Transcription
Tomorrow, we will all experience the most important IPO in the history of economics. And that is quite the moment.
SpaceX does the largest IPO that ever happened in the history of financial markets at 1.75 trillion, 135 per share priced for IPO. Very likely going up significantly tomorrow if you're lucky enough to get into this IPO beforehand. Your broker has told you probably if if you're in or not. That is now the big topic.
If you're not in or you are considering doubling down beyond the amount of shares you were able to get, should we do this? What do I do? The title already gave it away. I will not do anything on SpaceX. I will instead double down on Tesla. And here is exactly why.
Number one reason number one, SpaceX is the most hyped thing, the most hyped IPO ever. It is oversubscribed. And when we look at the deck, let's take a quick look at the deck of SpaceX. You have to scroll. Here's the actual pitch deck for SpaceX. You have to scroll to slide number 47. Slide number 47 before you see anything like this. And we will get into the actual numbers a little later for a later point in my argument, my reasoning. But you have to literally go to slide number 47 to see the growth rate, 33% revenue growth year-over-year from 14 billion to 18.7 billion. Uh, we see adjusted EBITDA growth actually less than 33% to 6.6 billion EBITDA in 2025. Even though that's slightly confusing because that seems to not account for the losses of the XAI division. And what we see here, building the infrastructure of the future, capital expenditures of course going through the roof, which means cash flow is falling through the bottom. Free cash flow.
Now, you know me, I'm all for progress and the frontier. The fact you have to scroll to slide number 47 means this entire pitch deck reads literally like a startup pitch deck, which I have nothing against. That's why we love the entrepreneurial energy, the pioneering spirit of SpaceX and Elon's companies. But you go to our mission, multiplanetary species, making sure the light of consciousness does not be is not extinguished. Our integrated platform, and it reads like a startup pitch deck talking about a lot of things that don't exist yet. And you know I am a big fan. These things of course exist. They have some proof points here, but it's very qualitative, and you would expect much more financials for a $2 trillion company. So you see that opportunities that is being unlocked, enterprise applications, $22.7 trillion of a market where SpaceX currently makes roughly 0 in revenue. Uh, and you see that this is a non-trivial part of the story. You know, 22.7 trillion, 26 trillion. Uh, this is also a little confusing here. I think that refers to the actual bars down here. Space, you know, let that sink in. We have a space company that whose space business literally is 370 billion TAM out of a 28.5 trillion TAM. So roughly 1% of their TAM is actually conventional space.
Now, I will get to this in a second. I think it's all great. I'm a big believer in SpaceX. I think this could become the most important company that ever existed. But you know what I'm saying here? It is about valuation and hype, and I am not super thrilled to see a deck like this to convince me to pay more for SpaceX, much more than for Tesla. Okay, so that is my first point. It's a little bit too much hype, and you probably have heard all the stuff like the systematic hype machine is just ginormous. You see it from all the underwriters, all the way to JP Morgan and Jamie Diamond pushing that, asking Elon all these questions in front of everyone. So there is a very uncritical thinking here of everyone involved because everyone involved, of course, is a little corrupt and wants to make a lot of money from Goatman to JP Morgan to all the other underwriters to NASDAQ and everyone who changed their rules. Don't get me wrong, I'm not bashing SpaceX. It's tremendous what they're working on. It's tremendous how they executed this IPO. I'm just saying for an investor, from an investor perspective, you have to be a little cautious.
Now, even more important, even more important than the hype problem. I also see that we have a bunch of air pockets upcoming, the same way Tesla had air pockets upcoming in Q1 of this year. I warned everyone that despite Tesla having all this upside and all this potential, that it was very clear that in Q1 nothing would happen, and what did you see? The stock was sliding down. For SpaceX, it's the whole thing on steroids. When you look at what's actually happening, Starlink. Let's look at the revenue streams we actually have. We have Starlink continues its growth, of course, right? We have a 33% growth rate, and now I bring you back to the slide I showed you when to look at the financials. Just look at the financials and do the valuation and understand the very nature of the stock. Understand the very nature of the SpaceX stock and understand the very nature of the SpaceX narrative. And once you understand the nature of the stock and the narrative, then you can use your brain to simulate what is likely going to happen to this stock. And here are the facts. Let's start with the facts. The facts is that that SpaceX is growing at a 33% growth rate, growing less than that with its actual EBITDA, and shrinking, of course, or taking massive hits, not even shrinking on cash flow because capex goes through the roof. So we are having negative cash flows. We have not very strong growth in EBITDA, and we have decent growth in revenue. That is all good, right? But the problem is when you actually look at the multiples. Let's make it simple and assume it's at 2 trillion. I think it will easily hit 2 trillion tomorrow. 175, uh, 1.75 trillion, 135 stock price, probably going to 160. That's what we're seeing in the early markets. Let's just say 2 trillion to make it simple. Let's assume this is a 20 billion revenue. So you're dealing with a company that is trading at 200 times, uh, 100 times sales. 100 times sales. The biggest sales multiple with any AI company we are seeing right now, uh, is publicly traded company is Palantir at roughly, I think the latest is 60. So even Palantir, that is, you know, some say a little bit overvalued, a little frothy, is at 60 times revenue, which is already outrageous. SpaceX is at 100 times revenue and grows much, much slower than Palantir. Slower growth, vastly higher multiple than the most hyped, highest multiple publicly trading AI company, which is Palantir. Okay. So not good on a valuation level.
