EP.43 - SpaceX ($SPCX) Irrational Exuberance? Space Winner or Street 50% Too High

"Our numbers are not even half of consensus. Treat the syndicate's number as an extremely optimistic bull case.""We think we're already very optimistic—but consensus is even more optimistic.""Launch is what makes 100% of the value of SpaceX.""Frontier AI is building very high barriers to entry.""Everybody wants to be part of the SpaceX story."Pierre Ferragu, Head of Tech Infrastructure at New Street Research, joins the show to break down SPCX’s sum-of-the-parts valuation and the key debates in the stock.We dig into:Why Starlink has a structural cost advantage over traditional broadband. The tell is that Starlink is already sold out in places: raising prices in capacity-limited markets while adding 0.5-1M subs a month — which is why the V3/Starship ramp is now the gating factor.The Starship launch being the next catalyst. The model needs ~1 Starship launch a week; New Street runs ~1 year behind Elon's timeline — a reminder that Musk's targets have a "world-class track record of being late but delivered"The xAI valuation framework: a ~$575B base value from a $750B-$1T 2030 market at ~15% share (on Anthropic/OpenAI's ~4.6x 2030 revenue) — and why it's a balanced oligopoly, not winner-take-all, so no one gets to run away with it.The spot-vs-planned compute arb: ~$50B/GW (the $15B / 0.3GW Anthropic deal) vs CoreWeave's ~$12B/GW — and why that premium may not last.The setup that should keep you honest: consensus was built on Elon-optimism to sell the deal; the stock will trade quarter-to-quarter on "where there's light" (Starlink subs, Starship launches), through 6-12 volatile months of lockup unwinds and index inclusion. The Debate: Overly optimistic earnings revisions vs a cost advantage in the space frontier led by the great entrepreneur of our time, Elon MuskThis episode was originally a Pitch The PM webinar sponsored by Alpha Sense on June 22nd. Get free access to all of our webinars on our substackStocks: $SPCX, $TSLATopics: SpaceX, Starlink, Starship, xAI, Frontier AI, Space Economy, Satellite Internet, Launch Economics, Artificial Intelligence, Infrastructure Investing*Not Investment Advice_____________________________________________________________[00:00:00] Introduction to Pierre Ferragu, New Street Research, and why the firm is uniquely positioned to analyze SpaceX.[00:03:59] How New Street frames the SpaceX investment thesis for institutional investors.[00:06:32] SpaceX sum-of-the-parts valuation: Starlink, Direct-to-Cell, Launch, and xAI.[00:10:05] Why Starlink has a major cost advantage over traditional broadband.[00:15:49] Starlink pricing, subscriber growth, and global expansion.[00:20:23] Pierre’s firsthand experience using Starlink.[00:23:10] Valuing Starlink and its long-term free cash flow potential.[00:27:36] Why Starship is the most important catalyst for SpaceX.[00:37:22] How SpaceX disrupted the launch industry.[00:44:25] Pierre’s valuation framework for xAI and Frontier AI.[00:53:56] Meta, open-source models, and Chinese AI companies.[00:57:19] Why xAI can command premium pricing for compute capacity.[00:59:36] Pierre’s variant view versus Wall Street consensus.[01:01:04] What investors should watch after the IPO.[01:02:45] Pierre’s outlook for SpaceX shares._____________________________________________________________💡 This episode is powered by:AlphaSense: Request a DemoPitch The PM Links:📩 Subscribe to our Substack for research updates and new high-conviction episodes from top PMs, and our Job Board: ⁠https://pitchthepm.substack.com/⁠Follow Doug Garber on LinkedIn for daily market color: https://www.linkedin.com/in/doug-garber-42aa508