
SpaceX's Valuation Climbs to $25B with New Funding Round - rising-sky
https://www.bloomberg.com/news/articles/2018-04-12/spacex-s-valuation-climbs-to-25-billion-with-new-funding-round
======
foota
Honestly, I think this might be one of the only companies I know of recently
where I've gone "huh, that seems like a low valuation". Is this a hype factor
or do knowledgeable others feel similarly?

~~~
cornholio
I would like to have a piece of that for wholly non-hype reasons. The space
business is limited but the bussiness potential for Starlink, an integral part
of the company, is simply monstrous.

If it pans out, Starlink can disrupt a massive, $1 trillion/ year telecom
market that is itself booming. Depending on how well they can productize long-
term (miniature receivers embedded in laptops, tablets etc.) they stand to
capture whole percentage points or even tenths of that market, giving Starlink
itself a valuation in the trillions.

It's also an ultra-high moat business, a truly global monopoly. Once you have
12.000 sats in the sky amortized and own the only launch service capable of
servicing them, you are impossible to budge.

~~~
enraged_camel
Correct me if I’m wrong but if SpaceX ends up in such a monopoly position
there wouldn’t be much stopping another company from launching their own
global satellite internet service. Even though SpaceX owns the delivery
mechanism they couldn’t legally deny other companies wanting to use it at a
fair price. If they do they would be sued immediately.

~~~
nickik
There are already other companies doing the same thing, mostly OneWeb.

SpaceX absolutely could deny selling rockets to anybody as rocket launch is
not a monopoly.

OneWeb has contracts with ISS, Arianespace, RocketLab, BlueOrigin and so on.
Non with SpaceX. I don't know if that is because SpaceX denied them, or if
they just don't want to work with them.

~~~
TeMPOraL
> _I don 't know if that is because SpaceX denied them, or if they just don't
> want to work with them._

Probably didn't ever ask, since they're a direct competitor. I can imagine how
this conversation would go:

OneWeb: oh, by the way, can we buy launches on your rockets for our satellite
Internet thing?

<Both sides laughing>

SpaceX: no.

~~~
greglindahl
Actually Oneweb and SpaceX did talk about working together a while ago, and
you can see what happened: SpaceX ended up deciding to start a competing
project.

------
goatherders
If you guys think social media and advertising is big business, wait until
commercial space flight clicks.

~~~
z3t4
It's kinda sad that social media and advertising is the most lucrative
businesses and so many bright minds work on that instead of for example ...

~~~
fsloth
"It's kinda sad that social media and advertising is the most lucrative
businesses and so many bright minds work on that instead of for example ..."

So, how would you employ the engineers instead?

Industrial society is about producing garbage for the masses to consume. The
huge churn of capital and labor creates as it's byproducts from time to time
items of actual human value.

But those things would be fragile and complicated without the industrial
economy surrounding them. If we look at this stage in our species history from
far away, currently the industrial economy is _supposed to be_ predictable and
mundane.

So, "producing useless crap" is a required feature of our economy so it can
occasionally produce science, art, medicine and the other things that actually
improve us as a species.

Now, consumer goods fall into two categories: physical and digital. Physical
consumer society is turning our biosphere to shit. Digital commodities, on the
other hand, are much more lenient on the environment.

So, if we look at it this way, and presume that producing consumer crap is
necessary for economic growth and stability, it's much better to work in
producing digital goods and services rather than physical ones.

Within this framework, the actual question is not why do the brightest minds
work at facebooks, but, will our economy ever develop beyond the point where
producing useless crap is not so much a necessity for systemic stability
rather than an occasional indulgence.

~~~
enraged_camel
>>Industrial society is about producing garbage for the masses to consume.

