitude airliners are.
Nooo, not thaaat!! We want traiiiins!!
There should be a high speed rail for every minor leg along the way. Efficiency is relative. People should be able to ship their car by this system instead of renting if they chose. Or use it to go sight seeing in any direction along it's web. The whole point is freedom to move around.
The cost of the HSR is tiny and inconsequential. For the 40 million residents of California it amounts to about $20 a month over the 10 years the fund has been going. It hasn't even spent 50% of the total fund yet. If construction was even 2x the current rate we would already have the central valley done. So I know they are slow rolling it. That's my point. They can speed things up even just a little.
Orbital ring would kickstart the space economy like nothing else, and is technically achievable with existing materials.
Would you trust the operators of an orbital ring with your life though? The modern world seems to mostly be able to do sky scrapers at this point but ... ehh. We still struggle a bit even with just airliners.
Both?!? Both.
Pinning CAHSR jobs program as hyperloop's fault is pretty funny. Maybe he did intend to upset it but since both turned out to be massive boondoggles doesn't seem like it worked - they managed to delay it themselves just fine.
Sure, California is a failed state on a lot of fronts, but Musk literally said he was pushing hyperloop for that reason. https://www.fresnobee.com/opinion/editorials/article26445107...
Whether he was the only reason for high speed rail being derailed and delayed isn't really the point. He intentionally worked against mass transit, and lied repeatedly about hyperloop as part of that.
Certainly not a Musk fan, but IMO the real point of hyperloop was more that it's on a route that could be constructed within our lifetimes. (Unlike CAHSR, check their website.) Of course, California knows this because that's where they built Interstate 5.
> California is a failed state on a lot of fronts
Some people really should just rm -rf their boot disk cause I feel dumber for having read their comment.
The feeling is mutual.
I think you've missed the point - that wasn't the reason at all. In a way he was right too - we'll have fully autonomous buses and private vehicles capable of making the full trip down the I-5 long before they complete even the middle of nowhere section they currently have planned.
Autonomous buses and private vehicles don't solve any of the problems high speed rail solves.
They're basically not building anything, and what they are building will be borderline unusable because of the route they chose so the car will be faster, cleaner and more convenient. If you want fast you can take the plane. So unless the problem is "how do we siphon as much tax dollars as possible banana republic-style?" I really can't agree here.
I don't think he's dumb at all, if what you say is correct. He wanted to block something for his own benefit and he achieved it.
I'm not convinced that's the case. I tend to think he just saw something he found cool and triggered his narcissism so he had to come up with something he thought was cooler. That something turned out to be BS and he just dropped the idea and moved on.
That's exactly what happened lol.
He is ruthlessly cunning. Not unusual in sociopaths and narcissists.
> the California High-speed Rail project
The state government of California was doing a bang up job of destroying this project on their own. He didn't really need to help them. Moreover given the rise of remote work I'm not sure it has as much value as it would have had it been constructed when it was designed.
> but he's not dumb enough to actually believe all the bullshit he spouts.
Yet he's not afraid of the consequences either. This seems more telling to me.
The consequence of becoming the world's richest man? Oh, the horror. The very wealthy do not face consequences for their actions.
He lies every day about his companies, and no one ever does a thing about it.
DOGE killed a few hundred thousand children for no reason at all; it didn't even save money. He did it purely for the joy of killing black and brown children in the global south. No one with any power to deliver has ever suggested he should face consequences for it.
Why should he be afraid of consequences? There will never be any for him, as long as he is protected by unimaginable wealth and a power structure designed around serving those with wealth.
He has never faced an actual meaningful consequence, of course he isn't afraid of them.
After articles on how starship is never getting off launchpad, I'm sceptical of news regarding elon, pro and anti. Sure, things like FSD are hopium or scam, but not everything could be. Haven't seen hard science estimates on their new ai satellites.
The issue with AI datacenters in orbit is not science or engineering but economics. There is no practical reason why it can't be done, but why would anyone want to buy compute from such a datacenter when they could pay substantially less money for better capacity on Earth?
Orbit is a bad place for a datacenter. Your equipment will be hot and bombarded with radiation. You can't do any repairs. Even with reusable rockets you still have to pay for fuel to launch everything into orbit. You get a small benefit of more efficient power generation but it's not worth all the downsides.
If you want to have solar-powered AI datacenter that you can't service, you'd be way better off building the power generation in a coastal desert and building your datacenter underwater.
With the rockets, it was more, “wow that seems impossible, but incredible if you can pull it off versus existing options.”
With the space data centers, it’s more, “Okay yeah so let’s say you do…why?”
It just seems like a really hard thing to do when the available options are, like, the Chinese building data centers on the Tibetan plateau where it is cold, ample renewable energy, tons of land, and, like, oxygen.
150 kW is tiny, that is a single rack. Would have to launch a huge number of them to match the GW data centers being built. There is also a lot of overhead for each one.
If Starlink didn't exist, then it could make sense to put edge data centers in orbit. But Starlink means can put edge computing everywhere on the ground.
Would it make any sense for it to orbit next to a Starlink satellite?
In 2025, SpaceX put 3,200 Starlink satellites into orbit with 122 Falcon 9 launches. That's about 2,000 tonnes. In about 2 more years, as the Starlink constellation reaches its licensed size limit, it should transition from growth mode to maintenance mode, freeing up over 1,000 tonnes of extremely reliable launch capacity.
What could that 1,000 tonnes per year get your in terms of sell-able data center capacity, and how does that compare to terrestrial build-out time frames?
According the the X post, each 150kW satellite is a bit over 2 tons, so a full year of launches would get you 75MW. Thats not much when AI datacenters are GW-class.
That projection depends on packaging and cooling breakthroughs that we would already be seeing in terrestrial data centers if they were practical.
I think it comes down to scaling and removing the bottlenecks.
If you build one data center on earth, you did just that.
If you build one in space and make it work and cost effective, you can scale infinitely (which is why SpaceX is uniquely positioned), until you hit the next bottleneck (which is why Tesla is building a fab).
Tangential: If you play Factorio or Satisfactory, this is _all_ you do. Removing bottlenecks.
