Thread by @AswathDamodaran

I valued SpaceX for its IPO a few weeks ago, with minimal information and a promise to revisit the valuation, when the prospectus was made public. The prospectus is public, the offering price has been set and my update is up and running. bit.ly/4ocgzbV

There is little in the financial statements that is surprising, at least in the aggregate, with the actual numbers coming in close to my pre-prospectus estimates for the most, and reinforcing my priors of a money-losing, high-growth company that is a Musk vehicle. bit.ly/4ocgzbV

The value of SpaceX is driven by narrative, and there are three spokes to the story - target revenues that frame the revenue growth input, target margins driving profitability and reinvestment, determining cash flows. bit.ly/4ocgzbV

The revenue growth from 2025 show SpaceX growing at 33%, but with divergence across businesses: connectivity leads with almost 50% growth, the space launch business has single digit growth and AI falls in the middle. bit.ly/4ocgzbV

The total addressable market (TAM) in the prospectus for the three businesses push into fantasy land for AI ($26 trillion) and the limits of plausible for space and connectivity. bit.ly/4ocgzbV

Digging into the details, the prospectus shows improving unit economics at the space launch and connectivity businesses, but worsening unit economics at AI, squeezed by competition and costs of delivering AI services, bit.ly/4ocgzbV

I expected to see big capital expenditures and R&D, but the actual spending on both in 2025 are mind-blowingly large, mostly because of the company's ambitions in the AI business. bit.ly/4ocgzbV

I updated my inputs marginally for space (pushing up margins) and connectivity (more cap ex) and significantly for xAI (double target revenues with much lower margins and reinvestment). bit.ly/4ocgzbV

My updated valuation with those inputs leaves my value close to my pre-prospectus estimate, but the influx of $75 billion in offering proceeds pushes estimated value of equity to $1.3 trillion and per share value at about $100. bit.ly/4o6v5Sa

If you are surprised that accessing the financial statements did not have a bigger impact on my valuation, it is because it is a young company, where the answers to the big questions are not in those financials. bit.ly/4o6v5Sa

As an investor, I like the company for its audacity and imagination, but worry that it will overreach in AI, and if it does, its governance structure leaves it with no guard rails. At $1.8 trillion, it looks overpriced to me, but that is a personal judgment. bit.ly/4ocgzbV

If you are a trader, you are playing a very different game, and whether you will make money or not on SpaceX is a function of how good you are gauging mood and momentum, and shifts in both. I am awful at both, and will stay in my lane. bit.ly/4ocgzbV