#307: Is SpaceX’s IPO a Buy?

0:00K-pop Demon Hunters, Saja Boys Breakfast Meal, and Huntrix Meal have just dropped at McDonald's. They're calling this a battle for the fans. What do you say to that, Rumi? It's not a battle. So glad the Saja Boys could take breakfast and give our meal the rest of the day. It is an honor to share. No, it's our honor. It is our larger honor. No, really. Stop. You can really feel the respect in this battle. Pick a meal to pick a side. Ba-da-ba-ba-ba. And participate in McDonald's while supplies last. and you can listen to that story if you like and buy into it and go yeah that's very future relevant and i believe in the leader and i believe but when you look at a price tag of 1.75 trillion you really really need they really need to see some serious revenue execution in the decade ahead in order to justify that price

1:00Welcome to Stock Club, the podcast where we find and discuss stocks that anyone can buy, many of which we believe will go on to grow your wealth. Mike, how are you doing this week? I'm good, I'm good. I just realized that tagline doesn't work for this episode, at least not yet, because not anyone can buy the stock we're about to mention. But no, I am good. I had a great weekend watching Rory win the Masters again, which is a bit stressful. stressful got the heart rate off but i'm sure a lot of our listeners would have been in the same

1:32Emmet:bracket well i was listening as well to an interview with rory and he felt after he achieved all he needed to achieve and wanted to achieve last year he was free and that freedom brought i suppose a kind of a um a sporting um what's the right way of saying it he wasn't tethered to the pressure of winning so he was actually playing better or certainly was for a good part of it anyway yeah i don't know about that now over the weekend he looked like yeah yeah the fairway thing um yeah i yeah i was as i was saying that i realized what i was saying wasn't entirely accurate however he won he won the evidence point do you think he has a hat trick in him oh jeez i don't know he looked he looked like he won that tournament not playing great which is impressive so who knows but uh well he's a great role model for young sports people around the world young golfers around the world yeah very much so what uh what are we getting into today though well before we get into that mike we had as you well know several guests over in ireland the week before last as porter stansbury and his team came to make a documentary about uh about us right um are specifically about profit um and what i want to say to our listeners if you want to peek at that hour and a half long documentary drop an email to pod at my wall street.com and one of the team will get back to you it'd be very modest for us to dive any more than that because we saw what they produced and um it's quite unirish really you wouldn't you wouldn't want to be kind of shown it uh on rte this is the most irish reaction ever i've gone i've done this big massive amazing thing speaking about my product and myself and be like astro jesus you know yourself now i do it away with that now don't put it up don't be talking about it now yeah it's done now it's done now i mean we we had honestly there were 33 people involved in this production excluding you and me and our team yeah uh but it was a huge production by stansbury porter and Co is the name of the company.

3:43And some of our listeners will recall Porter was on the podcast probably about six or eight weeks ago. And he is one of the most successful stock advisors. And he built a business called Stansbury & Co, which was the linchpin for Agora, which is the biggest publisher in the financial space in the world, even bigger than The Motley Fool, I believe.