> If you build one in space and make it work and cost effective, you can scale infinitely
"If we can just keep consuming massive amounts of capital, at some point, we'll turn a profit. Maybe even a big one."
It's not 2019 anymore, but this mindset acts like it still is.
SpaceX, along with its wanna-IPO classmates OpenAI and Anthropic, are going public because there's basically no more private investor money left and there's no political will (outside of whatever the hell is going on in Donald Trump's head) to lower interest rates to what they were in the golden age of blitzscaling.
They have to ask the public for more money. They just don't have enough humility to do it on decent terms, as evidenced by the IPO deals they're floating.
If this fails to produce what you're talking about - which is likely given things like "speed of radio transmissions", "thermal conductivity in a vacuum" and other things governed by those pesky laws of physics - the game's over.
I think that's looking at it the wrong way. Just view it as a fleet of satellites with computers in them that exist for the purpose of selling capacity. I don't see any issues with the physical fundamentals but the economics in terms of dollars either per flop or per bit transferred is where I don't understand how it's supposed to work.
Satellites are really expensive and electricity on the surface is relatively cheap. What hypothetical prospective customers are willing to pay the necessary rates? I understand that bandwidth back to the surface is expensive but are we really expecting so much raw data to be trapped in space that it justifies sending computers into orbit in order to crunch it at the source?
The physical fundamentals don't work. Radiating exhaust heat is exponentially harder in space than in the atmosphere.
What is the equilibrium temperature of a panel of black sheet metal hanging out at an orbit of 1 AU? Because if the thing is solar powered then it cannot exceed that temperature on average (ie across the entire mass) due to energy being conserved. You can do goofy things like using solar power coupled with a heating element (such as a GPU) to shift more heat to one part of the panel or another (ie employ an insufficient heat spreader design) but you fundamentally cannot exceed the equilibrium temperature on average.
There are people arguing it has to be a signal processing backend for a realtime radar system based on Starlink Direct-to-Cell antennas.
IMO, that lines up with a weird remark from Musk around stealth jet obsolescence few years ago, and makes sense.
It's a litmus test of who understand basic physics and thermodynamics
I see it as a hedge against NIMBYs. If terrestrial data centers literally can't be built then orbital is cheaper by definition. If not, just don't build them.
Worse, it’s “don’t worry, the next data centers will be in space, so it’s okay if the ones we are building right now destroy the environment, there won’t be anymore!”
It’s the exact tactic he used with California HSR
I don't see anyone making that argument and we shouldn't allow it. The "temporary" generators are bad enough.
The actual “plan” is to just put a couple of GPUs in each Starlink satellite for inference.
They’re not launching something the size of a building!
Which is irrelevant to SpaceX bottom line. Launching GPUs into space, whether by twos or by tons is not going to be a profitable venture.
It's just a wildly expensive bad idea, and it is obvious to anyone that understands how much it costs to put things in space. A man who runs a rocket company knows how much it costs. He knows it's dumb as hell. But, he also knows the average investor is even dumber, because TSLA still trades at ~357 PE.
That just doesn't seem to justify anywhere near the valuation though does it?
shhhhhh the line WILL go up, whether you like it or not
Disclaimer: I suspect "data centers in space" is just blatant market manipulation by Elon, exactly the same as he'd done dozens of times before with self-driving, etc.
Having said that... it might justify the valuation if every other data centre build-out gets blocked by insufficient power supply.
Might.
Bear in mind that you could take the solar panels that you would have launched into orbit, use the launch costs to purchase additional solar panels, batteries, and some additional land, and build a data center plus solar farm plus grid scale battery bank on the ground for probably (almost certainly) less than the combined launch costs.
I think the only way compute in space works out financially is if there's so much bulk data already up there that downlink bandwidth becomes a serious bottleneck.
> Let's say Starship can put 100-150 tonnes into orbit per launch, that is somewhere between 40-65 launches for just one single orbital data center.
Ok. And why does it follow from this that the physics of an orbital data center makes no sense?
Because 50 rocket launches seems hard to make cheaper than a building.
Why? It seems to me to be much cheaper than a building. Musk's aim is for the cost of one Starship launch to be under $10 million in the long run. 50 rocket launches would be less than half a billion dollars. Can you get a datacenter built on the ground for half a billion dollars?
Half a billion in JUST the rocket launches, you've still got to build the actual data center too.
That's assuming he can get launches down to $10 million which I'm sure will be right behind his flying roadster and cybertruck boat
The comparison isn't half a billion for a datacenter, it's half a billion for a big shed (and some solar panels). The problem of space based data centers is that the only effort they save you is building a big shed to put the GPUs in (and potentially cheaper power at the cost of more expensive cooling)
Using easily available numbers, a high quality distribution center building (heavy duty concrete floors, HVAC etc) is $100 per sqft.
A very large 1,000,000 sqft data centre is therefore $100 million.
Are you for real? HN yep
Yes, I am for real. The Colossus datacenter that xAI built cost $7 billion.
[1] https://www.globaldatacenterhub.com/p/can-elon-musks-7b-colo...
Most of that cost was presumably the 100,000 GPUs it contains, they didn't even build the building
You haven't built a data center for half a billion mate, you've just launched rockets. You still have to build the data centre! Only not from bricks, it's going to be complex modular units made of radiators and solar panels and you have to buy the gpus too, and the whole thing will be bombarded with cosmic background radiation but you can't replace or repair any part of it.
The cheapness of the building is not the problem that is being dealt with.
The construction of the building w/ zoning and the political fights and utilities arguments and years of time and whatever is what is being dealt with by putting it in orbit.
I bet you could build a fully off-grid DC that didn't guzzle water for less money than launching a rocket today, and there would be thousands of people lining up down the block to sell you more than enough land to do it a thousand times for cheap. This just isn't happening yet because it is still quite possible to build on-grid DCs supplied with fresh water for cooling despite what some people would have you believe.
And then when you build on the ground you could even send people to it to swap hard drives and GPUs when they inevitably fail or upgrade them to keep them current. At lower rates of failure than they would in space because we have a planetary magnetosphere protecting us from cosmic rays.
It would be extremely funny if putting things in space is cheaper and faster than dealing with zoning and local politics.
