Dear Reader,
Good morning,
Happy Wednesday!
The big news I haven’t talked to you about yet is SpaceX told its employees to prepare for an IPO next year.
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⭐How You Could Invest in Elon’s ‘Final Move’
What if I told you Elon Musk’s next venture could leave Tesla and SpaceX in the dust?
It may sound unbelievable, but it’s true.
Elon’s new AI startup could create 10-times more American millionaires than Tesla ever did.
This isn’t just another AI story…
This is Elon’s “Final Move.”
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This is a very, very big deal.
I think the question I’m asked more than anything else by people in my social circle is, “when’s SpaceX going public?”
Everybody’s always looking for a way to play SpaceX.
I’ve heard estimates it’ll go public around Q2 or Q3 2026.
But telling your employees is a very big deal.
CNBC came out with an article last week about how to play the SpaceX IPO.
They gave a few suggestions about how to play it directly and indirectly.
Their suggestion for the best direct play is Ron Baron’s Baron Partners Fund (SYM: BPTRX). It trades around $261 and 18% of the fund’s assets are in SpaceX.
Cathie Wood also has a fund like that, but I know Ron Baron’s pretty smart.
CNBC talked about the other ways to play the big boom of the industry itself and mentioned Rocket Lab (SYM: RKLB), which we recommended a while back and which our subscribers had the chance to close out up to 502% gains on.
But now that stock trades around $50 a share, has a $50 billion market cap with $500 million in revenue.
I think people don’t really understand, when they think of SpaceX, the rockets are definitely the coolest thing about SpaceX, but they’re not the primary revenue driver.
I’m going to break down the revenue for you.
SpaceX’s Starlink satellite internet service generates 60% to 70% of all the company’s revenue.
And it’s also the fastest-growing segment.
It’s basically doubled from four million to eight million subscribers in the past year.
This is a high-margin, recurring subscription model - which is a great business.
The launch services,what we think of when we think of “SpaceX,” accounts for 25% to 30% of revenue. This includes commercial launches for businesses and NASA contracts.
And rocket launches are a capital intensive business to be in.
We always think of business in terms of return on investment.
So Starlink has high returns on capital investment. The rocket side, “SpaceX,” has low returns - big investments, low profits.
They have 5% to 10% of their business dedicated to government/defense/NASA/Starshield/R&D, etc.
These are strategic, but not primary revenue drivers.
Most folks estimate SpaceX’s revenue to be in the $14 billion to $18 billion range.
Starlink accounts for about $9 billion to $12 billion of that.
Launch services makes up about $4 billion to $5 billion.
And government and defense comprises between $1 billion and $2 billion.
So we’re looking at a situation where they’re talking about a $1.5 trillion market cap for a company that does $14, $15 billion in revenue.
It just shows people cannot get enough of Elon Musk.
We see the “value” divorced from mathematical reality.
Now, there’s a lot to like about this -
Remember Tesla? The stock was less about a car company and more like a movement.
His fans have really supported him.
And my suspicion is SpaceX is similar.
If you were buying this company in a private transaction, and spent a trillion dollars on it, it would take you about 240 years to get your money back on that investment.
That’s kind of what we’d be looking at buying into a $1 trillion SpaceX IPO.
That’s definitely not how you want to invest your money.
Whereas you buy Coca-Cola, or Warner Brothers, a ship building company, Google, whatever it is, it would take you 20 years to get your money back.
Facebook right now would take you 19 years when you think of price-to-earnings. Amazon, 23 years if you bought all the stock outstanding.
And a lot of these are dominant companies.
But SpaceX at a trillion-dollar market cap?
You’d be looking basically at America’s next 250th birthday to make your money back.
It’s very richly valued.
I’m one of those types of investors who likes to wait for things to crack before I buy them.
I like to buy things on sale.
It’s just the way I’m built.
But I can tell you what - this SpaceX IPO is going to be a whole lot of fun.
And another backdoor way that I like personally to play SpaceX, and I’ve recommended this here in the Diary before, is T-Mobile (SYM: TMUS).
That’s because T-Mobile offers Starlink as an add-on to their service, which I personally signed up to.
The stock is already up a bit, and I still like it.
SpaceX and Tesla are two homeruns for Musk…
But behind the scenes he’s been making moves to dominate AI that few have caught on to.
People don’t realize his secretive AI venture, xAI, is growing 7X faster than OpenAI…
And could soon mint an entire new class of millionaires.
Now, like SpaceX, xAI is not publicly traded.
But the “backdoor” we found for xAI will blow your mind - and it’s tradable right now, right from your brokerage account.
Go here for the ticker >>>
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