4:07Emmet:so um yeah they came over it was a big deal you played plenty of golf well done mike what a hero i know it's tough we've been through this yeah you played with porter you were you were paired to porter for a four ball in the royal dublin and maybe baltry yeah that was uh well done anyway so if you want to see that documentary folks pod at my wall street.com and someone on the team will send you a link to it but honestly don't write to me i don't want to know okay right mike we are gonna talk about what will probably end up being one of the most uh ambitious hotly anticipated um stellar no pun intended ipos of the decade yeah i say i i have it what do you think notes here i had them as the most financially uh most anticipated financial event of the year maybe that's even yeah i think that's low-balling because every year has a kind of an it but this is huge it's the we're talking about the ipo of none other than spacex the most influential high-tech business i think that's out there at the moment and certainly in engineering and aeronautics yes what do you think certainly as a private business for sure i mean there's been years of speculation over this company it's the most valuable private company in the world investors have been going to the ends of the earth to own a piece of it on the private markets whether it be through they have you know owning pieces of companies that own shares or whether it be through kind of lesser known kind of secondary markets and stuff and paying crazy valuations and stuff so the hype around this is probably like nothing we've ever seen when it comes to an IPO I'm not sure if I can remember a bigger one in terms of certainly in terms of scale um oh i mean honestly mike it's a fascinating conversation because kids my generation which is circa 1974 grew up surrounded we were just surrounded by endless media that romanticized space whether it was star wars uh which i think was the first movie i ever went to see on the savoy of o 'connell street in dublin would you believe would you believe star wars the the new you know they had the new the ones that came out in the 90s and 2000s yeah that's the first movie i ever went to see is that so the one with liam neeson yeah yeah yeah oh there you go another thing we have in common well so you're right so star wars romanticized space for young people all over the world since the 70s um there was star trek on tv when i was a kid book rogers uh Battlestar Galactica like TV was full of romantic imagery about you go up to space you fight bad guys you build space stations um then there was Flash Gordon I mean Flash Gordon for me just totally I think it was Flash Gordon that switched me on to Queen's music and regular listeners know I'm a mega fan of Queen and they did the music for Flash Gordon so all of this was just a big ball like every kid in dublin in the late 70s and early 80s had toys concerned with space travel um and and we we were all led to believe that we would experience space in our lifetimes but then the next 50 years happened and it was kind of quiet to be honest so i thought and might be useful just to do a level set for me to kind of give a bit of a rough history of space exploration up until today because we really are now at one of the most important IPO and business events you could say ever yeah yeah go for it I think it's really interesting because it's funny you're mentioning that and like that's I suppose coming off the space race and everything else the time it took from the first plane invented to the space race and landing on the moon compared to from landing on the moon to now is almost it's more or less it's in the same ballpark and it feels like the progress at least in terms of major milestones hasn't stacked up at all

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9:09Emmet:It hasn't, you're right. But depending on whether your belief in human history is based on science or religion, you kind of have a belief set that says humans have been around for either 300 ,000 years or 2 ,000 years. But either way, for the vast majority of that time, sure, we did nothing. You know, for 300 and like 299 ,800 years, we did nothing at all. And then the Wright brothers or whoever came along and said, hey, I think we can get a few feet above ground for a prolonged period of time. And so it began. But in reality, irrespective of how long you think humankind has been on this little lump of rock and away from TV and cinema, whether a Star Wars, Star Trek or Flash Gordon, the real space industry began in 1957 when the Soviet Union launched Sputnik, which was basically a metal sphere the size of a beach ball, just shot it up into space.

10:08Emmet:That was the first thing that happened. It did nothing except emit radio beep, but that beep was heard around the world. And I think it kind of terrified the United States into action in a way that more or less nothing else could have done. In fact, the Soviets put the first satellite in orbit the first animal in orbit um what was the dog like like it was it like like the dog uh and that was again and the first man and tell me orbit as well yuri gregorne um and that was kind of 1961 and the first spacewalk is very good so the russian cause is very good for when it came to space but it by the 60s america wasn't feeling too good about it um because up Up until that point, they were kind of perpetually second.

10:54Emmet:But JFK came out in early 1961, I think it was, and said, by the end of this decade, we are going to land man on the moon. And I remember when I did my master's in strategy, like something like 20 years ago, we did a really interesting experiment in the class, which was called the Delphi method of estimation. Have you heard of it, Mike? No, no. Interesting one. So the Delphi method of estimation, if I recall correctly, and everyone can jump on GPT or Google and figure it more precisely than I'm about to explain, is a method. So the question was, how was JFK able to say in 1961 that man would land on the moon by the end of the decade and get it right?

11:37Well, the way it was done at that time was through the Delphi method of estimation, which means when you get a bunch of experts on a subject and average their best guess, right? You are, the probability of correctness is very high. And the way we did it at the time when we were doing this in this college course was we all had to guess the average number of coins in everybody's pocket. Now, 20 years ago, that was a thing. Everybody had a pocket full of coins and we, everybody put their guess, or maybe it was the aggregate. I can't quite remember, but we guessed it absolutely on the nose because everyone was more or less an expert on the total number of coins carried in a pair of pockets of trousers.