It implies that China, which can cut through much red tape and has great (and improving) utilities and infrastructure, lots of energy, can just build normal datacenters and save the cost of dozens of space flights.
Building in space adds engineering complexity. Heat output requires radiators. Radiation damages equipment without shielding. Repairs require a spacewalk. All this for what, better solar panels? If you think local zoning challenges are an obstacle, then you have 194 other countries to build in. Going to space is probably the worst option. Even putting a data center on a boat is probably a better choice and that still sounds like a stupid idea.
No, you've got the burden of proof backwards: We haven't even begun to talk about maintenance issues, space-proofing the equipment, power-generation, cooling, etc.
They'll do smaller satellites, and if they can get an order of magnitude improvement on cooling and power generation to weight ratios, it'll be close to the same order of magnitude cost-wise as a terrestrial datacenter. 10x the cost is likely not enough to make it all work, so it's a bad idea, but it's possibly less bad than using lead ballast for starship launches... maybe.
I still don’t see it. The equipment is very, very expensive, is subject to shortages, and has residual value after five years. But these very low Earth orbit satellites literally burn up when they run out of fuel for station keeping.
Even if you pay a bit more to position them in a higher, more stable orbit, you still can’t physically get to them to repurpose equipment.
Check this datacenter gadget out:
https://www.marvell.com/blogs/sustainable-computing-with-cxl...
That trick is a complete nonstarter if the modules you’re trying to reuse are in space.
Is there some reason significant improvement on cooling and power generation to weight generation ratios is even remotely possible?
“Supervised Full Self Driving.” Buy the hope, sell reality.
> In our downside scenario, orbital data centers won’t work or offer any advantage over terrestrial ones
Technologically, will they work? Shovel enough money at the problem and there's no reason they shouldn't. Rack up some GPUs in a shipping container, attach a couple of solar panels to the outside, zip-tie a Starlink to the door. Except for the little problem of heat. Space isn't cold, it's more of a giant Thermos bottle, and they gotta park in full sunlight, which is famously the only thing supplying the heat that keeps the entire planet alive. Good luck to them with their radiator setup.
But economically? There's no chance. Too expensive to get into space, too many auxiliary systems required, no maintenance is possible, and, given the lead time of prepping payloads for launch versus the rate of new developments in AI hardware, likely badly behind the times if not outright obsolete on the day of liftoff.
There is no shortage of land despite what some in the media would have you believe. Those same solar panels work at ground level. DCs don't have to be water guzzlers or grid destabilizers. They'd be better off by every metric solving terrestrial problems for the same money.
Of course they won't work. It's ludicrous that we have to even entertain the thought of otherwise.
Do they have a projection for what the company will be valued when he gets to mars by 2017?
> We Think the SpaceX IPO Is Overvalued
Well... yeah, sure, everyone thinks that.
And the fact that it doesn't matter and won't impact demand for shares illustrates how increasingly and dangerously untethered the stock market is from reality.
> ...and dangerously untethered the stock market is from reality.
"Disconnected from historical valuation norms" is a more sensible statement.
The idea that the stock market is "detached from reality" is dangerous too because the stock market is...reality. People make and lose real money in it every day.
There are good arguments that the historical valuation norms are reasonable and deviation from them is "dangerous" but there's no actual law that says the stock market needs to behave according to history.
While I personally think the current behavior has significant risk, I also can't dismiss that the role the stock market plays today is different. It's not just about raising capital, providing liquidity, price discovery, risk management and building wealth, for large numbers of laypeople it's also the go-to casino (entertainment) and a platform for expression (way to express dissatisfaction with corporations, politicians, the world, etc.).
For certain values of "reality". It doesn't take a financial analysis to tell you that it is bananas that Tesla (~1.3T) is worth more than four times as much as Toyota (280B), and yet.
But there's no law that says prices must be based on standard financial analysis.
You and I and a million other people might run away from Tesla's valuation but that doesn't mean that the market must.
I think it's very obvious that the historical norms that governed and explained pricing in the stock market no longer apply, for better or worse. Between the massive manipulation of the markets by central banks to the rise of the retail investor (and social media, meme stocks, etc.), there are a lot of factors in play that weren't a thing 30 years ago.
People grossly undervalued the IPOs of Amazon and Microsoft.
“But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown.” -- Carl Sagan
The problem is, as an investor, you don't know whether you're looking at a genius or a clown when dealing with these types of powerful trends.
Markets allow people to bet on it. So one would assume the author is taking the revenue from his $70/year subscriptions and shorting the bubble he sees (or at least positioning himself to do so).
Bitcoin has a 1.5T market cap with 0 revenue. I think Musk really got his eyes opened when he started playing with Dogecoin a few years ago. He applied the lessons successfully with Tesla, making the company an empty shell PR vehicle to support the TSLA "token".
There is a simpler explanation: passive investing in index funds turned out to be too effective and ruined the game for active investment management. Now the banks have figured out how to exploit passive investors and turn them into involuntary bag holders. That is why the IPO will go out at the stated price and the underwriters face little risk.
People make and lose real money in Las Vegas every day too, but millions of people don't have their retirement dependent on casino winnings.
> And the fact that it doesn't matter and won't impact demand for shares illustrates how increasingly and dangerously untethered the stock market is from reality.
Part of the reason for this demand is the fact that index tracking funds like QQQ will be forced to buy up massive volumes of shares. Not only that but other non index tracking funds that track large cap stocks will also have to buy. Vanguard large cap for example manages trillions of dollars. That in itself will have 100s of billions worth of buy orders.
Does this not follow from the basic 401k structure in this country? Most people will be defaulted into a fund like Vanguard and from what I can gather from my co-workers, none of them are particularly wild about taking their retirement money and playing the day trading casino to try to increase their performance.
It's better than what preceded it but we still manage retirement wealth poorly.
You could argue either way. This funnels retirement money into private pockets by forcing a listing at ridiculous valuations.
On a tech site, pessimism like this make me sad. I'm a nerd. I have been dreaming of a future where humanity finally takes its place among the stars since I was young enough to have dreams.