As the saying goes, one man’s garbage is another man’s treasure. So don’t be
so judgmental. :)

~~~
fsloth
No, it's garbage. Individuals living in industrial societies are consuming way
more than the ecosystem can support. So, either we need to get rid of people
or they need to consume less. I prefer the option where they consume less. If
it's not needed for a wholesome life it's "crap".

I consume as much as I can but only because the society lets me, and I'm too
burdened at the moment to actively change my way of life.

~~~
obmelvin
> I consume as much as I can but only because the society lets me, and I'm too
> burdened at the moment to actively change my way of life.

Maybe have some sympathy for others? If you feel so strongly and yet don't
change your actions, I think it's pretty hypocritical to say other people are
consuming a bunch of "crap". Don't get me wrong, there is a _ton_ of waste
produced in today's world and more of it than we need. But I think it's
important to consider that many people struggle to make ends meet and can't
afford the time, money or thinking that many of us here have.

~~~
fsloth
Sorry, are we disagreeing on some point? Maybe I missed something.

We both agree that the western society consumes too much, and in the part of
my comment which you extracted I included myself explicitly in the group of
people who consume too much. I am having sympathy for people who consume too
much and don't change their ways. I'm the first person I have sympathy for in
this as I'm preoccupied by other stuff than my lifestyle choices at the
moment.

I did not denigrate the people who consume too much, merely the habit of
consumption.

The actor and the behavior are two different things. Merely behaving in a bad
way does not make the person bad. It merely means they have something to
improve in their personal conduct.

Calling stuff people consume "crap" is not the same thing as insulting people.
Although, western commercialism has done a great effort in trying to tie
persons self worth to their consumer habits.

This psychological link is also crap.

------
pasbesoin
My mind warps a little when I look at today's valuations. A company that _can
go to space_ , at one tenth or less that of companies that live off of social
communication and advertising.

I'm not saying its wrong. Just, personally, cause for pause.

~~~
zzzzzzzza
The question is, what is there of value in space? Science fiction has really
misled people into thinking a human space faring society is economically
feasible. As a human there's nothing for you in space except, well, basically,
space cancer. Raw materials found in space can also be found at the bottom of
the ocean or underground with less or similar extraction cost and right next
to the only currently existing consumers of said material. Now a "species" of
software intelligences on the other hand, which could adapt their bodies to
fit their environments, the various collections of asteroids might present a
compelling opportunity to build a dyson swarm (assuming they could think of
some useful/valuable to them way to use that much energy).

It's kind of hilarious to think that people seriously propose terraforming
mars as a strategy to avoid the dangers of global warming or nuclear war;
there are a thousand other uses for all that time, labor, and money. Many of
which could mitigate threats like that for a tiny fraction of the cost.

~~~
TeMPOraL
You're thinking in terms of current consumers. Ocean resources may be cheaper
for Earth use, but space resources will be cheaper for _space_ uses. We're
finally on our way to bootstrap a space economy, and it has a good chance of
being self-sustaining.

> _Now a "species" of software intelligences on the other hand, which could
> adapt their bodies to fit their environments, the various collections of
> asteroids might present a compelling opportunity to build a dyson swarm
> (assuming they could think of some useful/valuable to them way to use that
> much energy)._

We still need to get to appropriate technologies, which is precisely what
expanding into space now is doing. A Dyson swarm is not something you suddenly
build in your garage from scrap parts after a night of heavy drinking.

> _It 's kind of hilarious to think that people seriously propose terraforming
> mars as a strategy to avoid the dangers of global warming or nuclear war;
> there are a thousand other uses for all that time, labor, and money. Many of
> which could mitigate threats like that for a tiny fraction of the cost._

Yeah, no. RE nuclear war, there are diminishing returns on the margin in
political involvement; hell, a big part of the nuclear danger is the fact that
_too many_ people are involved. By redirecting space sector into this, all
you'd be doing is squandering the engineering talent.

RE global warming, space sector is quite well aligned with efforts on global
warming (where do you think the climate data comes from? or even the models on
how global warming works?), and long-term, it offers moving some heavier
industries up the gravity well, mitigating the pollution involved.