12:23And the Delphi method of estimation is actually how JFK was able to say that man would walk on the moon by the end of the 60s. Anyway, he also knew about Operation Paperclip and the Nazi scientist. that were helping him so maybe that's some insight oh well this is true and so too did his best

12:40Emmet:guessers uh but the americans were perpetually in second place to russia and um he he basically in 1961 before congress said that they would be on the moon and he got it right um so that kind of was where the there was the explosion of space into media and tv and tv shows and what's often forgotten is how quickly momentum evaporated after man walked on the moon um apollo uh december 1972 was the last time humans had left low orbit earth but after that space became it kind of became institutional and in the 70s and 80s you know they were defined by space shuttle program which was sold to congress and the promise of making access to space uh like routine and affordable and it that have all these benefits to broadly the American people, but to the world.

13:34Emmet:And it didn't really deliver on the promise of making space travel routine or affordable, because every shuttle mission cost roughly one and a half billion dollars in today's terms, which is the beginning of the story, you could say, of SpaceX. There was the International Space Station, which began construction in 1998, and has been, interestingly, the space station has been continuously inhabited. I can never say that word, inhabited since November 2000. Imagine saying to an Irish mammy at Leaving Cert time, you know what I'm going to do? I want to work on the International Space Station. Like, there's no girl or boy at an Irish breakfast table, you know, at Leaving Cert who said, I'm going up to the International Space Station.

14:24Good luck to affect a lot of him. usually they come down in a couple of weeks bar those two poor that were up there for like six months or whatever that was yeah but you know

14:36Emmet:it's probably the most underappreciated geopolitical achievement of the 20th century because 16 nations worked together to get this thing up and running including the US and Russia adversaries forever since time began but they worked together they built something in orbit in a period when they could agree and absolutely nothing and that's pretty amazing isn't it yeah i imagine when you can see the entire world in one go the the problems down there maybe look a bit smaller can you only imagine have you seen the movie gravity yes yeah it's good it's i thought it was magnificent i really did it was a metaphor for the human condition and i think you reminded me of there because they're looking down on this planet and the troubles they brought up to space were still with them and you're looking then on this earth but anyway the other defining development of the era was the satellite industry something we all benefit from now if you have a television or a phone you do and um you know so the 80s and 90s was there was a lot of talk about sending up satellites and and the commercial value of objects in orbit was astronomical so things like gps and weather forecasting and television programming and financial transactions and blah blah blah all this stuff was kind of the promise of a good satellite network um but none of this really none of this stuff really felt like space exploration in in the original romantic sense like flash gordon you know like um if you're going to explore space you want to do it in a in a pretty cool spaceship that by the way by the way i have had a burning interest in gravity 9.81 meters per second squared my whole life the whole when i'm going to bed at night i i contemplate gravity i could do a whole series of podcasts on gravity it is such an interesting and misunderstood completely misunderstood phenomenon like you know t equals to the two pi square root of l over g do you remember that equation like i promise listeners we are going to talk about spacex eventually i'm going to bring it back sorry but anyway look what i was going to say is spaceships in the movies they're lying to us you can't do what they're doing there ain't no floor to walk on i'm sorry ain't never going to be solved i'll come back to that point in another podcast it paid for podcast you have to pay to not listen anyway um yeah so space exploration in in the romantic sense uh was just never delivered and and we're kind of now we are now at last at the precipice where um where it might just begin and like the global economy has become dependent on a constellation of of yokes up in the sky objects circling our planet just about 17 and a half they they go around the earth at 17 and a half thousand miles per hour and these these um satellites are actually powering most of the things we're using um so there's a lot to be said about space but the whole the storyboard changes when entrepreneurs decided to get involved so up until 90s you know whether it nasa or government body or is a Russian cause, whoever it was, was generally sponsored by the state.

18:03But suddenly entrepreneurs woke up and said, you know what, I think there's money up there. And in the early 2000s, a small number of private individuals decided that space was too important to be left to governments alone.

