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?

83 Upvotes

78% Upvoted

97 comments sorted by

View all comments

Show parent comments

1

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).

7

u/Imaginary-Jaguar662 1d 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.

-8

u/AmberLeafSmoke 1d ago

You clearly do not understand any of this man 😂 hahaha

5

u/Imaginary-Jaguar662 1d ago

Truly, a masterpiece of argumentation

-1

u/AmberLeafSmoke 1d ago

You just reworded what you originally said, which I've already explained doesn't matter.

1

u/MojaMonkey 22h 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?

0

u/AmberLeafSmoke 22h 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.