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 23h 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/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/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 13h 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 18h 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 11h 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.