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.
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?
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.
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.
> 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.
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.
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.
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?
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.
Land rights. Environmental reviews. Various suits attempting to exert extra compensations for tangential (at best) issues. Basically the California around.
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.
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.
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.
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 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.
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.
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.
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.
> 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.
> 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.
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....
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.
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.
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.
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.
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.
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.
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.
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?
>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.
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
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...
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.
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?
It’s very simple. You should expect he will do whatever benefits himself.
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.
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.
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.
> 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.
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
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.
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.
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?
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.
> 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.
> 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.
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.
> 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?
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.
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?
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.
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.
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.
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.
> 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 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.
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....
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.
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.
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.
> It’s much more convincing
Shouldn't your concern be whether it's true? Who asks to be "convinced?"
Right?? His takes are so good but his brusque, smarter-than-you finger wagging is offputting
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.
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.
You should beware of the predictive power of Morningstar before you read/take their advice.
I'm generally going to avoid betting against Elon.
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.
Maybe, but his proposed share structure is hilarious. I can't tell if Musk is serious or trolling Wall Street again. =3
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.
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.
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 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.
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?
>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.
You need a probability in order to estimate expected value.
Not a criticism of the article, but...
...from the pages of Duh Magazine
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.