I am looking forward to buying a little piece of it. I plan on putting a couple thousand into the IPO. I view it like buying into D.D. Harriman in "The man who sold the moon." I plan on taking those shares and forgetting about them for a couple decades. Maybe leave them to my grandchildren. This is the longest of plays and I hope it works out.
Maybe SpaceX will fail, but this is the first time since I was a boy that there is any real hope that humanity will step into that future, and I want to be part of it. Maybe Musk is suckering in dreamers like me, but I'll bet on a better future. This is it. This is our shot. Godspeed.
I mean the market is seemingly completely detached from the reality of financial performance. However, it’s VERY MUCH attached to the reality that is investor whims. You’re not betting on a company doing well, you’re betting that other investors won’t want to sell it en-masse. That’s it.
As far as I can tell, that’s exactly how it works. Reality is investor emotions. If it shouldn’t be that, I mean the whole system needs a rework.
Short-term, you are correct. However long-term, the stock market does tend to weigh value heavily. That is something that people who aren't familiar with the stock market often get confused because how can people who are in the short term and the wrong term have such different outcomes.
One of the obvious problems with the short-term thinking is you can trade on feelings all you want, but if things go really bad the company goes bankrupt and suddenly the court say no more trades allowed anymore and your and your value goes to zero.
The market can remain irrational longer than you can stay scared of it.
Let's go check on the cautionary tales of the Tesla shorts.... poor folks, we let them run around in the yard of the asylum without a fence because they have lost the motivation even to run away. They just keep mumbling about PE ratios....
From my perspective it's more of a "stay away" type of stock (short or not). The price is not supported by business finance fundamentals, and seems to be pushed upward via the retail market, driven by Elon's gift for selling futurism to the masses. To me, the value of Musk's companies is dangerously dependent on one single person, in a way that I can't think of for any other current company. It makes "investment" in the company more speculative, and closer to other "retail mass" phenomena like "meme stocks" or cryptocurrency.
As an example here, in the 2022 (relatively mild) stock market downturn, when the S&P 500 gave back about 20%, TSLA dropped from a peak in the low 400s, to a low of 122... roughly a 70% drop peak to peak. It's back to ~400 now, and it could go higher again. But, in the next downturn, it could go a lot lower.
It doesn't mean it's a good investment. It's just a personality cult. I suspect it might take a generation or more to settle on some reasonable price.
The next time there is a real correction all of these “concept cult” stocks are going to get hammered.
“When the tide goes out we will find out who has no shorts on.”
The federal reserve can keep printing money for longer than anyone can afford.
We can print more money, but it's not about "affording" it, the money printing at most changes the value of the dollar (i.e. inflation/deflation).
The rest of the world wants dollars, and as long as they do, the US benefits massively from that demand, and it would be foolish not to satisfy that demand, as it's pure benefit to the US.
It seems that many are devoted to ending the status of the dollar as the reserve currency of the world, but it's a strange and subversive thing for any US resident to want or desire.
A lot (everything?) hinges on orbital data centers. If they don't work, SpaceX is overvalued.
SpaceX plans to launch 120 kW satellites, each weighing 1.7 tons. Let's be conservative and say it ends up being a 100 kW satellite massing 2 tons. Let's be conservative and say Starship can launch 50 tons to orbit for $20 million ($5 million more than a Falcon 9 launch).
50 kW per ton x $400K per ton = $8,000 per kW = $8 million per megawatt in launch costs.
That means a 100 megawatt orbital data center will cost $800 million to launch.
You need about 833 satellites for 100 megawatts, so let's round up to 1,000 satellites. Let's say one of these satellites cost $3 million (that's probably high, but let's go with that for now). That's about $3 billion for satellite manufacturing.
Bottom line: It will cost SpaceX $4 billion to launch a 100 megawatt data center.
Anthropic is paying SpaceX roughly $50 million per megawatt per year. SpaceX could sell access to its data center for $5 billion per year. Assuming the satellites last for 4 years, that's $20 billion in revenue from $4 billion in costs.
Please correct my math/assumptions, but this rough calculation shows that SpaceX could be right and Morningstar could be wrong.
> Please correct my math/assumptions
1) You forgot to include the actual costs of the GPUs and other equipment, you are just calculating launch costs which will always come on top of the other stuff
2) Datacenters require repairs and hands-on attention, and space provides extra challenges like radiation to deal with
3) They have not provided any evidence that they can solve the heat diffusion issue, which could kill the whole project
4) Musk's track record for outlandish tech is poor (hyperloop, fully autonomous driving, Mars trips, etc. were significantly delayed or not achieved yet), and unlike some of these other things no one else seems to think this is economically feasible
I think starlink made intuitive sense; we already use satellites to transfer data for phone service and TV channels, a satellite can "see" a large area to service, the technology was there already, etc. Starlink provides a service you can't really get without going to space (coverage in remote areas).
The space data center doesn't make intuitive sense to me. Why put it in space? Wouldn't it be better just... on the ground? The technology doesn't feel like it's there either, and there would be significant competition from existing or new data centers that don't have all the drawbacks of orbiting the planet.
The US power grid is not able to keep up with demand, it's mired in red tape. There's also a populist revolt against DCs and the infra upgrade costs being dumped on ratepayers. That's the main benefit I see of their plan, from a US perspective. I think China probably will have a significantly easier time.
> The US power grid is not able to keep up with demand, it's mired in red tape
Why not build off-grid?
> There's also a populist revolt against DCs and the infra upgrade costs being dumped on ratepayers.
What about the other 94% of the Earth's landmass?
>Why not build off-grid?
He sort of is. I believe people aren't very happy with his gas turbines powering Colossus near Memphis. There's also currently a >5 year backlog for nat gas turbines for combined cycle plants.
Solar takes up an enormous amount of space to get to reasonable base load, because you have to massively overpanel in order to carry it through winter. You need a large multiple of the panels you'd need in space to get to reliable baseload, plus batteries. During grey winter weeks, our home array is frequently making like 1/6 what it does during summer, and even summer days have night/weather/etc compared to sun sync orbits.
Nuclear is hilariously expensive and slow to build. But I have some hope for small reactors and Commonwealth Fusion Systems/Helion.
>What about the other 94% of the Earth's landmass?