~~~
zzzzzzzza
while it might be possible for a space economy to exist I'm saying that humans
will never stay in space for long periods of time - the space economy (except
for the satellites and stuff we have now), will basically revolve entirely
around space tourism - so all those resources and manufacturing techniques
will only be valuable insofar as they support space tourism (which will only
be a fraction of the overall tourism industry, i think it would even be
relatively niche).

There's a lot of interesting stuff in space, for a physicist or astronomer -
but they don't even need to go there themselves to learn about it.

I don't think spacex's 25 billion valuation is ridiculous at all. but if it
went public it would probably get ridiculous (this wouldn't necessarily be a
horrible thing, there are far greater tragedies), based on people's
misunderstanding of what is technically possible in the near or medium term
future, in large part thanks to disproportionate screen time anthropocentric
science fiction gets.

------
varjag
A long shot, but is there any way for small fish to invest in a private
company like that without knowing the right people?

~~~
Arnt
No.

There are rules against that, intended to protect small fish against being
ripped off by strangers. Small fish are assumed able to judge their family and
friends, and big fish to be able to take care of themselves.

~~~
varjag
Thanks. Figures that's the reason for public companies and stock exchanges in
the first place. However where lies the boundary? I assume all institutional
middlemen are prohibited? You mention family and friends. While family is a
legal category, friends is extremely vague.

Would a sale between unrelated persons be regulated? For example between a
stranger and a confirmed ex-employee with stock? Does one have to be an
"accredited individual" for any outside stock transaction?

~~~
Arnt
Yes, exhanges is where you can buy companies that meet certain criteria, such
as publishing earnings forecasts and many other things to the public and not
to anyone ahead of time. Devices to protect small fish against being ripped
off by company insiders.

A sale isn't forbidden, but soliciting is. SpaceX cannot solicit the general
public. If they can explain that they reached you because you're Elon's former
secretary's cousin and you met Elon at a birthday party, they may choose to
include you in a financing round. Otherwise, they'll just say no, because
you're not worth the risk/cost of having to answer pointed questions from the
regulator.

(The regulator might not punish them, but just having to answer questions
quickly eats up expensive lawyer hours. And then there's the whole question of
who you are. If you're a shareholder you're entitled to answers, so pedants
owning a single share can be a real bother.)

------
richardknop
This might also be another way how Elon can keep financing Tesla. SpaceX has
in the past bought bonds of SolarCity, with this new cash perhaps SpaceX can
buy some Tesla bonds to save it from running out of cash this year.

~~~
jcfrei
Please no. SpaceX is too important to be pulled into the financial mess of
Tesla and Solarcity.

~~~
lifeformed
IIRC Musk said that Tesla was supposed to be the cash crop that eventually
funds SpaceX.

~~~
agildehaus
Can you point to the source? I've been a SpaceX fan for a long time and never
heard him say that.

Starlink, SpaceX's satellite constellation, is the cash crop.

~~~
shasheene
> Can you point to the source? I've been a SpaceX fan for a long time and
> never heard him say that.

Source is from the 2016 International Astronautical Congress talk in Mexico
[1]:

> And I should say also that the main reason I'm personally accumulating
> assets is in order to fund this. So I really don't have any other motivation
> for personally accumulating assets, except to be able to make the biggest
> contribution I can to making life multiplanetary

[1] [http://shitelonsays.com/transcript/making-humans-a-
multiplan...](http://shitelonsays.com/transcript/making-humans-a-
multiplanetary-species-mexico-city-2016-09-27#)

------
kmonsen
I wonder if SpaceX valuation is being accounted for the fact that they might
bail out Tesla like Tesla did with SolarCity.

------
jMyles
Tell me this isn't because the vision is defense contracting. Are people
banking on Space Force here?

~~~
azernik
tl;dr No. Commercial launch is a big market, and SpaceX is eating it alive.

