The SpaceX S1 has been released

[brittlerock]

Before you even think of investing in the SpaceX IPO (or open market stock purchase post IPO), please read the S1 very carefully. It is a remarkable document. A few things I picked up is that you can only purchase class A stock which provides you with 1 vote for corporate matters. You need never bother casting a vote because it has no value. Elon Musk will possess class B stock with 10 votes per share insuring that his whims can never be outvoted. No biggie? Who votes their shares anyway?

There’s more, lots more. SpaceX comes to market deeply in debt. Space X is burning money faster than the one profitable part of the company (Star Link) can generate profit. Every other aspect of the company is completely dependent on a lot of science fiction becoming reality (including recruiting one million people who actually want to colonize mars).

There’s other things like locating mineral rich asteroids and mining them and returning the refined products to earth at a profit. Or building an AI factory in space (“free” energy) and leasing compute to X-AIs chief competitors (Anthropic and Open AI). Selling (or renting SaaS style - I’m not sure) an AI code generator that X-AI’s engineers refuse to use because of its inferior functionality.

A lot of very questionable financial transactions. For example, SpaceX purchase hundreds of Tesla pickup trucks (because no one else was buying them) at full price, no volume discount. BTW, the number of trucks purchased by SpaceX exceeds the number of trucks reportedly sold to SpaceX by Tesla by close to 100 units. One of the board members has loaned SpaceX million of $$. Might he act in his best interest rather than the general stockholder’s? Oh, by the way, as noted above, Musk has sole authority to select the board members (remember that voting thing?).

There’s also a class C stock to which Musk will be entitled to gobs of shares should certain events transpire. Not to worry, it clearly says in the document that these events are unlikely to ever occur. The effect of that clause is such that if they were likely to come to pass, the full value would have to be expensed immediately upon going public. But, in that these events are declared as unlikely, they won’t have to be accounted for until they actually occur. So, what’s the point? Musk can still borrow against those shares as if they were real, tradeable stock.

No stockholder action can ever take legal action against SpaceX or Elon Musk personally - incorporation in Texas rather than Delaware has made virtually impossible to sue the company as a shareholder.

Those are just some highlights . . . there’s more.

[Iamnzane]

Having known a couple billionaires, they are very skilled at managing control of the companies they start. Usually they have difficult personalities and they quickly learn that they will get pushed around or pushed out. So they learn control. There is always a lot of pump and dump stock behavior around Elon’s companies. As such I have never owned TSLA. But I listen to Elon and find him a fascinating figure. And glad he is American due to all the technologies his companies have created.

We have got several giant IPOs coming this year. It is hard to tell where the money will come from and what will be the impact to our high flying Saul stocks. Will money get pulled from our stocks for SpaceX? Will they pull back? dunno

I can see no prudent way to publicly invest in SpaceX given the hype and expected valuation. But there is a halo effect to other rocket stocks mentioned on this board. And that is the other young space launch, payload, and services companies such as Rocket Lab, Intuitive Machines, and others. Myself I picked up a few shares of RKLB last month to ride the halo and am up 120% so far. I will bail out in the next 4 weeks sometime. I see their new Neutron rocket launch later this year as having likely various failures until the technology is perfected. Albeit this is why they keep delaying the first launch. Given the markets impetuous behavior around failures, RKLB will be a wild unpredictable ride for some time. What kills me is that I bought a big chunk of RKLB in late 2024 at $6/share simply because of the +90% growth rate and I loved their technology stack as an old aerospace guy. Within a few months I was up over 400% so I sold most of it for other stocks that I thought had room to run. sighhh well never look a gift horse in the mouth. I wished I had let my winners run as Saul always said.

If you want to invest in rocket stocks, probably best to wait a few months when the SpaceX hype diminishes and provides a better entry point. Or perhaps we discover a hidden gem somewhere in the space food chain.

-zane

[Smorgasbord1]

@Iamnzane

I can see no prudent way to publicly invest in SpaceX given the hype and expected valuation.

Well, millions of Buffett-followers and Bogle-followers and most people with 401Ks will be investing in Space-X even more than they’re invested in Tesla thanks to the new fast-track rules for adding newly listed companies to the indecies (Nasdaq 100 and S&P 500, etc.). Buffett made a public bet over a decade ago that the S&P 500 would beat any actively managed fund over the same time period, and I believe he won that bet (although that’s mostly due to funds being forced to buy and sell as their customers add or withdraw money at inopportune times, a story for a different board).

