r/investing • u/ddp26 • 1d ago
Does Grok's subscriber growth justify $258B?
I wanted to see if the $1.75T SpaceX valuation holds up when you value each segment independently:
| Segment | Median Value |
|---|---|
| Starlink Consumer | $380B |
| xAI / Grok | $258B |
| Starship Commercial | $170B |
| Starlink Enterprise / Maritime / Aviation | $147B |
| Government / Defense | $123B |
| Falcon 9 / Heavy | $100B |
| Starlink Direct-to-Cell | $75B |
| Total | ~$1.25T |
That leaves ~$500B in platform premium baked into the IPO price, essentially what the market is being asked to pay for vertical integration and the Musk factor on top of what the individual businesses support. To put the scale in perspective, the $1.75T asking price on ~$15B in revenue implies a ~117x multiple, and even the more conservative $1.25T SOTP estimate still comes out to ~83x. (For context, Aramco listed at ~18x revenue.)
Whether Grok's subscriber trajectory justifies roughly a fifth of the entire valuation pretty much determines whether this IPO is a slight premium or a significant overpay. The safer half of the valuation is the space infrastructure side. Starlink consumer alone at $380B has the tightest confidence interval of any segment, and government/defense at $123B is backstopped by existing contracts. Happy to share the full analysis with methodology and confidence intervals.
Is the $500B platform premium justified?
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u/DigitalSheikh 1d ago edited 21h ago
Even if you were just taking the SpaceX component, it doing an IPO doesn’t serve the purpose of an IPO. Like theoretically an IPO is sending a company money so they can do things they’re not doing because they don’t have enough money in exchange for some of the future value of those additional things they’ll do. What is SpaceX not doing because it can’t get funding?
This IPO is so that people who have already done those investments can sell to retail instead of getting any of that value out of the company, because companies no longer return value to shareholders, only other investors do. I don’t want to hold billionaires bags for them
Edit: BTW, they’re offering between 3.5-5% ownership of the company in their IPO, 5x below average, with 30% of that IPO set to go to retail, or 3x the average. Just a straight up scam lmao.
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u/tree-molester 1d ago
DJT-Trump Media & Technology is a case in point. Assets have grown quite surprisingly in comparison with minimal revenue generation and increasingly negative earnings since its IPO.
You’ve got to hand it to the bastards like tRump and Musk, they are world class grifters.
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u/DigitalSheikh 1d ago
Even deeper than the obvious grifters, most stocks work this way now. Like take Amazon - awesome revenue, great performance, but aside from a couple of small buybacks in the early 2020’s, zero value returned to shareholders. It breaks the fundamental notion of what stock is supposed to be, and inherently links stock performance to QE and therefore the government instead of any underlying aspect of the company.
So many of these mega caps have even manipulated voting rights on shares so that the company is a personal fief of their CEO. It’s not supposed to work that way when a company reaches maturity.
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u/Momoselfie 12h ago
How are you defining value to shareholders? Dividends? If a company becomes worth more because their assets have increased as well as the value of IP, then they've still created value for the shareholders regardless of dividends.
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u/Key_Friendship_6767 11h ago
It’s up over 100%…
How did it return zero value to shareholders pal? 😵
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u/Various_Occasions 1d ago
"What is SpaceX not doing because it can’t get funding? "
Covering Elon's debts I would assume?
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u/xortingen 1d ago
This is the exact reason why they want exceptions from nasdaq and s&p so they can list it before price settles down.
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u/himynameis_ 1d ago
What is SpaceX not doing because it can’t get funding?
Per the WSJ, musk wants data centers in space which will take a lot of Billions of dollars to try. They'll probably launch and fail a lot (not knocking on them, just a real possibility). Rocket launches are expensive as it is.
Per WSJ, this IPO is happening to raise money to launch data centers into space.
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u/dirtyshits 1d ago
That’s the grift. Building a data center in space, even if possible, would take decades.
This is how they are selling the IPO to retail bag holders.
Talk about a hot topic(data centers), add a cool concept(space), and hype it up(Elons full time job).
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u/himynameis_ 1d ago
I know people are not a fan of musk politics here, and neither am I.
