SpaceX/xAI IPO aloft. One for the record books in every direction. ARD #96

Michael Parekh AI: Reset to Zero

17 hours ago

14 MIN READ

It’s SpaceX Goes to Market Day — and not any Friday. The record books were rewritten: $75 billion raised at $135 per share, a $1.77 trillion valuation — the biggest IPO of all time — against a 5x oversubscribed global book. Ticker: SPCX. Today’s theme: the sky is not the limit with SpaceX, and of course its founder Elon Musk— defying financial, operational, technology, governance, and societal gravity. Three takes on the print, each with my Take first — and my Overall Take.

(1) Take a Breath: SpaceX/xAI Aloft — One for the Record Books, in Every Direction

MP TAKE: The world will bask in the magnitude of the numbers and the ambition over 24 years for this ‘overnight success’— and investors love a winner on the way up. With a 5x demand book, investor enthusiasm, Elon enthusiasm, and trading momentum are the near-term drivers — not the valuation. Legendary investor Benjamin Graham, often quoted by Warren Buffett himself, famously said: “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” And financial gravity is a weighty matter in the long term. Near term, the higher certainty lies with volatility — starting with what the stock does under that new SPCX ticker.

Sources, in narrative order: Bloomberg — SpaceX raises $75B at a $1.77 trillion valuation — history made. The NYTimes carries the skeptics — “It’s pie in the sky,” some investors say. And Axios on Elon’s other appetites. For longtime readers: Elon’s boundless AI ambitions in AI-RTZ #1066.

(2) Gusher for Early Investors: Sky-High Record Returns for Existing Investors — a 24-Year ‘Overnight’ Success

MP TAKE: Great valuation marks for existing investors, regardless of their holding-period lockups — Founders Fund, Andreessen and peers are looking at tens of billions. And remember: most professional investors borrow against shares for liquidity and tax reasons, so expect liquidity via that channel well before the lockups expire. For Elon, a public SpaceX is valuable M&A currency — he already executed one of the largest private acquisitions ever before the IPO, the $60 billion purchase of AI coding company Cursor (paid partly in excess Colossus capacity). And investors are weighing a possible merger down the road with Tesla and its $1.5 trillion valuation — a $3+ trillion public vehicle for AI investments on the ground and in space. That’s what will drive the real investor outcomes, short run and long. As I described this week, it’s a season of greed beating fear, with everyone coming in for AI seconds. The lights are still flashing green. But it’s time to listen to the music more closely. It could play on for a while.

Sources, in narrative order: Bloomberg — Founders Fund and Andreessen set for record returns from the SpaceX IPO. For longtime readers: ‘What It Takes to Be a VC’ in the AI-RTZ backcat.

(3) Near-Term Trading: Record 5x+ Order Book + Small Float = Higher Probability of Upside Volatility

MP TAKE: Order books are orchestrated meticulously — they’re a transient signal on the eve of an IPO. As someone who ran Goldman’s internet research effort in the nineties, I’ve seen my share. The real numbers: this one offering raises over 2x the proceeds of all 70+ IPOs done this year combined, with over $30 billion of the $75 billion coming from retail — bigger retail participation than anyone expected. Given the small float relative to outstanding shares, the multi-tiered lockups, general Elon enthusiasm, and the accelerated Nasdaq index inclusion in a couple of weeks — which forces hundreds of billions of passive index dollars to buy SPCX — the near-term momentum is probably to the upside. The truer fundamental test, as a former analyst and an analyst-in-all-but-name today: several consistent quarters of public-market execution, meeting and beating expectations. That typically takes a year — which is exactly why the S&P declined accelerated inclusion; these companies need seasoning. And likely longer here, given lofty ambitions in markets that barely exist. And of course: whatever Elon decides to do. That’s how he runs his collection of companies — which makes this more an Elon investment than a SpaceX one.

Sources, in narrative order: WSJ — over $200 billion in global demand, including a $5 billion order from BlackRock alone. For longtime readers: ‘Everyone Ready for Seconds’ in ARD #94.

MP OVERALL TAKE

Successful IPOs are always a wonder to watch — and this one was spectacular in every measure, positive and negative. Congratulations are in order for all the parties involved. And Mr. Market will be the volatile one to watch as new investors and partners get involved — not just in the early days of trading. A lot up in the air. No pun intended.

MP Take: Everyone should do their share of rational vs emotional brain thinking and evaluate accordingly — because what just went public is a conglomerate. With an unprecedented amount of unrelated businesses and circular cross-dependencies worth noting. SpaceX owns 8% or more of all unsold Tesla Cybertrucks — worth $130+ million — bought from Tesla before the IPO. Starlink is 60-70% of revenues, with government civilian and defense work the other big piece. Elon has to deliver rapidly reusable next-gen rockets — the returning booster always makes a great video, but that’s only half the story; the ambitions require taking launch costs from thousands of dollars a kilo to hundreds within two to three years. Then the V3 Starlink satellites on a consistent cadence. Then the whole AI business: Grok’s frontier models racing OpenAI, Anthropic and Meta coming in on the flank; distribution from current hundreds of millions to billions via X; and the opportunistic emerging ‘Elon Web Services’ (SpaceX/xAI EWS) — the surprise $70 billion of data-center rentals. Multi-year deals worth $40 billion from Anthropic and $30 billion from Google. After SpaceX discovered it couldn’t use the infrastructure for Grok in a timely way. On Colossus AI data center capacity stood up with tens of billions of dollars of Nvidia chips (some hand-delivered by Jensen himself). All that before Terafab — the hundreds-of-billions chip adventure with Intel to go after TSMC — and AI data centers in space, where it’s cold and the sunlight is eternal, but much of the science has to be invented: the best professional analysis says 10 to 15 years at least, not the 3 to 5 talked about around this offering, against Elon’s outlined $29 trillion market opportunity. Elon now has a hefty AI vehicle to make bigger moves up and down the AI Tech Stack — and SpaceX is indeed a ‘one of one’ AI company vs its peers. Elon, of course, is the ultimate one of one. A different animal altogether — one that requires a lot of attention, and rational vs emotional thinking. Volatile times ahead for this one.

