This investment has never been secret.<p>Google (now under parent company Alphabet) invested roughly $900 million as the majority of a ~$1 billion funding round alongside Fidelity Investments. This gave Google an initial equity stake of about 7–7.5% in SpaceX at a valuation of roughly $10–12 billion.
Remember this was also when SpaceX was actually about space, instead of mostly AI and Twitter. Long-term shareholders that were sold on the space, have to be thinking about how to get out once their lockups expire.
I don't think companies expanding their business should be the only reason to sell. Apple was a desktop and laptop computer company when they released the iPod. Nokia was a company making rubber products when they started making cellular equipment in the 1970s. Amazon was a ecomm company when they released AWS. Etc.<p>Sure, I'm cherrypicking the success stories but I don't think it's the <i>only</i> signal people should use.
Companies laundering their CEO's other failing companies is certainly a reason to sell.
$8.7B in losses over the last 5 quarters sounds bad, but that is also with $20.4B capital expenditure in the period and double digit percent increases per quarter in user metrics.<p>By traditional business metrics it looks toxic but compared to a typical tech unicorn it's not really outstanding.<p>Considering it's a tech unicorn with strategic and financial leverage like no other (their own global Internet infrastructure, access to arbitrary billions in capital, ability to build the biggest chip fab in the world), it's certainly fair to call it a gamble, but to call it failing is a stretch imo.
The iPod was a peripheral to use alongside your MacBook, it was meant to drive Apple computer sales initially and it's not like it was Apple's first attempt at a portable device (Newton). Nokia was building telecom equipment (stemming from their telephone cable experience, the insulation being a product of their original rubber business) and military equipment along with a bunch of other consumer electronics before they got into mobile phones. Amazon released AWS because that was their infrastructure they had built for themselves to handle their massive e-commerce business.<p>Companies generally don't just jump into a totally new market unless they've already got some experience.<p>The SpaceX acquisitions of xAI and X have absolutely nothing to do with space. While I'm sure SpaceX software engineers benefit greatly from cheap access to Grok, it and X have no relevance to the core business of SpaceX. It's the same level as "huh?" if Boeing decided to buy up an AI company and social media platform. The only reason xAI and X are even part of SpaceX is because Musk fucked himself with being forced to buy Twitter and he decided to bundle them with an actually profitable company.
SpaceX had adult leadership for a long time. I suspect there was a tacit agreement with Musk about a bit of separation.<p>He broke through that professional firewall when he merged xAI with SpaceX and then pushed it to go public as he did. I also posit that Gwynne Shotwell is weirdly undervalued for what she's accomplished and what she's put up with, and I think that will show up some time in the future.<p>There was enough technical analysis to show that even Musk's cult feed can't overcome the significant financial hardships he laid on SpaceX. I personally think it was his jump the shark move. He can't really go up again after this. He no longer has any untainted assets for mega-exploits.
>'Gwynne Shotwell is weirdly undervalued for what she's accomplished and what she's put up with, and I think that will show up some time in the future.'<p>Gwynne is fiercely loyal to Elon. I don't expect to see significant strife between them.
"succeeding despite Elon musk" is, however, a skill set applicable at only a (strike)small number of companies (/strike) single company.
Have you got any evidence for these claims?
Nvidia was a company making PC gamer hardware, not high-performance computing.
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Not just that, but private investors were sold shares that all had the same voting rights. Since just before the IPO SpaceX now has dual class shares, Elon and a few insiders have class-B shares with 10x the voting power, while everybody else (including private investors) have class-A shares with 1x the voting power
With the serious lapses in governance being made by founders with these special shares, such as Musk and Zuckerberg, I wonder if the shares without these special rights will be substantially discounted. What rights do these other shareholders retain that would keep them valuable? Rights to compensation in the case of bankruptcy?
No rights to compensation on bankruptcy. Payroll is first, then debt, taxes and stuff. Equity holders ride down to zero.
These have become some of the most valuable companies on Earth. The idea that there are lapses in governance in these companies is insane. Any shareholder is buying in fully aware of the governance structure. Many because of it! Shareholders’ rights are clearly enumerated.
