As a tech insider and investor, I know firsthand that the reality of AI and the narrative being sold are miles apart. When they finally collide, it won't be pretty.
None of these valuations add up. We are witnessing peak exuberance, driven by a delusional FOMO that can last as long as liquidity allows. But make no mistake: many of these IPOs will never hit their opening day highs again, and retail investors will be left holding the bag. It’s the same old song and dance with different faces. The bubble might take a long time to build, but the burst is an elevator ride from the penthouse straight to the basement
Like... this is literal facts because a 2 trillion valuation is lowkey insane for a company that hasn't even put regular people on Mars yet fr. Investors are totaly getting blinded by the hype while the actual math just isn't mathing at this point
Why is your math missing the $15 billion / year deal with Anthropic? Completely neglecting mention of current / potential data center revenue is malpractice. Either way the valuation is "aggressive", but pretending half their current revenue doesn't exist and not mentioning their largest short term revenue opportunity just showcases your ongoing bias vs anything Elon.
Assuming ~40B for 2026 with the Anthropic deal puts the valuation at 50x revenue. Still crazy, but quite different from the 100x you are claiming in this article.
Excellent analysis of the numbers given by Musk. Is there any accounting in the analysis for their likely inflation or even falsity. Musk is a prolific liar, and his fraud is insulated from accountability by his wealth and Trump.
The Starlink vs everything-else framing makes the valuation problem much clearer. A great operating business can still be attached to a story that asks investors to pay for several futures at once. The governance point matters too: valuation is not just about revenue multiples, it is also about whether shareholders have any meaningful control over the machine they are funding.
I've been thinking for some time that Google's AI overviews would reduce traffic to actual content web sites. It has for me, personally. Yes, it's a convenience, but so much for "Do no evil". The sites that actually produce the content will now get less money for advertising. There goes the content that feeds AI overviews. One solution would be for AI companies to pay for the content they scan, but I'm not holding my breath.
This is another Elon gift. He can't raise money for Grok so he's IPOing SpaceX and using it as front for Grok. He's also hoping that his IPO will suck capital out of the markets making GPT a bust. I predict that both will be met with underwhelming investments.
Hi Scott, observation about a $600B company asking for $2T really resonates.
The $600B side earned its number through one factory habit. Falcon 9 lifts a kilogram to orbit for about $1,500. The Space Shuttle did it for $54,500. The gap came from how the SpaceX factory in California works. Tom Mueller, the engineer who built the first SpaceX engines, handed Musk a build schedule. Musk read it and said "cut it in half." Mueller cut it. Musk told him to cut it in half again. The same habit turned a $120,000 part bought from a supplier into a $5,000 part built in-house.
Now xAI did not run that way. It spent $12.7B last year, and no one inside said "cut it in half." Gwynne Shotwell, the SpaceX president, now also covers xAI after the February merger. She would have to carry that habit across before small investors lose interest.
Appreciate the analysis highlighting one juicy bit in a bin of turds burning cash. Are there any IPOs where the juice was not squeezed pre-IPO? For crazy valuations these days, it just seems weird, where is the money coming from to create such demand and pump up prices? Margin? Are boomer kids putting their inherited millions into tech, abandoning their parents’ diversified approach? Is it investors from China?
What about the Anthropic deal? How can you miss that? Totally explains the well-spent capex you talk negatively about. I like you, Galloway, but your clear bias towards Elon is childish.
Thanks guys. This is a fantasy created to get early investors out of a hole to the detriment of the public through their retirement pland and retail investing.
Don't do it, but as you said they will get away with it....for now
Another great Monday morning read. I love the different takes
As a tech insider and investor, I know firsthand that the reality of AI and the narrative being sold are miles apart. When they finally collide, it won't be pretty.
None of these valuations add up. We are witnessing peak exuberance, driven by a delusional FOMO that can last as long as liquidity allows. But make no mistake: many of these IPOs will never hit their opening day highs again, and retail investors will be left holding the bag. It’s the same old song and dance with different faces. The bubble might take a long time to build, but the burst is an elevator ride from the penthouse straight to the basement
Like... this is literal facts because a 2 trillion valuation is lowkey insane for a company that hasn't even put regular people on Mars yet fr. Investors are totaly getting blinded by the hype while the actual math just isn't mathing at this point
Why is your math missing the $15 billion / year deal with Anthropic? Completely neglecting mention of current / potential data center revenue is malpractice. Either way the valuation is "aggressive", but pretending half their current revenue doesn't exist and not mentioning their largest short term revenue opportunity just showcases your ongoing bias vs anything Elon.
Assuming ~40B for 2026 with the Anthropic deal puts the valuation at 50x revenue. Still crazy, but quite different from the 100x you are claiming in this article.
Excellent analysis of the numbers given by Musk. Is there any accounting in the analysis for their likely inflation or even falsity. Musk is a prolific liar, and his fraud is insulated from accountability by his wealth and Trump.
The Starlink vs everything-else framing makes the valuation problem much clearer. A great operating business can still be attached to a story that asks investors to pay for several futures at once. The governance point matters too: valuation is not just about revenue multiples, it is also about whether shareholders have any meaningful control over the machine they are funding.
Musk can create a circular business with Tesla. Then any revenue numbers can be generated to match any valuation, right?
600bn is still ridiculous. This week we got data centres in space. It’s a bad episode of the Muppets but with no Miss Piggy to redeem it.
I've been thinking for some time that Google's AI overviews would reduce traffic to actual content web sites. It has for me, personally. Yes, it's a convenience, but so much for "Do no evil". The sites that actually produce the content will now get less money for advertising. There goes the content that feeds AI overviews. One solution would be for AI companies to pay for the content they scan, but I'm not holding my breath.
Wait, a Murdoch is buying New York magazine? The last time that happened Stayin’ Alive was a hit.
https://needsofthemany98.substack.com/p/spacex-earthlink-in-low-orbit?r=gwg0&utm_campaign=post&utm_medium=web
This is another Elon gift. He can't raise money for Grok so he's IPOing SpaceX and using it as front for Grok. He's also hoping that his IPO will suck capital out of the markets making GPT a bust. I predict that both will be met with underwhelming investments.
Hi Scott, observation about a $600B company asking for $2T really resonates.
The $600B side earned its number through one factory habit. Falcon 9 lifts a kilogram to orbit for about $1,500. The Space Shuttle did it for $54,500. The gap came from how the SpaceX factory in California works. Tom Mueller, the engineer who built the first SpaceX engines, handed Musk a build schedule. Musk read it and said "cut it in half." Mueller cut it. Musk told him to cut it in half again. The same habit turned a $120,000 part bought from a supplier into a $5,000 part built in-house.
Now xAI did not run that way. It spent $12.7B last year, and no one inside said "cut it in half." Gwynne Shotwell, the SpaceX president, now also covers xAI after the February merger. She would have to carry that habit across before small investors lose interest.
The $2T price assumes she can.
Appreciate the analysis highlighting one juicy bit in a bin of turds burning cash. Are there any IPOs where the juice was not squeezed pre-IPO? For crazy valuations these days, it just seems weird, where is the money coming from to create such demand and pump up prices? Margin? Are boomer kids putting their inherited millions into tech, abandoning their parents’ diversified approach? Is it investors from China?
What about the Anthropic deal? How can you miss that? Totally explains the well-spent capex you talk negatively about. I like you, Galloway, but your clear bias towards Elon is childish.
Thanks guys. This is a fantasy created to get early investors out of a hole to the detriment of the public through their retirement pland and retail investing.
Don't do it, but as you said they will get away with it....for now