Episode summary
Will You Be Forced to Own SpaceX and Other AI Stocks? What SpaceX needs to do in order to outperform
Money For The Rest Of Us
· · 31 min · Hosts: David
Summary
SpaceX is reportedly going public at an estimated $1.7 trillion to $1.8 trillion valuation, with about $80 billion raised at around $135 a share, and the host argues that makes it an exceptionally expensive stock on sales. Using about $19 billion in revenue, SpaceX would debut at roughly 95 times sales, far above Amazon and even above Nvidia, while still losing money and burning capital. The episode frames the IPO as part of a broader wave: Anthropic and OpenAI are also expected to seek public capital as AI infrastructure demands more funding than private markets can comfortably supply.
The host says SpaceX’s S-1 presents the company as a space, internet, and AI platform, but its largest opportunity is actually enterprise AI, including data centers in space. He notes that index fund investors may not immediately be forced into massive exposure, because float-adjusted weighting and index rules mean the initial S&P 500 inclusion could be small even if the headline valuation is huge. Still, if these companies grow and more mega-cap IPOs arrive, concentration in cap-weighted indexes could rise further.
The episode also compares index construction methods and highlights alternatives for investors who want less concentration in the Mag 7. The host favors historical-weight approaches like DSPY and also discusses XMAG 7, equal weight RSP, and fundamental indexing through PRF. His bottom line is that SpaceX may be a fascinating speculation, but investors should understand how much growth would be required to justify the valuation and how much portfolio concentration they are willing to accept.
Key takeaways
- The host says SpaceX would trade at about 95 times sales at a $1.7 trillion valuation, making it a very demanding stock to own.
- To justify even a 10% annual return from a 20-times-sales multiple in 10 years, SpaceX would need revenue growth of about 29% per year, according to the host.
- The host says SpaceX, Anthropic, and OpenAI are going public now because private capital is increasingly tapped out and AI data centers need more funding.
- The host says float-adjusted index rules should limit initial S&P 500 exposure to SpaceX and Anthropic, even if their headline valuations are enormous.
- For less concentration than IVV, the host points to DSPY, XMAG 7, RSP, and PRF as different ways to reduce reliance on the biggest AI-heavy names.
Notable quotes
“that $1.7 trillion valuation using $19 billion in sales, that's 95 time sales”
“They have filed their S1 statement. The the estimate it would be priced at about $135 a share”
“Our mission is to build the systems and technologies necessary to make life multi-planetary”
“if it was trading SpaceX at 95 times sales 10 years from now, it would need to take its revenue from 19 billion to $49 billion”
How the episode opens
And when we look at how SpaceX is priced, that $1.7 trillion valuation using $19 billion in sales, that's 95 time sales. So SpaceX is going public at a huge multiple. Welcome to Money for the Rest of Us.
This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it. I'm your host, David Stein. Today is episode 558.
It's titled, "Will you be forced to own SpaceX and other AI stocks? This week, SpaceX is reportedly going to go public. They have filed their S1 statement.
The the estimate it would be priced at about $135 a share. They're seeking to raise about $80 billion with a at a total market market capitalization of about $1.8 trillion. That's big.
If we think of the largest company that's publicly traded in the US, it's Nvidia. And they have a market cap of about $5 trillion. The market capitalization is the price of a stock times the number of shares outstanding.
But we'll see in this episode that in terms of its weight in an index fund that tracks the S&P 500 index, it depends on how much of the the company's actually shares are floating. In other words, able to be traded. In the case of SpaceX, it's going to be pretty small because Elon Musk will have maintain most of the control of the company and they're only raising $80 billion.
But then again, the index providers can adjust their rules and we'll we'll get to that. Now, I first became aware of SpaceX as is their Starlink product. I we've owned a cabin in Idaho about eight years.
And when we when we got there, there was a disc a disc on the side of the wall or on the side of of of the cabin and it was pointing to a local provider of internet.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- spacex going public
- ai stock concentration
- index fund weights
- passive vs active investing
- etfs less exposed to mag 7 and ai
Companies and tickers mentioned
- NVDA
- AMZN
- Space Exploration Technologies Corp.
- Anthropic
- OpenAI
- Nvidia
- Amazon
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Money For The Rest Of Us, this episode and its artwork belong to J. David Stein. Octagon is not affiliated with the show; this page is an independent summary.