I agree many buy because of the governance structure and founders retaining control, but there is a lot of dumb money out there.<p>From Claude via stockanalysis.com:
META — institutions 67.51%, insiders 13.49%, float 2.19B of 2.54B shares outstanding. That leaves roughly 19% as retail/other.<p>SPCX — institutions 5.95%, insiders 46.47%, float only 638.65M of 13.17B shares. Residual is ~47.6%, but that is not retail.
In the case of Spacex that's literally not the case, when private investors bought shares the company was already a decade old and had a single class of shares. It's only since the IPO that the company switched to a dual structure, multiple years after private investors bought in. And class-B shares have only been given to Elon and a few of his friends.
The private investors were free to sue or arbitrage, as it is a private matter.<p>There were disputes around SpaceX secondary market/special purpose vehicle shares before the listing, but they were all settled out of court, AFAIK.
> Any shareholder is buying in fully aware of the governance structure.<p>This is laughable. Many shareholders don’t even know they own stock in these companies.
That’s an indictment on them. You should know where you’re putting your money and why. If you delegate this to a professional or influencer, you do not get to blame them. After all, you could just buy something you think you understand better like real estate or keep it in cash.
You don't get much of a say in how your retirement fund is invested.
Exactly. If nothing else, you should know who you're supporting.<p>Many people wouldn't support SpaceX and Tesla if they knew more about Musk. Conversely, some other people who don't know much about him might want to support his companies.
The typical "investor" is an ETF these days.<p>Your standard SPY or VTI investor doesn't know jack diddly squat about shareholder rights, nor do they ever plan to invoke them.
Generally the 10x shares aren't traded so it's impossible to see if they trade at a premium.<p>One exception is GOOG / GOOGL which both trade actively, and there's not much difference in price.<p>The mechanism for a price divergence could be accumulation of the 10x shares to seize control, but even if you could buy the entire float, it wouldn't be enough to take control, so that mechanism never happens.
There are three classes of Google stock.<p>By voting rights, they have 10x (founder stock), 1x (trading as GOOGL), and 0x (trading as GOOG). The class with 10x voting rights does not trade publicly. The class with 1x voting rights does not have enough voting power to control the direction of the company so there is no real difference in perceived value between GOOG and GOOGL.<p>Employee stock awards are IIRC all in restricted shares of GOOG (0x voting rights) so they don't dilute the power of the founders.
You are correct.<p>Interestingly, the 10x shares held by Brin and Page constitute only 11% of the economic value of Alphabet, but 51% of the voting control.<p>And the 10x shares automatically convert to 1x shares upon transfer or inheritance, so if the founders cash out or die, the 10x supervoting power disappears.
> I wonder if the shares without these special rights will be substantially discounted<p>it should be, but the market might be a bit irrational.
It also seems to me to be a very odd conflict of interest given that they must see themselves as primary competitors in the AI space.<p>Seems similar to me as when Eric Schmidt resigned from the Apple board many years back because their products started to overlap, especially mobile.
SpaceX is WAY more about space than Twitter.<p>Twitter by itself is lucky to be worth $15B anymore.<p>The space portion of SpaceX is easily worth 10x that.<p>xAI is theoretically the hype machine that makes up the remainder of the value.
Twitter is the “hype machine”. It’s basically the advertising arm disguised as a social media company.<p>At SpaceX’s valuation, even a 1-2% increase in share price due to some astroturfing on the platform they themselves own basically pays back the cost of acquiring twitter.
Where did you get $15 billion from?
Or $150 billion SpaceX? Internet constellations may be mildly profitable, but beyond that, most things are an endless money pit without clear path towards profit anytime soon. Like, no one is going to spend a trillion on a moon base (or exponentially more for mars) without plans to somehow recover all that money.
I think those long-term holders who 10x their investment are quite happy with that investment so far.
Yes I'm sure they are just desperate to get out of their 100x investment.<p>A huge mistake, I'm sure the relevant parties have been punished appropriately.