18:15Emmet:So Elon Musk founded SpaceX in 2002, I think famously, it's famous in my mind, after being quoted absurd prices by a Russian rocket manufacturer when he tried to buy refurbished ICBMs for a Mars greenhouse publicity stunt. And his insight was that rockets were expensive because nobody had ever had a serious commercial incentive to drive costs down. So SpaceX was born. And it started by building the Falcon 1 from scratch in a small factory. And it nearly went bankrupt three times and this this falcon won achieved orbit on its fourth attempt to get up there in 2008 and bill mann you will remember our friend uh speaker at multiple events we've conducted including investiga on this coming august shameless plug folks buy your tickets now david gardener will be there a whole bunch of the world's greatest investors will be there you don't want to miss this get your tickets well on early bird bill mann interviewed elon musk uh somewhere around that time period of 2008 and the way bill explains it is that he kind of had a really cool question which was something about you must have learned a lot from the first couple of rocket launches where it didn't necessarily end in success i it exploded um but you brought a lot of learnings to the table which allowed you to carve your way to to all the subsequent successes but bill kind of had a little bit of stage fright and he was there with elon musk and he said so it must have been kind of cool to blow up rockets like he completely fluffed it and elon musk lost his head with bill got really annoyed with him start to ball him out of it um anyway so elon musk's sorry spacex kind of lost a few rockets along the way but they they achieved what they set out to achieve in 2008 the same year as it pretty much nearly ran out of money entirely which sounds like the tesla story anyway so the falcon 9 followed and then the falcon heavy followed and then they had the starship program which is attempting to build the largest and i suppose most capable rocket in history uh with the explicit goal of making humanity multi-planetary now i have a couple i don't know if you notice mike i have a couple of strange life overlaps with elon musk I know I'm second degree away from as are you because we're both pals with Bill Mann so Bill Mann has Elon Musk's number in his phone as to a few other people who who are even closer to me than Bill but here's one of the overlaps I've had with um with Mr.

21:02Musk he's a big fan of the author Ian M. Banks also known as Ian Banks the Scottish the late Scottish author who I absolutely love and And Elon Musk absolutely loves the culture series of books which were written by E.N.M. Banks. And it's a set of novels about a highly advanced spacefaring civilization that's run by AI. So you can kind of see why Elon Musk took great inspiration from E.N.M.

21:29Emmet:Banks' books. And SpaceX hasn't named any of its rockets like the Falcon 9 or Starship directly after Banks' books. But the influence shows up very clearly because he has named a whole bunch of his autonomous drone ships, which are used to land rockets on at sea after Ian M. Banks books, such as Just Read the Instructions is one of the one of the autonomous. The other is Of Course I Still Love You. What a great name for a drone ship. Of course I still love you. And then another is A Shortfall of Gravitas. They're amazing. So what's that to do with me? well I had loads of laughs with Ian Banks in the flesh I went out on Dublin on the lash with the guy and he was somebody who was a huge big tall gentle giant wordsmith genius and he apart from anything somewhere over my shoulder here perhaps in one of the presses because I tidied it up for the aesthetic are all Ian Banks's books signed with a lovely note on each one in only the way that he can write so elon musk doesn't have that in her face elon anywho the reusable rocket um was spacex's master stroke as you know because i'm gonna hand over to you in a minute when i eventually shut up and in december 2015 like 11 years ago uh a falcon 9 first stage landed itself upright on a pad after delivering a payload into orbit.

23:04And this, up until that point, had been kind of derided as an impossible task by a lot of the aerospace establishment. So for those who don't really know what SpaceX has achieved or what it does now, it has achieved what was at one stage held up as pretty much nearly impossible. and it cut the cost of reaching orbit really dramatically and rendered most of the existing launch industry's economics obsolete overnight. Okay, so how about, I have a choice here, Mike.

23:40Emmet:Do I shut up and let you talk or will I tell you the three things that space? Let me jump in and we'll talk the IPO. Okay. We'll talk the IPO first and then you can go back. Let's talk the IPO and then I'll come back and I'll tell you what it does. Exactly. Because really our listeners are now more, more, more, Emmett, more, more, because I've talked so much all these coffees later. Okay. I mean, to make sure we limit your caffeine before you jump on the pot. But yeah, we mentioned it was maybe the most anticipated financial event of the year. That could be underselling it. But on April 1st, 2026, SpaceX submitted a confidential IPO filing, which means we don't have any details yet.