SpaceX is finally following through on its promises and has put a lot of the
technical risk of its strategy in the past. All that risk was priced into old
valuations, so with a now-reliable and frequently-launched vehicle in Falcon
9, and successful follow-through on Falcon Heavy (less of a big deal
economically than the media brouhaha makes it out to be), that risk has gone
down and so the valuation is going up.

The launch business is a big [1] (but not enormous) one, and SpaceX has gone
from around ~15% to ~45% market share in two years [2]. In my understanding,
US DoD launches are a small, but particularly-high-margin subset of that
market.

[1] $8.8B annually, according to
[https://www.businesswire.com/news/home/20180116005923/en/Glo...](https://www.businesswire.com/news/home/20180116005923/en/Global-
Space-Launch-Services-Market-2017-2025-27.18)

[2] 2015-2017, according to SpaceX testimony to a Congressional committee:
[https://www.popularmechanics.com/space/rockets/a27290/one-
ch...](https://www.popularmechanics.com/space/rockets/a27290/one-chart-spacex-
dominate-rocket-launches/)

~~~
dalbasal
For a tiny bit more context, the military market is a limited. Defense has N
number of launches they need, regardless of price. If SpaceX pushes prices
down by 50%, demand will not double or triple, at least not fast.

The commercial market will respond to price. SpaceX is all about lowering the
price of space-access, and growing the market. More flights. New use cases.

Elon has a great grasp of microeconomics, at least the parts he needs. Tesla
was also clever in this regard.

~~~
jbms
Cheaper launches gives defence new use cases too. They'll start to launch
smaller satellites into more orbits. It'll take time to change their
processes, but they'll be launching small/cube/chip sats with all sorts of
sensors.

~~~
nickik
True but the DoD has a very long planning horizon. So it will take time for
them to react.

~~~
nugi
I can say, buy not attribute, that they are in fact reacting quite quickly.

------
acd10j
Does anybody else worry about having Wall-E kind of situation, Commercial
space launch being cheap, We might end up having lots of space junk. At least
with the previous price point, this was less probable.

~~~
Denzel
Space is vast... far bigger than you're imagining. Probably the best analogy,
that I've heard, to put your mind at ease: think about how many cars are on
the road today.

There are about 1 billion cars.

Is the surface of Earth crowded?

Well, not only is the surface area of a single sphere in low-earth orbit (LEO)
bigger than the surface area of Earth, you have to remember we're dealing with
volume. We can move in three dimensions and thus there are many "surfaces".

There's an order of magnitude more space for things in space. ;)

We're not even going to get close to delivering 1 billion objects to orbit
anytime soon. And even then, it wouldn't be crowded.

~~~
jessriedel
This is true, but the very high orbital speeds means there can be a
surprisingly high frequency of collisions even at extremely low density.

~~~
Denzel
That's also true. Do you have any material I could read on how this frequency
increases with the rate of spacecrafts deployed?

~~~
schiffern
A good place to start might be the original paper by Donald Kessler,
"Collision Frequency of Artificial Satellites: The Creation of a Debris Belt"
[http://webpages.charter.net/dkessler/files/Collision%20Frequ...](http://webpages.charter.net/dkessler/files/Collision%20Frequency.pdf)

------
tqi
Let's be real - humanity is going to die out before we regularly visit other
planets.

~~~
lz400
I think we'll achieve singularity level mind uploading before anyone
physically goes to any other planet. And, to be honest, makes a lot more sense
to do it that way. Carrying humans around, with limited lifespans and feeble
bodies, makes space travel wasteful and stupid. All those problems dissapear
once people are only software. I even think trying is a waste of time, I
wished Musk was focused on brain research, not rockets.

~~~
ben_w
Disagree. The tech to reach Mars has already been invented, and while the cost
needs to decline Musk has a plan to get there from here; conversely nobody yet
knows how much we have yet to learn about brain function in order to make the
simulations people instead of p-zombies (or even non-functional, not sure
which is worse), and right now (despite Musk’s brain interface side project)
full brain scanning requires death.