Gadget AI — Tough Times for Windows Laptops

Sources, in narrative order: The Verge — “Dell’s new XPS 14 is better in almost every way. Except the price. The prices suck.” — the best of the Windows flagships, priced 30-40% higher than last year on ramping memory costs. For longtime readers, in narrative order: Apple’s MacBook Neo, a new arrow in its AI quiver in AI-RTZ #1017, and Apple’s supply chain locks out most tech memory pressures in AI-RTZ #1010.

MP Take: Dell is the canary in the coal mine for the whole Windows ecosystem of OEM laptop makers — and the same dynamic is coming on the smartphone side. Apple is poised to take points of share in the value segment of computers and smartphones — from its typical 25-30% of computers — due to its Apple Silicon economics and an unparalleled global supply chain with long-term contracts that locked in the key components now in short supply and high demand.

Questions

Q1 — What is MP’s favorite daily-driver laptop?

The MacBook Neo — Apple’s $500 value machine from earlier this year, now its best seller. In Blue, of course. It’s only got 8GB of RAM, but it runs on an iPhone chip and is very, very efficient — 8GB on Mac OS is smooth as butter; 8GB on Windows is a painful experience (tested, repeatedly). Nothing on the Windows side competes — Dell’s $600 back-to-school promo on the 13-inch proves the point. Does the job.

Q2 — What’s MP’s core reason to prefer Mac over Windows?

Mac OS just works. No muss, no fuss. Windows means incessant updates that take two to three times longer, constant sales pitches for first- and third-party add-on services, and bloatware management. (Windows still wins for AAA games — credit where due.) That hasn’t changed of late.

Full Source Reading —

For the broader context, see the canonical sources for ARD 96 — in today’s narrative order:

Shorts Clips from today

Clip 1 — SpaceX IPO: Record Demand, Retail Rush

Watch on YouTube Shorts

The SpaceX IPO rewrote the record books: $75 billion raised at $135 a share, a $1.77 trillion valuation, against a 5x oversubscribed global book — with over $30 billion of the $75 billion coming from retail investors. Proceeds over 2x all 70+ IPOs done this year combined. Ticker: SPCX.

MP Take: Order books are orchestrated meticulously — a transient signal on the eve of an IPO. But small float, Elon enthusiasm, pent-up retail demand, and Nasdaq index inclusion in a couple of weeks all point to near-term momentum on the upside. The truer test comes later: consistent quarters of public-market execution. Voting machine now, weighing machine later.

Clip 2 — SpaceX + Tesla: A $3 Trillion AI Vehicle?

Watch on YouTube Shorts

For Elon, a public SpaceX is valuable M&A currency. The $60 billion Cursor acquisition is already baked in — and investors are weighing a possible merger down the road with Tesla and its $1.5 trillion valuation: a $3+ trillion public vehicle for AI investments on the ground and in space.

MP Take: Great valuation marks for existing investors regardless of lockups — most professionals borrow against shares for liquidity and tax reasons, so expect liquidity via that channel near term. It’s a season of greed beating fear, everyone in for AI seconds. Lights still flashing green — but time to listen to the music more closely.

Clip 3 — Elon’s AI Empire: A Conglomerate in Orbit

Watch on YouTube Shorts

There’s an unprecedented amount of unrelated businesses inside SpaceX — a conglomerate with circular cross-dependencies worth noting. SpaceX owns 8%+ of all unsold Tesla Cybertrucks, worth $130+ million — bought before the IPO. Starlink accounts for 60-70% of revenues. And the new ‘Elon Web Services’ rents AI data centers to Anthropic ($40B) and Google ($30B).

MP Take: This is more an Elon investment than a SpaceX one — a collection of businesses that needs to be analyzed in its parts. Everyone should do their share of rational vs emotional brain thinking and evaluate accordingly. SpaceX is a ‘one of one’ AI company. Elon is the ultimate one of one.

Clip 4 — Reusable Rockets to AI Data Centers in Space

Watch on YouTube Shorts

To make the SpaceX story work, Elon has to deliver fully reusable next-gen rockets — beyond the returning booster that makes a great video — taking launch costs from thousands of dollars a kilo to hundreds, in two to three years. That’s the gate to V3 Starlink cadence, Terafab chips, and the $29 trillion market opportunity he’s outlined.

MP Take: AI data centers in space sound simple — it’s cold, there’s eternal sunlight — but the technical realities are daunting and a lot of the science has to be invented. The best professional analysis says 10 to 15 years at least, not the 3 to 5 talked about around this offering. The ambitions are in markets that barely exist — that’s the part to weigh, not vote on.

AI Ramblings Daily on AI-RTZ is here to think through AI and reset. Together.

Today’s AI-RTZ #1115 — Nasdaq to force-feed SpaceX/xAI IPO into Passive Index Funds — a calculated business decision unlike the S&P’s seasoning call. If you own a Nasdaq fund like QQQ, you’ll be a SpaceX shareholder before too long — you likely already own Tesla. A lot more detail there.

Look out for this weekend’s Saturday Weekly Roundup, and Sunday’s ‘Bigger Picture.’ Have a great weekend.

Thanks for tuning in, AI Curious Folk. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here.