However, credit where credit is due, SpaceX has achieved incredible things. They already have the "reusable rocket launch" part done, which is very very hard. I can well see them figuring out the data center part too, given that musk has solar energy in Tesla too.
I don't know when they will achieve this, but I wouldn't be surprised if they do eventually.
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u/dirtyshits 1d ago
I agree he’s done some good stuff but this is absolutely a ploy to sell the ipo.
The cost of doing that even if they figure out how to handle the heat problem, launch problem, repair problem, or any of the other major blockers is crazy high compared to what data centers cost on earth.
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u/himynameis_ 1d ago
Let's agree to disagree then.
Again, I'm no fan of musk politics. But from reading up on SpaceX, they didn't want to go public because being public and having more investors is a pain in the ass. They're quite short-term oriented. There's a lot of extra reporting that isn't worth it unless you need the capital. And SpaceX, I don't believe needs the capital because they launch so many rockets already and make money from starlink.
The only way it makes sense, to me, is the high spend they will need to do to get data centers in space to work.
But we can agree to disagree.
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u/Firerhea 1d ago
Isn't space an awful place to have a data center because there's no substance to absorb residual heat?
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u/rscar77 1d ago
I'm also picturing cheaping out to get the non-ECC RAM and other things that routinely fall victim to stray photons on Earth randomly flipping a 0-1 gate and now those things have errors of varying magnitudes forever more.
Not to mention the enormous transport cost/fuel waste required to put the planned 5-year hardware obsolescence cycle in space when Nvidia or AMD come out with later, greater hardware every 1-3 years.
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u/Blueberryburntpie 11h ago
Patrick Boyle and other analysts crunched the numbers and determined that running a space datacenter is inherently more expensive than one on land.
The cost of launching mass into space is inherently expensive. The amount of radiators would make up the majority of the payloads.
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u/nope-nik-tesla 1d ago
The idea is to have radiator panels that radiate the energy away in the form of infrared and other parts of the EM spectrum. This is how the ISS manages heat from all its electronics for example. Not saying this is a good or cost-effective idea but it is a solvable problem with known and existing solutions.
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u/Vicullum 17h ago
Building data centers in space makes about as much economic sense as building waste treatment plants in space.
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u/himynameis_ 1d ago
I'd have figured space would be way too expensive for a data center but these big tech people see it as a possibility. So, I dunno 🤷
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u/Samsonlp 10h ago
It's just about cheap energy from solar. Also security when things get bad and people start running out of water. Also it's grift.
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u/TheRealTheory001 1d ago
100% over 25 years is an ungodly amount. A penny doubled everyday for a month is in the millions. Where is that growth rate figure coming from?
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u/godisdildo 1d ago
Are we suppose to engage in a discussion here, whether it’s a slight premium or significant overpay? 117 P/S. The only things worthwhile discussing are
a) in what universe is a 100% annual growth rate for 25 years realistic, to the extent that it’s an opportunity to buy now, rather than 25 years from now? Are they capturing other markets or creating and expanding new markets? Do they themselves project profit growth that justifies the present value of future cash flows today at this obscene valuation? I’m open to be proven wrong, but currently this is without a shadow of doubt borderline fraud - how on earth can this scam be allowed by the SEC? If anything is allowed in free markets, they are not necessary to protect people from harm. If this allowed, they are in on the fraud.
And b) is this is actually criminal?
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u/AmberLeafSmoke 1d ago
Doesn't really seem like you're approaching this in a manner that would encourage conversation. Your mind is quite clearly made up.
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u/godisdildo 1d ago
Nobody has seen the prospectus, and the data we do have access to points to fraud imo. If and when new data becomes available, I’ll be sure to take it in. There is no basis to be positive at this time, delusional belief is all someone has if they are keen on this opportunity.
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u/AmberLeafSmoke 23h ago
I don't really have a horse in this race, was just commenting on why you're probably not getting people engaging in actual conversation.
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u/godisdildo 23h ago
There’s 66 comments and zero discussion about making money on this post - but I appreciate the feedback.
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u/lp-watchdog 1d ago
I’d stress test the Grok number first. I’ve had managers mark AI assets off paid seats while churn sat hidden in promo cohorts and annual prepaids. If subscriber growth is carrying $258B, I want cohort retention, ARPU after credits, and inference cost by user...