Geopolitical concerns, infrastructure/power availability, security, since these things are full of incredibly valuable hardware.
> Geopolitical concerns, infrastructure/power availability, security, since these things are full of incredibly valuable hardware.
The market decides that, not Elon. Do customers want to pay $X for compute in Iceland (or wherever), or do they want to pay $kX for compute in space?
What premium are customers willing to pay for compute in space? I would guess that the premium is actually negative because the quality of computation in space is worse than under the sweet embrace of Earth's atmosphere which provides a natural protection against radiation.
No premium, it's just a question of whether people can and are willing to build enough in those other places. Space is a bet that they can't. Also, I don't think bitflips are a huge deal in space for neural nets, we already build in randomness via temperature. A little more shouldn't make things noticeably worse. Higher energy particles could be a problem over time, but when I looked into it, it looked like the incidence of very damaging particles for a given area was surprisingly low.
Morningstar does think it's a possibility that Starship ends up being highly successful as a reusable platform and that orbital data centers end up being very successful, they just assign a 7% chance for that outcome.
I guess to this point the argument for the valuation is just, do you think Elon will beat the (very bad) odds?
I wouldn't take that bet, but I can see why some people would.
Fair point. Even if the math works, SpaceX could fail at execution for any number of reasons.
My trading app (Nordnet - big in Scandinavia) is plastered with ads for the SpaceX IPO.
I don’t think I have ever seen this before.
I need to understand what possible benefit there is to doing DCs in space. The cost would be, no pun intended, fucking astronomical. The cooling situation would make no sense at all -- the major up-and-coming application of DCs, LLM training, has absurd cooling requirements even here on earth where convective cooling is an option, to the point where many DCs use open-loop cooling. Latency might be better, in some cases, I guess, but probably not by some groundbreaking amount.
Who is this product for? How the hell did "data centres in space" make it into the prospectus at all?
More to the point, why is Morningstar being so generous with their interpretation of that line of business? It's plainly insane, and you don't need an advanced degree in physics to understand why.
It's easy to see the benefit in DC's in space if you look at a few ingredients:
1. The recent Iran drone attacks on AWS data centers
2. Growing anti-AI and anti data center sentiment at home, plus Larry Fink (ceo of Blackrock) in a recent interview being terrified of dissident groups using consumer drones to attack data centers.
3. Anthropic, Grok, and other AI vendors becoming more and more integrated into defense and military, plus increasingly reliance on AI for other national surveillance systems
Data centers are and will be targets, both for national military attacks as well as home grown dissident attacks, so they are proposing to move some of the critical workloads to somewhere that the only group that can attack the data center hosting the workload is a nation state with space launch capabilities. That significantly reduces the number of actors that can attack the data center. And if the US wants to they can probably bomb all the other space rocket launch facilities worldwide in less than 24 hours, leaving extremely limited capability to attack a space hosted DC.
Is it insane? Probably, but the US has done insane things with military budget before, and will continue to do so for a long time. If you are Elon, its a great time to milk that US defense budget for some more R&D, and even if the main project doesn't work out, he's still going to be able to keep some innovations within the company and apply them to Starlink and other more realistic endeavors.
If the only benefit of space-based datacentres is a hedge against infrastructure attacks in a world war then we are in an awful place.
I'm not disagreeing with you but peace is far more prosperous for humanity than blowing the worlds' retirement funds on datacentres-in-space as a military endeavour.
Also. I would not fully trust argument that all possible adversaries are incapable of attacking them. Possibly with cascading effects at least when you get size of satellites planned.
Even with this benefit of the doubt, even stretching our suspense of disbelief as far as it can go, we are basically talking about a niche military application that inherently has a limited market value.
In other words, we can just assume this concept is possible and makes sense some level of financial sense for military, government, and high sensitivity use cases.
Well, find me a military contractor worth $1.5 trillion. Lockheed Martin is worth 1/10th of that.
Put Lockheed Martin and AT&T together and you’ve got about 1/5 of a SpaceX IPO target valuation.
Even if we make this assumption that the technology is marketable and has merit, it’s not like every company or government agency is going to want to switch to this technology. There are already a number of alternatives that can mitigate many to all of the risks that it solves.
The cost and complexity right now to deploy global services and their disaster recovery replicas to multiple distant data centers in the terrestrial world is already extremely low. Often, these features are offered as an off-the-shelf service.
California could sink into the ocean and my users wouldn’t even see a blip of downtime. Unless they live in California.
Heck, build some data centers underground in deep fortified bunkers if you want. That would be cheaper than launching them into space. They might even be easier to defend than satellites and space DCs because a foreign adversary can’t just launch a missile up in the sky to get to it.
Going back to not really suspending disbelief as much, I also think performance and latency is going to be an insurmountable problem. Right now as we speak Starlink residential service is about 10x slower than my home fiber connection at the same price. How is this technology going to compete with data center level infrastructure even in an optimistic scenario?
I can toss pennies per hour at Amazon for a relatively small VM with like 4GB of RAM and they’ll give that thing a 15 gigabit connection.
> Starlink residential service is about 10x slower than my home fiber connection at the same price. How is this technology going to compete with data center level infrastructure even in an optimistic scenario?
Where I live in New Zealand the only good internet provider is Starlink, so all my internet is through Starlink. The latency is about 20ms, so while yes you are technically correct that is 10x slower then 2ms, it isn't a major deal breaker.
You are probably thinking about light and fast API calls, where latency is more noticeable. But if you are doing an inference or LLM job that is going to take several seconds of token generation before the full response is available then the difference between 3.002s and 3.020s is negligible.
> build some data centers underground in deep fortified bunkers if you want.
This is the defensive build. The US has a tendency to optimize for offense.
Let's roll forward another few decades, and imagine a classic dystopia scenario: pervasive worldwide surveillance systems, armed drones and robots everywhere, etc. Where does the data from those surveillance systems get crunched, and where do the drones and robots get controlled from? Probably not from one central system in one place. That would ironically be too high latency. These systems would most likely end up as generic shells with minimal on board smarts, controlled by AI "brains" up in LEO, 20ms away via radio. The AI observes from overhead via it's surveillance systems, and it acts via it's robot bodies down on Earth.