24:19It's seeking a$1.75 trillion valuation. If it achieves, this would make it one of the top 10 largest companies in the world. It's looking to raise$75 billion. The previous largest IPO ever in terms of fundraising was$29.4 billion for Saudi Arabia's Aramco. Yeah. No details on the ticker yet. Suggestions are either SPCX or just space, the one word. But yeah, look, it's going to be absolutely huge. The Roadshow is expected to start in June with an IPO likely in July. So we will come back once we get the prospectus. We'll break down the business. But for now, we do have to speculate on everything, really.

25:02But my big question was, why now? And there are definitely some catalysts to this. You mentioned kind of the momentum, I suppose, behind the space industry in general. There's a lot of public companies making an awful lot of money for investors. There is definitely an appetite for this. There's an appetite for this in the secondary markets, in the private markets. We've mentioned this already. But it just seems like space is very much in the zeitgeist right now. We just finished the Artemis.

25:27Emmet:Look, Jeff Bezos sent Katy Perry up there. I mean, that ding-a-ling came back down. I don't know what she was talking about. I'm sure Musk was right. Okay, we need to IPO. She's really done a good job on it. But I think what's even a bigger catalyst than all of that, because I'm a little surprised that Musk wants the stress of running another public company. The headaches he's had with Tesla, with his pay package, and the issues with selling stock etc he didn't have to deal with any of that with spacex so why now and i think a lot of a lot of it comes down to is the merger of xai and spacex which was set up in turn to kind of set up this ipo down the line as well so they merged in february spacex was valued at 1 trillion and xai was valued at 250 billion now they're private valuations obviously spacex has been through an awful lot of iterations so that's more accurate but the xaii one is it is kind of it's not plucked out of thin air of course but it is based on like you know certain fundraising rounds and that's kind of it so immediately you look at that and you look at 1.75 trillion dollar valuation and you're kind of raising eyebrows um and look a company of space exercise alone should not remain a private company as public investors we should be able to get access to the largest fastest growing business in the world and spacex is certainly one of them it's obviously one of the most exciting businesses as well with what it's doing like as in it really is a style accomplishing feats of engineering no one has ever seen you're talking about the the the the falcon the falcon uh rocket coming down and relanding and everything and it is truly incredible so public investors shouldn't be shouldn't be able to be kind of ring fenced outside of that so i i am happy that these businesses are going public but is musk you know there's an awful lot of headaches that come with running a public company compared to a private company if you look at stripe and the collison brothers they seem content to remain private and run the businesses they see fit rather than in the limelight dictated by the whims of the public markets because when you're leading a company and the stock price is going down that dictates decisions within the company whereas if you're leading space spacex and your last funding round said it was treat what trillion dollars worth and it's going to be a trillion dollars until your next one around and that's it it's a much more stress-free environment so spacex could stay private if it wanted to it's profitable enough it doesn't need to go for external funding between star like starlink and the launch program there is incredibly fast growing very profitable business there but then you integrate the cash burning AI company in XAI, which has an incredibly high demand for resources, maybe now you need a big cash injection to the tune of maybe$75 billion to build out AI data centers in space, if you truly believe that that's what they want to do.

28:22This does feel a bit like Musk is leveraging the reputation and just the sheer feats of engineering that SpaceX has done to fund XAI, in a sense, which doesn't really sit right with me, especially when you consider that like Reuters estimated that if it went public at$1.75 trillion, it would be going public at 56 times revenue and 109 times EBITDA. Not only that, but they are planning a 30 % allocation for retail investors, which is triple the industry standard. And then this is what really doesn't sit right with me as well is what the nasdaq has done so have you seen this no no so the nasdaq has made like some pretty aggressive rule changes specifically designed to fast track what looks like just spacex but i think it will also be down the line because we are expecting anthropic ipos and open ai ipos as well but designed to fast track these massive ipos into the nasdaq 100 index almost straight away.

