TIP830: SpaceX (SPCX): Is It Really Worth $2 Trillion Dollars? w/ Kyle Grieve & Shawn O'Malley

SpaceX was founded in 2002 after Elon Musk concluded NASA had no concrete plans for human Mars missions. He invested roughly half of his $180 million PayPal payout into the company. The Falcon 1 failed on its first four launches before SpaceX became the first private company to send a liquid-fueled rocket to orbit in 2008 and secured a $1 billion NASA contract the same year.

The company today operates three segments: space, connectivity, and AI. The space segment has completed over 650 launches at roughly a 99% success rate, delivering 2,213 tons of payload to orbit in 2025 alone, more than the rest of the world combined. The average Falcon 9 launch costs approximately $74 million versus NASA's average of $2.5 billion, and Falcon Heavy cut the cost per kilogram to orbit by roughly 92% versus historical averages. Starship is expected to reduce that further to $100 per kilogram, a 99% reduction.

The connectivity segment, which Kyle Grieve calls the crown jewel, operates Starlink with approximately 9,600 satellites representing 75% of all active satellites and 10.3 million subscribers across 164 countries. The segment carries roughly 40% operating margins and 63% adjusted EBITDA margins. Consumer broadband subscribers doubled in the last 12 months, though average revenue per user fell from $88 to $66 as lower-priced plans were added. V3 satellites expected in the second half of 2026 will carry 20 times the throughput of V2 and are projected to achieve a nine times cost reduction per gigabyte versus V1. Grieve notes the prospectus lacks fee escalators similar to those American Tower uses, which is a meaningful caveat for long-term revenue modeling.

The AI segment, formed after Musk acquired Twitter for approximately $44 billion in 2022 and merged it with XAI and SpaceX in February 2026, generated $3.2 billion in revenue in 2025 but posted $6.3 billion in operating losses and $12.7 billion in capital expenditure. Grieve views this as the weakest segment, arguing Grok is not meaningfully differentiated from competing models and that Twitter's value has arguably been destroyed since the acquisition. Shawn O'Malley adds that unlike Alphabet's Gemini, which benefits from proprietary training data, he cannot see how SpaceX's AI spending complements the rest of the business. Grieve believes the connectivity segment is essentially subsidizing the entire company and draws a parallel to his own Alibaba investment, where one exceptional segment subsidized all unprofitable ones, an experience that led him to require at least two segments likely to become cash cows before investing in a multi-segment business.

SpaceX raised approximately $85.7 billion in its IPO, exceeding the originally planned $75 billion target. Pro forma cash stands at roughly $101.5 billion against approximately $30 billion in total debt, yielding a net cash position of about $71.3 billion. Despite this, SpaceX remains cash flow negative and unprofitable, with $19.7 billion in capital expenditures and $8.6 billion in R&D spent in 2025 alone. The company also acquired Cursor, an AI coding agent with roughly $4 billion in annualized revenue, in an all-stock deal valued at approximately $60 billion, or about 15 times revenue. Grieve frames this as an example of Soros's reflexivity, where Musk's storytelling supports the stock price, which then enables acquisitions using elevated stock as currency.

Elon Musk owns approximately 12.3% of SpaceX stock and controls roughly 85% of voting power, meaning shareholder approval is not required for any decision. He can unlock up to 1 billion shares through performance stock units tied to market cap milestones reaching approximately $7.5 trillion, with one tranche requiring a permanent human colony of 1 million people on Mars. Grieve argues that once 1 million people are on Mars, all tranches would likely unlock simultaneously.

On valuation, SpaceX trades at approximately 110 times revenue and roughly 500 times adjusted EBITDA. Grieve's bottom-up TAM analysis produces approximately $600 billion across all addressable segments, far below the $28.5 trillion figure in SpaceX's own prospectus. His base case model, assuming 37% annual revenue growth through 2031 and an exit multiple of 30 times EV to EBITDA, yields a fair value of approximately $110 per share in 2031, implying a compounded annual return of nearly negative 10% from current prices. O'Malley guesses SpaceX stock will be roughly 50% lower in five years, though he acknowledges continued business progress could eventually make it a compelling investment at lower prices. Grieve concludes that even at $100 per share he could not justify holding SpaceX as more than a highly speculative 1% position.