The masses are already invested in the biggest AI companies: Nvidia, Broadcom, Alphabet, Microsoft, etc thanks to their market cap weighting in the indecies. But, at least those companies have track records of profitability and steady management. It’s fair to point out the voting tiers - Alphabet adopted something similar. This is Elon learning from his TSLA “mistake.” Investing in TSLA or Space-X is primarily about investing in Elon and his judgement/actions.

The money for investing in Space-X via the indecies will mostly come from index rebalancing. Micron is now a $1T market cap company, but Space-X at $1.5T-$2.0T will be larger and the smaller companies will be proportionately less. Although I believe the new fast-track rules don’t force the bottom company(ies) to drop off the list, considering how small a percentage of the total they are that point is moot.

[drew1618t]

Smorgas,

I think your forgetting that the nasdaq and s&p 500 are weighted by market cap adjusted by float. Since spaceX is only going to be 4-5% float it’s 1.5T will be treated as 75B. Applovin has a market cap of 200B but a 72% float, so it’s treated at 144B or almost double what spaceX will be.

Also from my research the Nasdaq has approved fast entry. S&P 500 took input before making their decision, I think they plan to release their decision in June. S&P 500 was discussing multiple changes, lowering it from 1 year to 6 months, allowing companies in with a float below 10%, and allowing non profitable companies in. The s&p 500 receive plenty of negative feedback on removing the profitability requirement and the float.

Drew

[Smorgasbord1]

The rule changes and proposed rule changes are complex and perhaps still in flux.

For instance, NASDAQ is proposing a “5X float multiplier” for stocks with less than a 20% public float. So, if Space-X comes in at $90B, the index would value it as $450B for weighting purposes. Yeah, that’s still not $1500B, but it’s still quite large and passive ETFs like QQQ would be forced to buy shares.

The S&P 500 rules are different - seasoning dropping from 12 months to 6 months, so not as fast as NASDAQ 100. But, as Space-X’s staggered lock-up release (tranches at 70, 90, 105, 120, 135 and 180 days) means more shares would be coming into the market during that 6 month wait, expanding the float. And with the profitability requirement being waived (which delayed TSLA’s entry) as well as the minimum float percentage being reduced below the current 10% requirement.

So, while the impact won’t be as large as I initially feared, there’s still what appears to me to be a considerable impact for Space-X. Space-X has some profitable businesses (Starlink), some growth businesses (launching rockets and xAI), and some money-losing, shrinking businesses (X, formerly Twitter). By any reasonable math I’ve seen, Space-X’s IPO will be overpriced, which is perhaps why they are targeting 30% of the shares to be made available for retail investors (typically it’s around 10%), some of whom might be willing to pay any price to invest in Elon.

[PaulWBryant]

Hey guys,

People keep flagging this as off topic. It’s fine to discuss SpaceX as a growth company, but maybe let’s talk about their numbers?

The S&P 500 inclusion stuff is off topic. If you have a link with an update on how that might work, maybe include it in a PS or footnote, but let’s not go back and forth on it.

Thanks,

Bear

[brittlerock]

@PaulWBryant I disagree. We are here to discuss the investment viability of growth stocks. Well, maybe even calling the coming availability of SpaceX a “growth” company (stock) is off base. But, at least due to the allure of Mr. Musk many seem to think hyper growth is inevitable, after all, how could the richest man on earth make such a monumental blunder?

Probably, the discussion has reached a point that few followers of Saul’s board will venture to take a position, or if they do, they recognize they are not investing, they are speculating and timing will mean everything.

But otherwise, everything about this IPO is important for those who are still weighing the “opportunity.” I would include the potential market manipulation driven by alteration of NASDAQ and S&P inclusion rules.

[Buffjan2]

I have been flagging many of the posts in this thread. The orignal post was predominantly about governance and voting structure and had a hard edge that felt like it could morpy into politics at any time.

Saul had to ban all TSLA discussions for years because of the fan boy vs hate for Musk. This thread is a hate Musk thread, equall as bad as if it was a fan boy thread.

[drew1618t]

All,

I think a limited discussion of changes to the S&P 500 is on topic here because the S&P has long been the baseline many of us use to measure our results. If the benchmark itself may change in a material way, then understanding the change seems relevant.

