Rising 30-year Treasury yields are forcing a market-wide repricing of risk, acting as the 'adult in the room'. This is driven by persistent inflation and geopolitical tensions, challenging the narrative of endless growth fueled by AI and loose monetary policy.
The analysis of SpaceX's S-1 filing reveals a highly profitable and excellent core business (Starlink) being weighed down by a 'money furnace' (xAI). The merger is viewed as a strategic move by Elon Musk to fund his AI ambitions using SpaceX's brand, despite xAI's staggering losses and $9 billion cash burn in a single quarter.
The episode contrasts SpaceX's target $2 trillion valuation (106x 2025 sales) with established, profitable, and faster-growing tech giants like Nvidia. This stark comparison questions the sustainability of valuations driven by hype and narrative rather than concrete financial performance and growth metrics.
SpaceX is allocating an unusually high 30% of its IPO to retail investors, which is interpreted as a deliberate strategy to sell the 'Elon Musk story' to a fan base that may overlook the company's weak financials and extreme valuation.
Keep pulling the thread on James Murdoch.