Well X is at the end of the name, so first is about Space, then about X, right?<p>/s
SpaceX, like Tesla, has always been about Elon Musk.<p>Investors are buying Musk, like they were buying Warren Buffett with Berkshire Hathaway. Long-term shareholders are not buying space; they are buying Musk. This has been clear to everyone since the beginning; it has been well communicated (look at SpaceX governance rules in Texas), and there is nothing mystical about it.<p>It's very likely Musk will roll everything up into a single Musk conglomerate.
Investors are buying into the fallacy that musk can continue to work as a hype man, rather than some visionary or innovator. They like that he can make stock numbers go up, seemingly against all odds and reason.<p>Whether this trend continues or not indefinitely will largely determine if incestors start looking for the door.
It's a valid point. But the markets are a harsh mistress. If you don't like fallacies, you don't buy. And if you think the number is not going to go up, you can always short the stock.<p>In defence of Mr Musk, despite his character flaws, Tesla is the only Western electric car company in the top 20, and this includes Korea and Japan. Also, SpaceX is ~90% of the world's commercial rocket launch capacity.<p>But this does not mean SpaceX would be correctly priced at the moment. It may be expensive, but SpaceX is going to have many years to come to reap the benefits of their hard work building the business.
Unlike Tesla, SpaceX is still a visionary and innovative company. Their current cash problems are precisely because they are so heavily invested in so many innovations that have yet to pan out
Love the typo.<p>I think Musk's luck is running out, he's been too political this past year and he seems to also have run out of geek "street cred". Remember youtubers visiting (whatever the Tesla trade show was called) were more perplexed than impressed with what has been shown. Similar sentiment seen across trade shows (like CES) where everything was AI and no one seemed to ask themselves "why are we putting AI in this?". The answer, of course, for startups and stock listed companies, to make themselves more valuable on paper.<p>Investors would probably be aware of that if they run any kind of sentiment analysis on online social media content. And at the same time there's some pull-out from tech stock. So maybe some are starting to realise that things are too shaky for their risk profile?
It's really sad to see that we just accept that Elon Musk, one of the most influential and maybe-still-the richest person in the world is constantly lying to shareholders for his own benefit. And gets zero punishment for it.
Original HN thread, 11-years ago (220 comments):<p><a href="https://news.ycombinator.com/item?id=8914956">https://news.ycombinator.com/item?id=8914956</a>
In fact it was often mentioned as a recommended way to try to invest in SpaceX via proxy, before IPO. I don't think that advice had much merit, but it was there nevertheless.
Alphabet is the modern day berkshire hathaway.<p>Alphabet’s investment holdings (eg, spacex, anthropic..) are worth in the same order of magnitude of BRK’s (~$300B)<p>The track record of google’s M&A is pretty good.<p>Except for search and cloud, many of Google’s important products were from M&A - Maps, Docs, android, doubleclick, youtube , deep mind, etc.
It seems obvious that the deal Google signed to rent compute from xAI just before the IPO was specifically to goose the IPO, giving xAI nice looking growth. They could have paid a lot more for that deal and still made it all back on the IPO. I don't believe for a second Google needs the compute. They've got their own AI inference hardware, the biggest data centers in the world, and they don't make any of the most popular AI products. They're not desperate for compute.
100x return, I would sell immediately after this kind of gain, maybe that's why I am not a Google
Per the article, they can’t, yet.
I'm sure at an $80 valuation they will tell everyone how it's time to buy as it slides down further
Pichai will talk about data centers in space again, like he did before the IPO. Then he'll sell SPCX.
Average pre-ipo sale price is $6.xx
This is a micro/macro mistake. You obviously can't dump a 6% stake at strike price on Robinhood.<p>"The Market", at this scale, means "You find the buyer(s) yourself and work up the deal with a hundred lawyers and PR staff and hope the contract negotiation stays secret".
Actually, that's the service provided by GS, etc. They have those buyers on the other side of their Rolodex.
Isn't that literally what institutional trading desks are for? One of the reason to use one is that they can execute a large order without impacting the market price
tell me how you dont know anything about dark markets and dark pools. I loveeeee how you average people dont know how they operate at top
There would be some laws in place. And it would also stress the relationship with Elon.