Now, on EBITDA, of course, it's even more devastating if you do the math on this. We are talking about, you know, something like what is this, 5 billion, uh, so you need like, how much is this even, 200? You need 200 to get to, so it's 400 price earnings, roughly 400 times PE at a growth rate that is not very impressive because earnings grow even less. Okay. So the bottom line is, from a valuation perspective, conventional valuation perspective, SpaceX is a total joke. Let's just face the facts. Now, you know me, you know Pioneer Lens. We are not like that. We are not a dummy little conventional analyst. I'm just making the point, looking at the facts. It's a joke. It's insane to invest in this thing. Okay.
If we put on our pioneer hats, let's do that for a moment. If we do a discounted cash flow model into the future and do the math, you know what I arrive at? I give you away some, some things that we are seeing. I think the present value, the present enterprise value of SpaceX is somewhere between 8 and 12 trillion today. Okay, discounted cash flow models, something between 8 and 12 trillion, not 2 trillion. So in my book, the fair future value of SpaceX is at least four times, right? 400% higher than what we pay for it tomorrow on Friday. So these are the two realities we have to actually put together here. Okay. And my point here, number two, air pockets. As, as you can see, I'm not saying this thing is overvalued. I'm saying air pockets upcoming because I just explained to you two points from a conventional point of view. SpaceX is a total joke and massively overvalued. Massively and insanely because at current growth rates, with current businesses, even with the greatest stalling story, they cannot get to that valuation anytime soon. Why does Pioneer Lens and Pioneer Alpha say it is 4x undervalued on DCF? Because we are taking into account orbital compute and we are taking into account enterprise AI on orbital compute. I was the first one who said, I think six months ago, I provided you a bag of the napkin analysis before anyone knew anything that actually turned out to be nearly accurate to what SpaceX is saying now that orbital compute is huge. It is easy for SpaceX and it's coming sooner than people think. So I'm bullish on this and it's going to be absolutely enormous. The second argument that is very fresh that I just learned two weeks ago is that I have now high confidence that Grok and the XAI team will absolutely leapfrog and getting to the frontier of enterprise AI deployment and become a serious competitor for OpenAI and for Anthropic for a singular reason. And that reason is Cursor. Cursor is an ingenious deal that will unlock massive value and allows them to deploy the digital human, as I call it, which means they can take all jobs. Okay. So that is very bullish.
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Here's the problem. This is fantasy land. And in Pioneer Lands, we live half in fantasy land, and we live half in reality. That's where we can turn reality into the fantasy land. So I'm all for it. I'm very supportive. But I also know my buddies who are running Wall Street. And Wall Street normally doesn't like that. They only like that when they can hype the hell out of it and take massive fees and be corrupt and enrich themselves with your money. That is the reason they are hyping SpaceX right now. It is not that they understand or believe what I just said. And what does that mean? It means that once the hype is gone, once the piece of, uh, the fees are paid, they will drop this like a hot potato, and they will revert back to their standard operating procedure. And that procedure is, show me the money before I buy this thing. In other words, the disconnect or the bridge we need to bridge this point in time here, where we are massively overvalued on any conventional reasoning, and that future of orbital AI, Cursor, Grok, enterprise AI. The bridge in between is where you run on hope fumes. You have to run on hype or hope fumes until these revenues start know flowing and streaming in in earnest. The hard forcing functions like robo-taxi, like Optimus for Tesla. We will talk about this in a second. We know how it goes. As Tesla investors, you are running on hopes and fumes, and when the market decides it's time to crash or to correct, you get hit so hard that you don't know what even hit you. And there is nothing that holds you back from dropping to wherever this thing leads you here. And that would not bode very well for SpaceX, basically could drop to whatever 500 billion in a crash because there is no net. There is no cash flow net, no cash flow growth that can help it. I'm sorry to say that, at least not now.
Now, do I think these hard forcing functions for SpaceX will actually come into play much earlier than people actually think? Yes. But much earlier means the second half of 2027. I think that's when you will see real stuff potentially happening. But maybe they're getting delayed to H1, first half of 2028. Look at the calendar. We are in June 2026. What do you think happens in the meantime? In the meantime, you're sitting on a cloud, and it starts raining, and the cloud disappears, and you plummet down to earth if you're unlucky. I do not want to be exposed to a stock like that, especially with the second half of 2026 coming up. I think we are still in a total bull market. I think we will continue the run, and we will continue. SpaceX will continue to go up, probably, but once it's time to drop, SpaceX will be the first victim. That's what I'm predicting. And there's nothing to save it until these things kick in in the second half of 2027, which is earlier than anyone thinks, but I believe that. But that's what you do in the meantime.