29:25So then you're forcing, you know, billions and billions of dollars from passive index funds that track the NASDAQ 100, like QQQ is the most common one, to go buy SpaceX shares almost immediately after IPO, within two weeks. You know, traditionally, a company would have to wait, it was at least three months, but often the companies would wait until the annual reconstitution of the index in December before being eligible for the NASDAQ 100. Now they can go in after two weeks after IPO. um 15 trading days after their ipo the company this is only for the mega caps so the company's market cap must rank within the top 40 of the existing nasdaq 100 constituents so that's roughly at about 100 billion dollars which is obviously going to be spacex it'll be anthropic it'll be open ai so it does make sense it's also removed the 10 minimum float requirement for mega cap companies so you can only list a very small amount of shares that means that it's maybe easier to manipulate on the public markets too and then for those companies that float less than 20 of the shares nasdaq have brought in a rule that they will multiply their list and market cap by three for the purposes of calculating their index weight so that means that the etfs that track these will have to buy three times the amount of shares of that company if they have a low float with base x is likely going to do because they have an awful lot of private investors and most owns an incredible amount of shares i think he owns about 40 of the company um so look there there there isn't a course like i see the argument as well that the trillion dollar company should not be sitting on the sidelines and out of a nasdaq 100 because it is such a such an influential size just by scale alone it should be in the top top companies but the rule changes here seem so blatant to me and almost sycophantic in a way where you're bending at me to ensure that they get the listing over the myse um so yeah it just doesn't really sit right with me that they're it almost seems like you're setting up retail investors in a sense for exit liquidity somewhat for these major major ipos that are going to come onto the market straight away spacex being the first one but again open air and tropic are expected in the year ahead as well and almost just offloading exit liquidity for retail investors either not even directly not from buying the shares but from index funds too so yeah like in terms of the ipo look we're not going to comment on stuff we don't know in terms of perspective we'll have a later episode on that but just what's coming out in terms of details now none of it really sits very comfortably with me i I hate the fact that it's coming in on an expected$1.75 trillion.

32:16And, you know, it's got, what, it's going to be 50 % bigger than Facebook and has about 50 times less profits than Facebook. Like, why? Because of the Musk multiple? Because of how sought after it is on private markets? A lot of that just comes down to liquidity and a lack of options for investors who really, really want to own them shares. So yeah, that's a little rant. It doesn't have anything to do with the company per se. It just has to do with how this is being done and what the NASDAQ is doing, especially around it. So yeah, I'm not sure if that really fits the rest of this theme of episode because SpaceX is an incredible company.

33:00But there's some murkiness to this too. This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, Sponsored Jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a$75 Sponsored Job Credit at Indeed.com slash podcast. Terms and conditions apply.

33:32Emmet:As you described that to me and all that was news to me, It felt like the first cousin twice removed of SPACs where the special acquisition companies were a hot trend in and around 2019, 2020 as a mechanism for companies to fast track to flotation. They sidestepped the IPO process. They didn't need to obey the rulebook. They were merging with a company that already had gone through IPO, but was nothing more than a big ball of money and through a sleight of hand would acquire a business like Virgin Galactic, which is one of circa 60 companies on the stock exchange now that's primarily concerned with space exploration or the space economy.

34:16Emmet:me but what you've described there doesn't feel right it feels well is that in the best interest of investors or is it in the best interest of theatrics um and to maybe warm up a tepid IPO market you know like as you touched on like Stripe has sidestepped or decided rather not to IPO to this point anyway because their access to funding is they have as much funding as they wish that the best interest rates available um so why would they ipo um i couldn't but help think of that overused and super tired example of mine which is when i invested in netflix its market cap was a couple hundred million you know it was a micro small cap now we're looking at businesses and sure everybody can see the promise and i'm going to talk a little bit about what a spacex business is and where in fact it hopes to get to and you can listen to that story if you like and buy into it and go yeah that's very future relevant and i believe in the leader and i believe but when you look at a price tag of 1.75 trillion you really really need they really need to see some serious revenue execution in the decade ahead in order to justify that price but the real shame And what you told me is that generally post IPO businesses don't make for great investments because the market is finding its footing.

35:46And very often the shares take a nosedive in the subsequent weeks, months and even quarters. And then if you chuck it in to make it part, what, like four or five percent of the NASDAQ 100 straight away, that's affecting. That's it.

36:00Emmet:So that's exactly it. Crazy, crazy stuff. yeah okay rather than hammer that point and i think there's a lot we could talk about on that um i think it's worth just being very crystal clear for our listeners what does spacex do well it's effectively three businesses the first is it is their dominant uh rocket launching company in the world and it designs and manufactures and it launches some of the rockets I mentioned, the Falcon 9, the Falcon Heavy, the Dragon, and then Starship related systems. And it also sells small satellite ride share capacity. So the first business is it launches stuff. The second business is it operates Starlink, which I've no doubt many of our listeners are subscribers to, and it has become the commercial engine of the company.

