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Any SpaceX shareholders on this board?

Current price after hours $215.79 at I type. Issue price $135, so it's up $80.79 per share. 3.09 bn shares outstanding.

So SpaceX's market cap has gone up the same amount in two days (a little over a trillion dollars in each case) as Berkshire's entire market cap, despite having started from a nosebleed level. Good for them.

The bullish view: the higher the price goes, the better the earnings yield. Losses (for now) mean a negative earnings yield, so a bigger market cap makes for a lower loss rate percentage.

For anyone interested in such things, I gather that options on SPCX will be listed tomorrow, Tuesday the 16th.

Jim

For anyone interested in such things, I gather that options on SPCX will be listed tomorrow, Tuesday the 16th

Any guesses for what an ATM put will cost? In other words, how much of price fall just to break even.

Peter always has an interesting perspective.


https://youtu.be/wKXgeNwNRJ4?is=JWO33lO2BZmIcJ75

Peter always has an interesting perspective.

Peter who?

So SpaceX's market cap has gone up the same amount in two days (a little over a trillion dollars in each case) as Berkshire's entire market cap, despite having started from a nosebleed level. Good for them.

I'd love to buy SPCX, because it looks like easy money, right?

But it reminds me of my GameStop experience. I owned a little bit before it became a meme stock. I sold it on the way up, but of course nowhere near the all time top tick.

And that's the thing with SPCX. Sure, I can buy some today, but how will I know when to get out? I certainly won't get out at the top tick.

And really, how many times can it tack on another trillion dollars in market cap.

So, unfortunately, too hard pile.

Peter who?

He meant Patrick (Patrick Boyle) who is the author of the youtube video he linked.

Any guesses for what an ATM put will cost? In other words, how much of price fall just to break even.

Well, the numbers are in.
The stock price is about $204 at the moment.
The price of a January 2028 (longest dated) $205 put is around $65.

Not that bad, really. That would get you the right to sell at net $140 any time in the next year and a half, which is above the issue price of $135. I think it's fair to assume that most of the action in these first few days is short term exuberance that says little, good or bad, about the likely future trajectory.

If you're confident in your bearishness but short of cash, you could entirely fund that put purchase by selling a $230 call for the same price. That call sale trade, taken in isolation, doesn't lose money until the price sticks above $295, up another $90 from here. (about another $1.2 trillion in market cap)

Jim

"That call sale trade, taken in isolation, doesn't lose money until the price sticks above $295, up another $90 from here. (about another $1.2 trillion in market cap)"


Give it a couple of days😂

More than 2.5x Berkshire cap already.

Space X is yet the latest example of what markets can do on the upside when momentum and euphoria gets behind them.
That's why I think it's ridiculous when members of this board get so precious about their valuation of Berkshire, where for example at 1.3x BV its a "buy"and at 1.5x BV it's a sell.
A great way to get shaken out of a stock right before a big move.
It's best to "be right and sit tight".
There has been literally ZERO reason for any new money to flow into Berkshire for the past 5 years.
The thesis was " you're investing in a bunch of T bills, a great insurance operation, but you also get a poorly run railroad, utilities, and a bunch of other slow growing companies.
But someday in the future there will be a crash and hopefully the CEO at the time will pick the right opportunities, and we'll find that out 5 years after that."
That was the basic theory. Not very compelling, so one must assume the stock, at present levels is as washed out as it can get, give or take 10-15%.
Now we have a new CEO that is buying back stock and aggressively pursuing opportunities NOW to
Make Berkshire Compound Again.
The story has changed, but Wall Street doesn't know it yet.
It's once again exciting to be a Berkshire shareholder!

I get the impression that this SpaceX IPO phenomenon is regarded as a major inflation. My question is: How might one best take advantage of the seemingly certain deflation likely to come? I haven't done complicated stuff like options and shorts, but if it may be possible to get a big boost in a short period of time on this one, I might be willing to put in a small percentage of my port into the gamble. Any thoughts?

Tom

I get the impression that this SpaceX IPO phenomenon is regarded as a major inflation. My question is: How might one best take advantage of the seemingly certain deflation likely to come? I haven't done complicated stuff like options and shorts, but if it may be possible to get a big boost in a short period of time on this one, I might be willing to put in a small percentage of my port into the gamble. Any thoughts?


Really, options are the best. If you buy a put, you might lose the money you put into it, but you can't lose any more than that.

An update from up thread:
The stock price is about $204 at the moment.
The price of a January 2028 (longest dated) $205 put is around $65.

The stock price is now $199.20, and that put is now trading around $73-74, up about 13%.
Easy!

Of course, the market value might go down if the market cap goes up more, but it won't go down below the $65 you paid.


Correction: options might not be the best choice. The best choice is probably to sit on the sidelines and just watch it like an entertaining movie.