Okay, let's go through it. Starlink is not going to help, of course, because Starlink is simply way too small. And also, Starlink is not going to suddenly double. They are not going from 33% growth to like, whatever. Maybe they're going a little bit up, but at that on this basis, it's not going to help. Starlink is not going to help short-term. This is not enough cash flow. It's that simple. Terrestrial compute. Maybe you say, "Oh, Joe, you don't even need orbital compute. Look at the Google deal. Look at the Anthropic deal." But this is all hype. What do I mean with that? Is it not true? Yes, it is true. But how many more of these can you do? The answer is not many. Colossus is also limited in in scope. Maybe you can do one more $1 billion per per month more, maybe. But then you used it all up. Even Elon cannot magically make this stuff disappear. So that is the problem here. Yes, it's great that they have this additional revenue now potentially coming in from Anthropic and from Google. And yes, they can sign more deals for Orbital AI that doesn't exist yet. It's just not going to move the needle. You need for that valuation to unlock these super revenue streams, Orbital AI, and of course Cursor and XAI. But that's a long way from June 2026. And that means we have air pockets, and we will get hit hard. And people say, "Oh, what about index inclusion?" Well, that's over end of July. Okay, sure, you can fuel the rocket, maybe even do three trillion. Who the hell knows short-term? I'm just saying once it starts dropping, once you go into the air pockets, you have a problem all the way to the second half of 2027. That's a very, very, very long.
But we are not just talking about SpaceX. We are talking about the comparison to Tesla. And Tesla, this is a photo of the Cybertrucks in Dallas. Tesla has gone through this whole pain for a very long time, and you know all about it. We are flat for 5 years. We are now falling in anticipation of the IPO and because the market is a little bit correcting. We are at an insane 380, uh, price point right now. Absolutely insane, given that the all-time high in December was 490. And Tesla has made tremendous progress to the point that I have the conviction, of course, here, the opinions can diverge, but I'm of the conviction that we will see robo-taxi at scale this year, and with scale, I mean 10,000, thousands and thousands, very likely over 10,000. That is what I think can happen by December, and I think it will start to happen in June. Now, this month, I think we will see Cybertrucks. Now, I can be wrong, but it's becoming less and less likely I'm wrong. So basically, all these air gaps and all the problems with SpaceX apply also to Tesla, only that Tesla is at SpaceX's H2 2027 because H2 2027 is H1 2026, which means now for Tesla. And I'd rather be on the last end point on the tail end of these air gaps than at the front end. So Tesla is going into an inflection point, and I'm not talking about the stock first. I'm talking about the business first. The stock follows these cash flow forcing functions. And I am very, very sure that Tesla's inflection points for these forcing functions will kick in way before, way more early than SpaceX's, because Tesla's will kick in now, or latest in the second half of this year, which starts in one month or in two, in three weeks. And SpaceX is in 2027, late 2027.
And my final and last point why I like Tesla much more than SpaceX is the simple thesis of the merger. Now, there's all kinds of talk out there, but I think, wait, there's a little typo. Uh, I think that, uh, the merger is pretty much a done deal. I can't predict if it happens as quickly as Alexander Merge, for example, says, like meaning now in July and August, or later, but I think it's extremely likely to happen sooner than later. And I also know that this merger has to happen at a minimum 1:1 SpaceX Tesla, if not better for Tesla. I said all the way to 1 to 2. And what I mean with that is, if you, the combined entity, for example, is 4 trillion, or let's say 3 trillion, what do Tesla shareholders get? Uh, uh, what do SpaceX shareholders get? Do they get each 50% or does Tesla get 66%, 2/3? What I can assure you is this merger will not happen under a 1:1 for Tesla because then Tesla shareholders will just vote hard no, and they still have to vote yes. And Alexander had all the theories, oh, the institutions are on board. Like, no, they're not. Institutions have fiduciary duties. They cannot do deals that are bad for their own investors. This needs to be reasonable. And to buy Tesla right now, you have to pay a premium. If you have to do a 1:1 merger at 1.75 trillion, which is very low, by the way, for SpaceX, SpaceX will be probably higher if they announce the merger in July. After that, might be lower, but whatever. That means Tesla at 475. You can buy Tesla now for 380 or 390. So the merger is another reason that it's not smart to buy SpaceX when it's valued so much higher than Tesla. Not for the cash flow reasons, that's a whole different reason, but for the merger reasons. If they have to get together at 1:1 at a minimum, why would you buy the one that is more expensive, if you can buy the one that is cheaper? And there you have my four reasons why I am sticking with Tesla. And if I get some more money somewhere, I will just put it into Tesla, especially at these prices, because these stocks, they have a relationship that we can clearly see and define. And on all these four points, it is four times score for Tesla, 4 to zero. I hope that was interesting. Stay cautious out there. It's a risky, dangerous market with lots of opportunities and lots of risks. Thank you so much and see you very soon.