It sounds like sci-fi, but you have to remember the world is full of megalomaniac nerds. They love this type of stuff, and if they think someone might be able to build it, then they want to be the one to build it.
I think that vision you paint of satellite-commanded robots makes reasonable sense. At the very least, we can assume it does.
But then I go back to my original question where I ponder whether that vision results in a gigantic company.
I look at some of the contracts I found some news articles about: Space Force has a $437 million (not billion) contract with ViaSat and SES, the Pentagon is said to be spending $13 billion on LEO satellite programs.
And we can’t forget that SpaceX doesn’t actually make any of the robots. They only make the communications stack.
AT&T has a market capitalization of about $150 billion, for comparison.
I would like to add to my reply to this comment, that heat management in space is extremely difficult.
The idea that we can manage heat in a data center scale in low earth orbit is pretty much impossible.
Look into the physics of the problem and how heat transfer works in the vacuum of space.
It’s trivial to attack things in space if you also have stuff in space. Just ram your cheap satellites into the other guy’s. Do it right and the destruction will cascade.
1 -- Signal jamming exists.
2 -- Space also belongs to the citizens and not the corporations.
3 -- The defense industry is the single worst most corrupt and idiotic industry we still shackle ourselves to.
> 1 -- Signal jamming exists.
How easy is jamming starlink? I don't think it is as easy as jamming gps. As I've seen numerous warning from Russia that they providing starlink to Ukraine is bad idea. That they're going to shut it down etc. But, starlink is still being used in Ukraine.
https://www.forbes.com/sites/zakdoffman/2026/01/13/kill-swit...
Prior to these events, the prevailing consensus in the defense community was that Low Earth Orbit (LEO) satellite constellations like Starlink were nearly impossible to jam effectively. Their defense relied on the satellites' constant rapid movement and their ability to "frequency hop" to avoid static interference. The blackout in Iran has shattered this assumption.
https://www.jfeed.com/news/starlink-iran-china-jamming
The main argument is if you scale up a lot you run out of electricity supply on Earth.
> Who is this product for?
1. Using one part of Musk's holdings to trick people into feeling optimistic about how it will do incest with another part.
2. Megalomania dreams of becoming the Tessier-Ashpools from Neuromancer with their private fiefdom.
There is no benefit, and they aren't going to actually do it in any meaningful way. When was the last time Elon Musk made a factual forward looking statement about one of his companies or products? It's all just bullshit, no need to dig deeper than that.
It's so you don't have to ask anybody for permission. That's it.
Right now, 70% of the country is at least skeptical of DCs and at worst absolutely hate them. NIMBY is basically the rallying cry. That's why you go "up" (if they can make starship work). The physics is "hard" but doable, you can keep them cool enough in a sun synchronous orbit. The math pencils out. It's not my field, but back of the envelope math seems to work. Scott Manley has a video on it if you're skeptical.
But, people keep thinking about this like "return on investment" is the only thing driving this play. They're literally the only company with a mostly reusable system (unless you count that company trying in China?). They're the closest company to a fully reusable launch vehicle. They have a ton of government contracts with star shield. After Bezos' rocket blew up last week, there's basically nobody close to competing with starlink...
I am not a Musk fanboy, but, like, there is literally no other serious space competitor right now. I mean, "maybe" Boeing? But not really - they're years away...
So, like if you read about the Memphis Datacenter - Colossus I think? They're unable to get power, they're pulling in power from Mississippi to keep the thing running. You know how many times they have to ask permission for that? The infrastructure costs there just to power it start to get absurd too. Then the unending line of approvals and environmental impact studies and permits. For all the people saying, "it'd be cheaper on earth" it might be in terms of dollars, but if you can basically iterate entirely unfettered in space, it's the obvious choice if you can make it happen.
Like, seriously, go try to build something, there are a LOT of rules outside of rural areas. It's literally why my wife and I decided to build our cabin where we are building, because there were basically no restrictions. Meanwhile in town, my buddy's deck was a nightmare to permit... it was a deck, not bridge. Seriously, to all the people saying, "it's easier" go try to get something built in a big city or where you have to fight through permit hell.
These tech oligarch guys view this (I think rightly - it's one of the only things I view them as right on) as a race to AGI against the Chinese. We're in the lead right now, cool, but the Chinese have excess kilowatts and we don't. In fact, we don't have adequate power plant infrastructure at all and we couldn't get the power plants built if we wanted to (the Ezra Klein and Derek Thompson book Abundance touches on this topic if you're curious as to why). It's not going to happen.
But up? No NIMBYs in space (yet). So they're going to go where nobody will tell them "no." At least, that's what I would do if I owned a literal rocket company.
People are all looking at this stuff through the lens of "money" as if that matters hardly at all after AGI, lol. The analysts are looking at this like it's 1995. I mean, PE ratios are important, don't get me wrong, but after 2016, and Trump, and the applications of transformers, and the war in Ukraine (and current shit show in Iran), and the rising price of fuel, and, well I'll stop, the list goes on and on, but acting like the "normal" rules of investment apply is just silly. This stuff is about power, and he who controls access to orbit is worth a basically unlimited amount of money...
Do I wish it was happening differently? Yup. But hey, we decided to give up on space as a country like 50 years ago, maybe we can try to do cool stuff in space now.
> It's so you don't have to ask anybody for permission. That's it.
I would think this is a very temporary victory. You only don't have to ask permission right now because nobody is doing it. But space does actually belong to people, as in there are a lot of different stakeholders with their own motivations. And, that also naturally includes every country's military. I don't foresee everyone just rolling over and accepting massive amounts of space junk without at least getting their piece of the pie.
I also don't think we gave up on space as a country. We have Artemis. I think we sort of realized that there isn't much in space. Outside of science-y stuff and research, there's really nothing to do. There's no products to be made, and our country revolves around consumerism. I think space DC's will be the same story. Does it make sense from a money perspective? Because I think that's really the only perspective that matters.
>> It's so you don't have to ask anybody for permission. That's it.
This doesn't make sense because there's one party whose permission you always must ask, and that's the government. They are the ones who get to decide whether you can launch your rockets.