That said, I also understand the argument for waiting until S&P announces the final decision, especially since that appears to be coming soon (within 10 days). Speculating endlessly before the facts are known would not be useful.

The distinction I’d make is this: debating macro, index politics, or which companies might benefit is probably off topic. But discussing whether our benchmark is changing, and how that affects comparisons to our portfolios, seems directly related to how we evaluate performance.

It reminds me of Saul’s French cooking-board analogy. If the board is about French cooking, then Russian literature is off topic. But if the standard measuring cup used in French recipes is being changed, that seems relevant to the cooking discussion. The S&P is our measuring cup.

Drew

[dlbuffy]

@brittlerock

Probably, the discussion has reached a point that few followers of Saul’s board will venture to take a position, or if they do, they recognize they are not investing, they are speculating and timing will mean everything.

And that is why we should lock it in my opinion. Anyone still weighting the investment opportunity should discuss that in a place for SpaceX discussions. IMHO.

[Smorgasbord1]

Morningstar has some good charts/data:
https://www.morningstar.com/stocks/6-charts-spacexs-s-1-financials

Here’s the Consolidated Summary:

Metric	2023	2024	2025	Q1 2026
Revenue	$10.4B	$14.0B	$18.7B	$4.7B
P/L from Operations	—	+$466M	($2.6B)	($1.9B)
Net Income / (Loss)	—	+$791M	($4.9B)	($4.3B)
Adjusted EBITDA	—	—	$6.6B	$1.1B

So, 33% revenue growth from 2024 to 2025, but only 15% YoY for 2026Q1.

The company was profitable in 2024, but not last year and not last quarter. This chart shows the breakdown:

Starlink is the winnner, with revenue growing almost 50% YoY. Adjusted EBITDA was $7.17 billion at a 63% margin, with EBITDA growing 86% year-over-year. Subscriber count is growing, but ARPU is declining due to cheaper plans.

The AI related business, which unfortunately includes the Twitter business (some estimates say it’s today worth half of what Elon paid), is suffering from heavy Capex ($7.7B in 2026Q1 alone) from data center build-out land Grok model training. Grok isn’t doing so well, which the company is trying to fix with the Cursor deal. The recent deal with Anthropic will add $15B of revenue to the company. That means the above graph will look different by EOY.

It’s worth noting that Space-X is now competing with the 3 top so-called NeoClouds (CoreWeave, Nebius, Iren) in GPU rentals. Since Grok isn’t that popular, Space-X has idle capacity, which Anthropic is happy to pay for. And unlike the other NeoClouds, Space-X has the Colossus I cluster up and running already (at 460MW) - no worries about power, acquring GPUS, cooling, etc. It’s up and resulted in an immediate expansion for Anthropic on day 1. Who would have predicted this business for Space-X a year ago?

Ironically, the actual Space part of the Space-X is growing the least, with revenue up only 7.6% YoY. As noted above, it was profitable, but Starship R&D was up 64% ($3B), and that’s probably still continuing. Revunue comes from $95M per launch and 43 launches last year. That’s not including the 122 internal launches done for Starlink, which presumably show up as costs for the Starlink segment, maybe at a reduced rate.

As for what that means for potential buyers at IPO, I think the summary is that:
• Elon controls the company at 10X voting rights
• The businesses aren’t all bad, but the valuation is very high. You’re essentially paying for future success up front.
• If you back out a generous Starlink valuation (~$500B), you’re paying ~$1.25T for the launch business, xAI, X, and the Starship optionality.
• And the addition of passive investing dollars in the near-term, as discussed earlier, may result in stock price volatility separate from any business developments.

[brittlerock]

BTW, years ago I suggested the French cooking analogy to Saul. He ran with it.

[brittlerock]

I will freely admit, I am no fan of Mr. Musk. I’ve kept my personal opinions out of everything I’ve posted. I won’t bother to explain my opinion of the man as that would be clearly inappropriate.

Every word I posted relates directly to the viability of SpaceX as an investment opportunity which might be under consideration by some readers of this board.

Go read the S1 for yourself. I tried to stick with just a few of the facts as I understood them. I think those facts (and many I did not discuss) should act as a whole series of red flags no matter what you think of the man behind the company.