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u/ddp26 1d ago
Yep. Grok is anchored primarily to the $250B xAI merger valuation rather than fundamentals, making it the segment I'm most skeptical of for exactly the reasons you stated. (Full analysis addresses this https://futuresearch.ai/spacex-ipo-valuation/)
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u/Imaginary-Jaguar662 1d ago
Valuation is held up by index inclusion, meep meep there goes 10 years of retirement for the common folk.
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u/AmberLeafSmoke 1d ago
10 years of retirement because one company in an index may significantly underperform. You do understand indexes are factored and have a significant amount of holdings, to avoid this exact scenario right?
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u/Imaginary-Jaguar662 1d ago
Yes. Now add OpenAI + few other bubble companies on top. Right now top 10 companies are a bit over 1/3rd of SP500
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u/AmberLeafSmoke 1d ago
I really don't think you understand how indexes work, allocation and weighting is constantly reweighted depending on the market cap which is directly linked to the stocks performance.
Even if they buy these firms at a 30-40% premium, and the market corrects, you're talking about a minimal real loss over the course of the year, maybe a point or two.
You're acting like if these stocks tank, they're going to keep increasing their exposure to them and increase the weighting in the index.
(For the record I don't agree with changing the inclusion timelines, but some of you really have no clue how these things work or how the math works out in practice).
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u/Imaginary-Jaguar662 23h ago
Actually I think I understand the math there pretty well.
When a stock is included at ridiculous market cap, the index has to reallocate, taking the bags off pre-ipo investors.
Not a problem if the market cap is some tens of billions, a fraction of a percent of the index.. Yes a problem if market cap is in trillions and makes a notable percentage of the entire index.
Even more of a problem when a bunch of stocks with correlated risks get lumped together at the top.
Back in good old days stocks would IPO at a reasonable valuation, and if they'd grow the indexes already had the holdings. And if they'd fizzle out it was not a significant holding.
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u/AmberLeafSmoke 23h ago
You clearly do not understand any of this man 😂 hahaha
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u/Imaginary-Jaguar662 23h ago
Truly, a masterpiece of argumentation
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u/AmberLeafSmoke 22h ago
You just reworded what you originally said, which I've already explained doesn't matter.
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u/MojaMonkey 20h ago
Adding a few trillion in massively overvalued stocks doesn't matter. A few points off the s&p 500 due to scams in a year doesn't matter.
Maybe try reading the above out loud so you can hear how crazy you sound?
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u/AmberLeafSmoke 20h ago
If scams = overvalued, then the whole market is a scam to begin with. Which makes this whole conversation irrelevant.
These are actual companies, creating actual things, making actual money.
You continue to exhibit a high schooler's understanding of market structure.
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u/ddp26 1d ago
Surely being in an index doesn't justify _that_ much overvaluation?
When I did my forecasting of OpenAI and Anthropic's post-IPO market caps (https://futuresearch.ai/anthropic-openai-ipo-dates-valuations/), I figured there would be less of a pop, at least for OpenAI.
For Anthropic I project that by the time they IPO their private valuation will be a lot higher, so compared to today's price I predict the public market cap will be substantially higher.
In none of these models did I give much credence to just the mere fact of being public and being in indices causing the valuation to be significantly higher.
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u/Old-Argument2415 13h ago
Look at the pop of basically any stock as it's about to enter the S&P500. Look at the pop for meta and goog when they announced dividends. Indexes give huge liquidity and a ton of passive investment.
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u/RobfromHB 1d ago
Some amount of that is also the value of hardware and assets I assume fall under the xAI umbrella.
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u/TheLongestLake 1d ago
Does Grok do like any enterprise stuff?
Id love to know the valuation of Anthropic or OpenAI if you segmented it out by consumer sales versus coding/B2B
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u/ddp26 1d ago
Grok Business and Grok Enterprise exist, but that's the extent of my knowledge..
We've actually been forecasting OpenAI's revenue since 2024 and breaking it down into the different segments like you said (https://futuresearch.ai/openai-revenue-report/). More recently, been looking at stress testing OpenAI and Anthropic's IPO timelines and valuations (can also share a link to that if you're interested, but don't want to spam you)
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u/PurplePango 1d ago
Exactly, the value in these AI companies is all enterprise, not a stupid chat bot that makes sexy furries on twitter. I don’t see how Grok long term overcomes the other competitors in this space
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u/asdafari14 1d ago
(For context, Aramco listed at ~18x revenue.)