Further, the only estimate I have for how much processing power will be needed
to simulate a human brain in real time is 10^19 flops, which means Moore’s Law
needs to carry on for another 25 years just for the hardware to beat Musk’s
Mars ticket price.

~~~
lz400
One thing is having the technology to send a rocket to Mars, another thing to
have a completely functional and self-sustaining colony, that doesn't depend
on Earth supplies and that offers the possibility of a life that is not just
growing potatoes and looking at rocks from the habitat's window. I suspect
we're hundreds of years from the latter.

~~~
ben_w
That’s reasonable, but you did originally say “physically goes to” rather than
“colonises”.

~~~
lz400
I think it's possibly the same or similar. I don't buy the pioneering mission
with people who go knowing that they're not going to get back and possibly die
of radiation exposure. I think nobody is going up there until there's a lot
more tech in place, at least at the level of The Martian, ie: knowing how to
get them back and guaranteeing survival

------
nontechdude1
google is supposedly worth 800 billion. hasnt paid a dividend and probably
never will.

valuations are as much measurements of cult-ness as actual sustainable
monetary gain. I'm suspicious of founder-led, constantly "reinvesting"
companies or companies that stay private for too many years. Seems Bernie
Madoff-y.

~~~
Pyxl101
Investors do not demand that companies pay a dividend, and prefer companies do
not issue a dividend, when the company is growing rapidly. Investors would
prefer to keep that cash in the business, to use as fuel for further growth.

Recently, Alphabet and Google revenue growth has been around or above 20% per
year. Take a look at their Q4 2017 earnings statement [1]. Here is a table
based on figures in Item 6:

    
    
      2013  $55,519,000
      2014  $66,001,000
      2015  $74,989,000 (+14% YoY)
      2016  $90,272,000 (+20% YoY)
      2017 $110,855,000 (+23% YoY)
    

Compare to the net operating revenue of a company like Coca-Cola [2], which
pays about $1.50 dividend per share per year on a price of about $0-47 per
share:

    
    
      2013  $46,854,000
      2014  $45,998,000
      2015  $44,294,000
      2016  $41,863,000
    

Most investors in companies like Google expect to get more return by keeping
cash within the business to use for growth, resulting in share appreciation,
than they would get by receiving a dividend. If growth slows or stops then
investor sentiment will change. There are other figures to consider, but these
figures represent significant growth for a company of Google's size.

Madoff's business was a scam and pyramid scheme that depended on a steady
stream of new investors to pay off his old investors. Google and Coca-cola
operate real businesses that collect revenue from paying customers; Google's
is growing rapidly while Coke is holding steady or declining. There's no
similarity to Madoff.

[1] [https://abc.xyz/investor/](https://abc.xyz/investor/) [2]
[https://s22.q4cdn.com/984101753/files/doc_financials/annual_...](https://s22.q4cdn.com/984101753/files/doc_financials/annual_2017/2017-annual-
report-on-form-10k.pdf)

~~~
brisance
Nobody should pay any attention to the metric because it's a silly way to
value a company. Think about it: there are about 7 billion pairs of eyeballs,
ignoring maybe 1% who are legally blind and/or Braille ads do not exist. 110/7
=> Google revenue is generating $15.7 per viewer per year. And Google expects
people to believe that this value will increase each year, when the
denominator is increasing and the numerator is decreasing due to competition.

Viewed as an advertiser (Google's real customers), I would like this number to
come down over time.

~~~
gbear605
Google definitely isn't reaching all (non-blind) people on Earth yet, and even
then most of the people that is it reaching can probably be monetized a lot
more.

~~~
dillondoyle
Plus growth in digital ads (and the duopoly that virtually all new digital
spend goes to FB or Google)