[Smorgasbord1]

I think some near-term future developments are not covered in the backwards-looking S1, and not being properly anticipated by analysts.

First is that the Anthropic deal I mentioned above was announced after the S-1 was released. That’s $15B of revenue per year. Estimates I’ve read put the cost of building the Colossus 1 data center has about 100,000 Nvidia GPUs consuming about 400MW, and cost between $3B and $4B. That means the Anthropic deal alone will have paid for it in about 3 months - with high margins afterwards. This changes the math for the xAI segment, and also has a big impact on the overall business.

For instance, Anthropic alone will add $3.75B per quarter in Space-X revenue. Last quarter’s revenue was $4.7B, so that’s a 79% QoQ growth factor for a full quarter. My estimate is Q2’s revenue will have increased 50%, with Q3’s being close to a double.

Just a few days ago, SpaceX was awarded a $4.16 billion contract by the U.S. Space Force to accelerate the Space-Based Airborne Moving Target Indicator (SB-AMTI) program. Revenue from government contracts has been and will remain lumpy due to their size and complexity.

I do believe this means that the xAI business turns around to profitability this year, adding to the already existing Starlink profitability. Which leaves the original core Space business, which at the very least has enabled Starlink to be profitable with way cheaper satellite launches. And has the combined potential for in orbit data centers in the future.

Like all of Elon’s businesses, buying into the IPO means paying the Elon premium, which means you’re buying some/much future success already being priced in. I personally think the S-1’s verbage is over the top (“extend consciousness to the stars” appears like 10 times), but the numbers aren’t as bad as some are saying. Space-X needs the money for further Capex (Colossus 2, Starship, etc.), so IPOing now seems reasonable, and trying to capture retail investor excitement is a good business move - better than lowballing the IPO price and leaving money on the table for others.

Whether that means buying at the IPO makes sense, I don’t know.

[brittlerock]

Anthropic is a chief competitor to X-ai. They can end that contract on short notice - maybe they will, maybe not, but it stands as a major risk to that source of revenue.

ALL of the touted future for Space-X and contingent space based business is highly dependent on the unproven, and rather exotic Starship technology. So far, nothing has gotten off the ground, let alone successfully made it to space. Success in imminent? I’m not a rocket scientist, but I’m not betting on unproven technology of this magnitude. Yes, I admit, Musk has a history of delivering, but he also has a history of delivering late - way late, like do we really have FSD? Not under normal driving circumstances for average drivers. Hoe long ago was the first scheduled delivery of this tech? Oh yeah, that was early 2013.

I for one will not put a single dollar into Space-X. Not at IPO, probably not never. BTW, if Chinese BEVs ever become available in the US, Tesla (already based on stale manufacturing tech), Pulsar, Lucid, Rivian and I’d venture the US majors are deep trouble. BYD builds a fantastic luxury vehicle at a price point that a lot of average Chinese folks can afford. And now Xiaomi (cell phone maker) has entered the fray with what I consider the best BEV in the world (unprofessional opinion based on YouTube reviews).

[Smorgasbord1]

@brittlerock

Anthropic is a chief competitor to X-ai. They can end that contract on short notice - maybe they will, maybe not, but it stands as a major risk to that source of revenue.

According to the S-1, it’s a 3 year deal with a 90-day advance notice after 180 days for cancel. Elon has said he asked for that, in case he needed the compute, rather than the other way around. Given the demand for Claude, it would only be if some other NeoCloud gets a large data center stood up and can undercut Space-X on price.

https://www.morningstar.com/news/marketwatch/20260528209/spacexs-major-ai-compute-deal-with-anthropic-could-end-a-lot-sooner-than-expected

As for comparisons with Tesla and cars, well, that seems pretty irrelevant to me. I think it’s best to approach potential investments with objectivity.

[brittlerock]

Thanks for the reply Smorg. I consider you to be one of the premier posters on this board. I may disagree with you at times, but I never disregard your comments.

Just the same, none of my money is ever likely to find its way into Space-X. IMO, the risk factors far outweigh the opportunity and I can’t perceive any way in which those risks can be ameliorated. If you’ve not read the full S1 for yourself I urge you to do so.

As for Tesla, I think it is relevant because Musk is relying on his reputation related to the extremely well protected success of Tesla to sell Space-X. A lot of folks will invest in Musk, not Space-X. I think they well be badly disappointed.