A more accurate version of your claim would be: datacenters in space allow you to deal with one party (i.e. the government) instead of many. So long as your relationship with that one party is good, your business plan is safe.
Fair (at least for now, maybe in a decade we will be manufacturing stuff up there, but for now, yeah).
Totally fair - and with Star Shield and basically SpaceX being the only reasonable launch provider, and a Musk-Friendly government currently in the executive… then I think my thesis holds. The only people who can tell SpaceX no at that point are like 3 nation states with ASAT capabilities?
Regardless, he won’t have to ask the “city” counsel of Asslick Indiana if he can “please build here pretty please!”
Mark my words, they’re going to build “up.l
Why are we considering data centers in space? What problem does it solve? I don't understand this concept at all.
Surely putting server racks in orbit where you can't do basic maintenance without sending someone up there is a terrible idea?
It just always puts me in mind of the story of an IT guy having to travel for two days to go to a premises and turn on a server that three separate people ensure him was already on.
The only people considering data centers in space are those too out of touch to remember that their vacuum flask retain heat for hours. At any usable capacity we'd be talking about massive field of dissipators, which can't be possibly profitable considering there are far more lucrative payload compared to dumb panels. Some would pretend there's a just around the corner tech to solve the heat waste, but if such tech really exists one of the criticisms of terrestrial data center (wasting stupid amount of water) would've been solved anyway making space data centers even less viable.
And there's also bitflips. Acceptable for astronauts carrying normal laptop to watch movies, but in a data center? Solving it through redundancy easily cut the usable capacity to half, and there's not enough shielding with any competition for the payload slot.
The usual criticism of Mars colonization is maintaining a base in Antarctic is already a heroic effort despite being relatively easier. Google and Microsoft mostly abandoned their "data center underwater in nearby shore" plans even though in those the tech would've only sat for few minutes going down or alternatively waiting for the problematic module being floated to the surface.
Great, so I'm not just some idiot who doesn't get it. Why then is anyone entertaining this IPO when it's clearly based on such a dumb plan?
I wish Ed Zitron (currently also front page HN) would adopt this calm, measured writing style. It’s much more convincing and shorter to read too.
Right?? His takes are so good but his brusque, smarter-than-you finger wagging is offputting
> It’s much more convincing
Shouldn't your concern be whether it's true? Who asks to be "convinced?"
No matter what a stock broker thinks, the market decides. At this moment SpaceX’s shares are oversubscribed:
https://www.bloomberg.com/news/articles/2026-06-08/spacex-ip...
Also trading on crypto futures markets at ~$160 vs the $135 IPO price so you should probably buy and flip to a greater fool.
The real question is whether or not the stock will be more overvalued, immediately after the IPO. My brother earned a bunch on the Rivian IPO, despite considering it overvalued, because he figured it likely wasn't overvalued enough.
You should beware of the predictive power of Morningstar before you read/take their advice.
I don't think euv capacity will ever make data centers in space a thing.
From SpaceX's S-! it bases its valuation on the total addressable market of 3 markets, which is made up of:
1. Space operations: $370 billion;
2. Connectivitiy: $1.6 trillion, roughly split between mobile and broadband; and
3. AI: $26.5 trillion, which includes $22.4T in AI Enterprise applications, $2.4T in AI infrastructure, $760B in subscriptions (ie Grok) and $600B in digital advertising.
So immediately we see the limits of the space market. SpaceX did 170 launches in 2025. At $100M each, that's $17 billion in revenue and Falcon 9 launches just don't cost that much. That brings Starship into the picture but that program is arleady at $15 billion spent without a single dollar in revenue. So we know from the outset that only the other markets can really justify the STarship prgoram because you have to remember that STarship has to compete with Falcon 9. Or, even worse for SpaceX, a Falcon 9 competitor.
Now, as for Starlink, this one is interesting. Starlink has a big advantage when you need mobile broadband (eg planes, boats) as there's nothing really equivalent, Yes, there's 5G and that's fine in populated areas on, say, RVs and such. But the receivers are expensive.
I think Starlink is going to have a hard time competing with 5G, mainly because 5G already exists and Starlink handhelds are predicated on STarship being able to launch sufficient low-altitude V3 Starlink satellites, which themselves have a more limited life because they are lower altitude. And you're still going to have to deal with per-country licensing, marketing, regulations, etc.
I wonder how much of this is predicated on military applications.
But let's get to AI as that's the most hand-wavy (IMHO) of all this.
First, digital advertising. Well, when Elon bought Twitter it had $4.5B in ad revenuie. Now it's $1.8B. I also think Twitter is fundamentally limited so that's just not going anywhere. Twitter just isn't 10x'ing it's audience (IMHO).
Subscriptions? I think this is a dead market. For everyone. Why? There'll be a race to the bottom, hardware will get cheaper, eventually AI agents will be run locally (even on phones, eventually) and it's just not the cash show OpenAI, SpaceX or Anthropic think it is.
Let's also dispense with orbital AI data centers. It's a completely dumb idea. it's going nowhere. Don't believe anyone hyping it up. It makes zero sense and it will never amount to anything.
SpaceX seems unable to monetize their AI investments thus far. How do I know this? Because you don't lease DC space and GPUs to Google if you have a better use for them. So it not only looks like you're falling behind but you also need the cash. Also, this is dependent on getting enough GPUs. Published details about the Google deal seems to allow Google to cancel or revise the deal if SpaceX is unable to deliver so there is a huge risk here.
What none of these companies (SpaceX, Anthropic, OpenAI) seem to be addressing is what happens when future generations of hardware come out? What happens when running models locally becomes more and more viable? What if there is no expensive hardware moat? What happens when AI models get commoditized? I personally believe this last one will happen and China will make sure it happens.
So all in all there are a ton of risks here. I am skeptical about the long-term prospects of OpenAI in particular and Anthropic less so but I think xAI's (ie Grok's) future is way more uncertain.
I'm actually most confident in Google's future here because they haven't bet the company's future on AI not imploding.
> There'll be a race to the bottom, hardware will get cheaper, eventually AI agents will be run locally (even on phones, eventually) and it's just not the cash show OpenAI, SpaceX or Anthropic think it is.