There sure does seem to be some exuberance out there. A shoe company (Allbirds) announces it's going to become an AI company, and the stock price zooms. It's up 45% today. Like the 1990s when you could make a bundle just by adding ".com" to your company name.

Jim

I think it's ridiculous when members of this board get so precious about their valuation of Berkshire, where for example at 1.3x BV its a "buy" and at 1.5x BV it's a sell.

Those P/B sideboards have held for a long time. The price has mostly bounced around those ratios through good markets and bad markets, through a younger (old) Buffett and a really old Buffett. I would not feel comfortable standing pat with a price well outside of either side thinking that "this time is different".

Like the 1990s when you could make a bundle just by adding ".com" to your company name.

I'm reminded when 3Com/Palm saga. At the time, the mobile device/PDA/Internet space was super hot. So 3Com IPO'd a small portion of Palm, with plans that 3Com shareholders were to eventually receive 1.5 shares of Palm for each share of 3Com.

So in theory, 3Com was worth at least 1.5 times as much as Palm, and that doesn't include the rest of 3Com's business. But when the initial Palm shares IPO'd, Palm's market cap jumped to about double that of 3Coms. Which implied the market was placing negative value on the non-Palm portion value of 3Com.

SpaceX doesn't seem quite that bonkers, but it isn't far off. SpaceX is basically a datacenter/AI play, with a yet-to-be profitable launch business tacked on. As of today, SpaceX's market cap exceeds Amazon's--which is also a datacenter/AI play. The difference is Amazon already makes tons of money from its datacenters, and has an enormous and profitable retail business as well. Google tells me SpaceX has about 0.2 GW capacity, compared to about 5-7 GW for Amazon. Amazon has a big head start, in other words.

The market is wildly mispricing one of these companies, and I don't think it is Amazon.

SpaceX doesn't seem quite that bonkers, but it isn't far off. SpaceX is basically a datacenter/AI play, with a yet-to-be profitable launch business tacked on

While I am as amused as anyone about the hype and overvaluation of this issue (at least until it foments the biggest bear in a generation), I think you left out the single most important component. And it *does* have value, and that’s Starlink.

It’s already profitable. It works. It’s a “today” solution for anyone who wants instant access to the internet, and while that’s a minority portion of the US, it’s still estimated to be anywhere between 14%-20% of population here, the “truly rural” segment. More than that, it’s a lot higher in Mexico, South America, Africa, many parts of Asia, India, and so on, meaning the potential addressable population is somewhere in the billions.

Yes, there are other solutions, some better, some cheaper and so on, but I’d put Starlink as the jewel in this otherwise overstuffed turkey - for everything from mobile military to commercial airlines to underserved populations around the world. I would have no idea what the eventual (true) value might be, but it’s gotta be more than renting data centers to other overstuffed turkeys as they head their way to the eventual slaughter of the inevitable market shakeout.

Starlink.
It’s already profitable. It works. It’s a “today” solution for anyone who wants instant access to the internet... but I’d put Starlink as the jewel in this otherwise overstuffed turkey -

I might go even a bit further. The rocketry business by itself is not particularly profitable at the moment, but if there IS an orbital lift business in future, they own it. Their lead in cost to orbit, current and future, currently seems untouchable.

I don't really see how that could possibly justify the stock's valuation levels, but in future it could easily be their largest profit centre. A moat filled with vacuum is even better than a moat filled with shark infested water.

Jim

I might go even a bit further. The rocketry business by itself is not particularly profitable at the moment, but if there IS an orbital lift business in future, they own it. Their lead in cost to orbit, current and future, currently seems untouchable.

I don't really see how that could possibly justify the stock's valuation levels, but in future it could easily be their largest profit centre. A moat filled with vacuum is even better than a moat filled with shark infested water.

Should even a small fraction of the datacentre plans come off, it is more a moat filled with decaying junk that will eventually pose a hazard to itself and to everyone else with LEO satellites. I don't see this as a business model that Berkshire, at least, would step up to insure.

But there are lots of reusable booster vehicle companies working away. Some in China where there is no willingness to commit themselves to Former US-controlled infrastructure, others in Europe where there's a steadily growing realization that they need to control their own tech and defence destiny. They're at most a decade behind.

Interesting article here on the underlying economics and engineering of "datacentres in space". Closing line: "I did not invest in the IPO.":

https://tauzero.com/Rob_Tow/essays/the-cloud-is-no...

Should even a small fraction of the datacentre plans come off, it is more a moat filled with decaying junk

For sure. I think the data centre plans are plainly nuts, the sort of thing you see in a tweet when you need to bop the stock price because some executive incentive scheme is about to lapse. But there are other uses for rockets, those are the ones I was thinking about.

Jim

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