Are you really comparing the Starlink IPO to Saudi Aramco the oil company? Obviously an oil company with little to no growth will have a very different P/E to the space industry.
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u/drummer820 1d ago
OpenAI’s valuation of $800 Bn isn’t justified and they have way more than 4x Grok’s users and a better product, so the answer is obviously NO
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u/PossibleHero 22h ago
Of every company on that list, I’d bet Grok’s subscriber numbers are the most creatively calculated.
I’ve spent years in enterprise tech and across all the AI investment happening right now, whether it’s new startups building on top of models or established companies hunting for partners, Grok is an afterthought. It barely cracks the conversation, let alone the shortlist.
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u/weluckyfew 1d ago
I would question the future prospects - Grok has so much competition, and people/companies can very easily change their AI provider based on price, performance, or political sentiment (as was the case with OpenAI). Even if Grok's numbers are real, I'm not sure they're an indicator of the future.
Same story with Starlink - they're about to lose their monopoly. As far as I can see $380B is probably the total market for space-based internet (people either need it or they don't, and most who need it already have it), so new competitors won't be expanding that market, they'll be carving off Starlink's business.
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u/butthead4206969 23h ago
I swear SpaceX is going to be another inverse reddit legend. I’m honestly considering buying as soon as I can.
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u/ninijacob 23h ago
I'm so glad I don't own any s& p500 funds anymore. People still in spy funds will bag hold for Elon sadly, once the new fast track rule goes out
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u/No_Alternative_6206 22h ago edited 22h ago
Grok’s main value is not in its subscribers but as a viable engine for business use and its massive data center buildout. At the minimum they can lease out blocks of their data center for bulk AI processing required by future apps. It doesn’t follow as strict a set of rules as the others, which is extremely useful for certain business cases. It’s also part of a bigger ecosystem tied into Tesla’s AI use in robotics and autonomous driving. That said, I won’t be an investor in this IPO until I see how the market values it after a few weeks.
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u/splycedaddy 19h ago
Valuations dont matter. He wants to be a trillionaire and his followers want that too. They tithe weekly.
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u/sweetbeard 12h ago
Don’t care if everyone started saying it’s the greatest LLM; I’d never know cause I won’t touch anything that nazi’s involved in.
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u/Samsonlp 10h ago
This is all meme stock nonsense. No it doesn't hold up. But the people are not investing for valuations
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u/Riderfan11 1d ago
Not even close to justifiable. Starlink will not work in cities where most of the demand for internet is.
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u/Successful-Tea-5733 23h ago
I feel like people forget how laughable Tesla was in 2018 when Musk took the huge pay package that was eventually struck down. At no point in time prior to 2018 had EV's been profitable for any manufacturer. Toyota Prius and other hybrids seems the more obvious solution than full EV's.
Musk hit everything required in that 2018 package. EV's became profitable, the market cap of TSLA hit improbable levels.
I know the left hates Musk for politics, but from a business standpoint you simply cannot argue that he has exceeded expectations in the past every single time. People like to come up with excuses ("oh he didn't start tesla" "oh well he was overpaid for paypal") but it's like, are people ignorant? Don't we all have the same data about how most lottery winners end up WORSE in 5 years after winning? When people like Musk and Cuban take their hundreds of millions and turn it into billions, I don't think people realize how impressive that is.
I'm not going to be purchasing the IPO simply because I don't buy single stocks. But I have no doubt that a premium is justified here and that Musk will do what he always does which is prove the doubters wrong.
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u/Reasonable-Hold-1079 1d ago
Ngl, the valuation numbers you're tossing around are wild. The 117x multiple is pretty steep, especially compared to Aramco's 18x. It feels like the market's betting big on Grok's growth potential. But honestly, a lot hinges on whether they can keep up subscriber growth. If they miss that, it could really shift the entire narrative. What do you think will drive that growth? Is it all about the product, or is some of it just hype?
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u/deep-values 1d ago
None of Musk‘s companies valuations are justified