That’s why we are seeing pushes for regulatory capture, safety fear mongering, large government contracts, and even potentially the government taking stakes in these companies. It’s a sprint to cash out before they get commoditized.
IMO the purpose of going public is primarily to make it hard to nationalize SpaceX, which some people have called for.
Data centers at the bottom of the ocean make more sense than data centers in space.
No duh.
This isn't different than any other tech IPO in the last 15 years.
I'm generally going to avoid betting against Elon.
The downvotes are a good indicator you have the right idea.
Doesn't really matter. Elon just has a good track record of delivering value for investors, and will move mountains to make it happen.
Everyone says SpaceX IPO price is too high, but it's the most interesting IPO in a long time, it's critical to the US government, and America is, frankly, addicted to gambling. I'm not convinced it's going anywhere but up for a long while.
Very little of the IPO is related to anything government, or space for that matter. It's mostly a rental service for some GPUs that were hoarded, with the promise that somehow in the future the $2B/month that Anthropic and Google are paying SpaceX for compute infrastructure will somehow grow, that somehow SpaceX will grab valuable GPU real estate before others and continue renting it to others who actually make productive services.
Even SpaceX's own documents estimate the space stuff to only have an addressable market of $370B, and it's not like it's a document full of conservative estimates considering they estimate their AI at approximately the entire GDP of the United States.
80% of all mass launched from Earth in 2025 was launched by SpaceX, and 95% of those launches were with reusable systems.
That dwarfs all other launch capabilities on Earth, including all governments. Short and medium term value may be shaky if you evaluate SpaceX as a typical business.
Compute in orbit is "stupid" only to those who don't think it through. Their biggest initial customer for that feature will be Google, and through Google, Apple; two of the highest value tech companies on Earth. Seems like a fascinating flywheel to me.
Also see Aswath Damodaran’s updated analysis. It’s not quite as dire as Morningstar but is still lower than what musk wants.
> At the rumored pricing of $1.8 trillion for the company, it is too richly priced for my tastes, given my valuation of $1.25-$1.35 trillion for the equity in the company.
https://aswathdamodaran.blogspot.com/2026/06/a-weeks-ago-i-a...
If SpaceX is indeed overvalued (which I have no opinion on), it above all else demonstrates how unimportant spaceflight still is.
SpaceX has been the only game in town for quite a while now, to such an extent that the intelligence agencies of foreign governments have no alternative but to launch with SpaceX. They now do more orbital launches than the entire rest of the world combined. If they really are worth less than Microsoft, then it seems space just doesn’t matter that much, because SpaceX is space for all practical purposes.
I think you are conflating mattering and making money. You can matter a lot, generate a lot of social good and not make money.
This article is just about the making money part.
I think this is right. For example, GPS is tremendously useful, but you can use it for free. Similarly, while there are commercial weather services, a lot of people access the ad-supported versions[0] or get it from their government’s weather agency.
[0]: which obviously provide some revenue, but much less than the value provided.
SpaceX is important to launch and telecom, which are two big space verticals but not all of space.
Further, space is just reaching the point it can really grow.
Space is strategically important but perhaps not as directly economically valuable as Microsoft yet, and SpaceX is just a fraction of that value.
Part of the problem with this argument is that for them to be worth a lot, you need both the amount of stuff launched into space to go up massively and for no one else to be able to build a rocket that's anywhere near as good. Spacex is doing really well now, but if Rocket labs, China, Blue Origin, or anyone else manages to make a rocket that's half as good, spacex needs to maintain a monopoly despite not having anything especially magic.
SpaceX is not being valued based on the space part, it's being valued based on Musk's claim that the market for their AI is the entire GDP of the United States. The space stuff is only estimated as about 1% of their addressable market
Why would space matter, economically?
The real immediate economic value hasn't really changed for decades. Starlink is the most recent significant innovation in that area, and it's worth less than 3% of Google's revenue.
The hyped up reasons for space mattering are all completely speculative and at the limits, stretch the bounds of a sane person's credulity: asteroid mining - ok, there may be an economic case for that, but it's far future; colonies on the Moon and Mars - there's no economic case for those, it's purely a dubious expenditure of tax dollars that has no meaningful economic purpose. Etc.
So, what makes spaceflight "important" beyond what it's already used for and has been used for, for decades?
For a moment then I thought this was the communist newspaper Morning Star https://morningstaronline.co.uk/
No wonder they think it's "over valued"
Maybe, but his proposed share structure is hilarious. I can't tell if Musk is serious or trolling Wall Street again. =3
This is the most white collar “we call bullshit” type of writing I’ve seen in a long time and I’m here for it. Not a good sign for the next two AI IPOs either. SpaceX had the hubris to release their S-1 publicly and whatnot. This is going to be “Hot Garbage Summer” in the equities market lmao. GG VCs.
And water is wet
Not a criticism of the article, but...
...from the pages of Duh Magazine
>However, we assign this scenario, in which both Starship is reusable and scaled orbital data centers are highly successful, a 7% chance of happening
I may agree with their overall sentiment, but I think this sort of formulation is just silly nonsense from analysts who build models instead of companies.
Okay, but if someone is going to invest money into companies they need some way of deciding what they think a company is likely to do in the future.
Are these kinds of reports mostly a lot of window-dressing around a gut-feel about what might happen in the future? Yea, of course. But, there's not really other options. Pretty much all the other options for predicting how much money a particular company is going to make in the future will also boil down to a gut-feel.
You need a probability in order to estimate expected value.
I want some shares purely as a novelty. Don't really care about the price. It's not about making money. It's about owning a piece of the future.
well the good news is, you are exactly who they are looking for! you could just buy some merch though, which has the same effect
otherwise using ROIC or CAGR might be more optimal way to evaluate your investments
I already walked away with a 140k gain in TSLA. I did get some SpaceX t-shirts though. Most of my portfolio is decidedly boring right now.
Hey, I’m doing the exact same as OP and so is everyone at work I know who has a memefolio of shares. You never bet against papa Musk.
You guys are looking at these IPOs all wrong. Nobody is looking at valuations. It could open at $200 a share it would make no difference.
If you want to own a piece of future buy some coal stock, it is what future looks like in America :)