36:53And Reuters, who you mentioned mike reported that starlink now has 10 million uh subscribers while spacex launch a cadence reached 165 falcon launches in 2025 so the second business operates is starlink and then the third business that it operates um is is it builds government and defense communication infrastructure through Starshield, which SpaceX describes as a secured satellite network for government entities, which is probably very similar to the Starlink network, but I suppose variations in hardware and software. But it also continues to fly human spaceflight missions with Dragon, and it's still developing the Starship for Lunar and Mars missions.

37:44Emmet:So at the headline, one might say oh spacex is that something to do with mars well no not really yes it is but it's not the lion's share of the story by any stretch um and i suppose writers i suppose with this company you can discuss the current reality and the future and they're very different stories and the current reality of what you said is very much based on rocket launches and starting subscriptions but what it could be you know the the i was about to say the sky is the limit but we're beyond that do you know what i mean oh yeah i have a question for you and it's from as i would often say the front row seat on the balcony of ignorance i should know the answer to this question but is grok and xai the same thing yeah so so this is the thing we're talking about spacex now and we're talking about scaling but to fully encapsulate the entire company now we need to talk about grok and twitter and grokkopedia and xai which which kind of is why i'm having my little rant earlier as well because it does muddy the water this is now a big kind of messy conglomerate of slightly related but not really related businesses and and the your play of investing in the leading satellite company in the world or the leading you know satellite broadband company that is growing subscribers you know doubling every year isn't there anymore because you also have to invest in twitter if you want to own shares of it um so that's why oh wait hold the door are you telling me x aka twitter is part of this mega ipo yes isn't it make sure i got my facts right here no um but yeah because uh they i missed that i absolutely missed that they integrated twitter into xai oh i see so then right xai into um spacex okay so reuters reported that spacex generated about 15 to 16 billion of revenue and about 8 billion of EBDA in 2025 and that's really the backbone and valuation of Starlink you know and in other words it increasingly this business is today more of a communications and infrastructure platform than it is anything else you could economize in detail this is a communications company with a very profitable launch arm attached if it's so it's you could describe it as a utility

40:28Emmet:in a weird way oh my goodness yeah i mean that really does change the ipo story but uh it's like we're here we we're we're doing a strategic collaboration with consolidated edison conness you know in the old movies of new york where you see steam coming up through this the manholes in york that's con ed it's got it they used to i don't know why i can't remember what they used to push steam around the city i think it's how they heated the city uh so spacex and is proud to announce a strategic collaboration with other leading utility provider con ed um but in 10 years so what what is this business going to look like in 10 years well who knows good on twitter sorry i could have it already owns twitter it could own tesla as well and might even own twitter I was about to say, they're going to throw everything in together into the big musk melting pot.

41:18I have no clue. Yeah. Well, I think, you know, it being a space company is, it almost feels a little reductive. You know, it could be more like this kind of vertically integrated global infrastructure company. global is selling it short too they're on about building data centers in space which is a bit kind of depressing going from we're putting people on Mars to servers in space is a real downgrade

41:54Emmet:well the heat, the energy, we've often discussed the energy required to cool down a data center, that's gone you're sticking in space it's bloody freezing up there yeah it's very chilly you just open the door and let the cooler and no air blow through look in plain English what SpaceX is today is it launches rockets it carries your stuff up there if you pay the money uh 8k usually satellites from third parties that go here come here can you bring me stuff up to space for me uh it brings astronauts up um and it runs a huge satellite internet network and it sells secure space-based comms to governments that's what it is today but but where it's going where it's going is it's going to um continue to monetize the success of starlink evidently and raise capital for bigger more ambitious things and you've touched on it there i mean the the there's an like it's an extraordinarily crowded field like a like just as a slight digression a guy called adam jonas that morgan stanley wrote a paper uh the other uh public published a paper the day before yesterday about 60 publicly traded names across the supply chain uh rare earths and industrial gases and all this kind of stuff all concerned with the space industry 60 companies that you can buy shares in today he called it the space 60 list and um i read through it and i don't hate to deal with it on a podcast because reading off a list of 60 companies does not it's nearly as good as me describing the shape of a graph but it's even worse so i'm not going to do it but you if you just stick into google the space 60 list from morgan stanley you're going to see 60 companies that you can invest in today um the majority of which i'm going to guess you have never heard of because there's ones you'll know of course like boeing and uh maybe honeywell and and and maybe moog who make actuators but there's a whole pile of them a ton of them you've never heard of so it's an absolutely nerd nerds paradise i'm really looking forward to going through those 60 companies one of which one of which i have invested in in horizon and i am more convinced than ever after this conversation the research i did for this conversation is going to create vast wealth absolutely vast wealth um but anyway you can go and have a look you've seen the you've seen the potential now where i know the company you're talking about going from 30 40 billion to 1.75 trillion i wouldn't mind being on that train hell yeah and then the space industry like today looks nothing like it did just even just a few years ago because of the number of players and the diversity of approaches to go up there and technology that's brought up there and the pace of development is under it's i mean it's totally unprecedented so it really feels we're now at the birth of an entrepreneurial space race as opposed to a governmental space race and the industries that are going up there just for completeness of conversation and you touched on it there while we've already talked about satellite constellations and and all those different satellites um amazon's project a kuiper i think it's called is building um a competing constellation um to to elon musk's one then there's these uh lunar ambitions and and and there's a whole new lunar race going on um mars is up for discussion space tourism is an industry that yeah i kind of bought into the idea as you well know six seven years ago i'm not so sure but um whether or not you'd want to go up there it's it feels like analogous to going down to the bottom of an ocean to see titanic i think only a small percentage of people would be willing to take the risk for that reward less less you know less people now i imagine yes indeed yeah for sure sadly um then there's defense and national security as an industry unto itself um but the the bigger picture, the bigger picture opportunity for the space economy, if we call it that, according to Morgan Stanley, the industry, the space economy industry was worth about 630 billion in 2023.

46:23And they said that it's going to exceed at 1 trillion by 2030 and probably exceed 2.7 trillion dollars by 2040 so firstly the macro market the industry is projected to grow and goldman and bank of america have also made comparable projections so the kind of size of the industry all the all the big research houses are in agreement and in lockstep that it is just going to get bigger and bigger and bigger um but one of the very interesting and i will how long as this podcast has been coming to recorders of an hour, I'm going to just give you quite an interesting statistic, which is the fundamental economic driver is falling launch costs.

47:07The cheaper it costs to launch a rocket into space, the more it becomes appealing and the more that can be done. Now, specifically in 1990, it cost about$54 ,000 per kilogram of weight to reach low earth orbit by 2023 spacex was advertising falcon 9 ride sharing price at about two thousand seven hundred dollars per kilogram so remember those number 54k in 1990 2.7k uh just a couple of years ago and starship if it achieves its design goals will reduce that by another order of magnitude to somewhere in the range of 100 to 200 bucks per kilo brought into space so the expression no carbs before marbs which means no carbohydrates before you go on a holiday to marbella uh so you look slim in spain i really didn't think that was going to be a point of contention on this podcast it will have no equivalent for going to space because it will be cheap to haul your big belly up to space and once it's up there it's weightless so there'll be no carbs before marbs but you can have carbs before space no problem and it's nearly cheaper to send some the space and carry a bag into ryan air flight than oh yeah for sure um and you know what we're talking about this is what happens to any industry when the cost of the critical bottleneck collapses like lcd tvs were super expensive but then when the cost of lcds etc etc so the applications that were once upon a time previously impossible because it was preposterous to spend$58 ,000 per kilo to send something up to space are effectively removed, which gives, it opens up a whole new industry for things that we haven't even thought of yet.

49:01And that's why SpaceX, it's, oh, to just stretch the analogy even further, it's a bit like when apple built the iphone it said look you can build apps but your creativity will build the apps we've built a platform well spacex says you want to send stuff to space we'll get it up there for you and that's where entrepreneurs uh around the world will start to sharpen their pencils and think of things that i we can't talk about today yeah like in space manufacturing like you know who we should be making our labubu is what are those things called the boobu yeah the boobus we should be making our lupubus in space and sending them down because it's cheaper to do it.