(1) there's a lock out, they can't legally
(2) Moving that kind of volume at market price is extremely difficult
(3) This disclosure was required by law as part of their earnings. They would rather have said nothing and quietly offloaded it.<p>One consequence of booking the revenue is that they're going to have to report a loss when they sell it.<p>It's possible there's some tax shenanigans at play (idk): report the profit, mark it against their massive AI capex, sell later when they can book a loss. (I'm not sure if it works that way, it wouldn't for an individual, but maybe they can find a way to trigger a stepped up basis.)
Retail doesn't really move stocks like Google too much, and institutions might understand Google and it's finances better than Google...i.e. there are no accounting tricks or mysterious losses that can shake institutional analysts much (besides illegally hidden stuff). They will perfectly understand why Google is taking a "loss" on the sale.
Feeling sated and not constant greed is no way to build billionaires, nope.
if you are big company like google, another 100 billion is not gonna make you feel better since cold cash is liability at that scale<p>100 billion is nothing if that money can put you in better spot at technology landscape
6% is more than all of the issued IPO shares. They were 5%, right?
One of the best corporate investments in recent history. >100x returns in 10 years
Maybe hacker news is wrong and SpaceX is actually valuable.
I don't think anyone is arguing SpaceX is actually valuable, just overvalued and the repeated recipient of obvious corruption.
Yeah, I have put my money where my mouth is, but I think it is. Extraordinarily so, and I think the Musk hate has clouded people’s judgement.<p>For what it’s worth, I get it. I have found Musk insufferable for the last decade since he attached himself to the right and got into drugs, however I think SpaceX is undervalued right now.<p>1. They are literally the only company on earth with a reliable partially reusable launch system. There are a few people trying, but everyone else is way behind.<p>2. When they eventually (hopefully) get Starship right, we will see a price drop in the cost of transportation to orbit we have never seen. When I did the numbers a few years ago, the price for space mining to be comparable to terrestrial mining was around $20-60/kg to orbit. They’d effectively be the ONLY way to access that. That’s one of a gazillion things that becomes possible with cheap access to space. UPS becomes a competitor at those prices… it’s game changing.<p>3. They are basically dominating the satellite internet world. Nothing compares. Starlink is amazing, especially here in Alaska, I suspect they will eventually have a phone, which will be revolutionary.<p>4. A gazillion government contracts, Star shield, and arguably point to point QRF shuttle (after starship). The defense implications alone mean that they are going to be around indefinitely.<p>I don’t know, but I think people are sleeping on this.
5. A gazillion amount of telemetry data and social media data to sell on the data broker market. That alone is enough to attract another billion dollar of potential investment consistently, especially for training data and intelligence...you know, selling to the Mossad or CIA.<p>In a world of money, every bit you can earn, you have to earn, while I know it is immoral to sell the data for spying purposes, morality alone don't mean shit now, that I never see any capitalists and corpo dogs have any kind of morality anyway, except when massive backslash, congress hearings and boycotts, which is, ahem, Meta/Facebook and Cambridge Analytica. But given the unique position Musk used to have in Trump's government and his right leaning position he is safe to do so. At least for now, he is immune to holding congress hearing for a scandal I suppose.<p>And not to mention that Grok is literally trained over X/Twitter, and keep in mind Bluesky is federated and strangely, no one seems to be scraping it over ActivityPub. I believe Thread is also built on the same foundation but it's sure that Meta made good measures for antiscraping, I expected as a data oriented company.<p>Alas, keep in mind SpaceX merged with xAI and nonetheless don't forget their data side
$500bn marketcap is still valuable<p>Its how it declines to that point at another 70% loss from $1.5 trillion that people are worried about
Given how much ai spending Google need to do, and that the are selling equity for the first time in a long time to do it, no doubt spacex shares are going to be dumped out they moment they can.
What’s that in data centers?
Didn’t they just raise $85B “for AI”?
Everybody here an expert, but no trillionaires, billionaires, and I’m guessing millionaires
Can’t wait for SpaceX to go even lower.
Hopefully they made this investment pre-IPO at some vastly lower valuation because otherwise… …this is a not going to end well for them.
<a href="https://archive.ph/kQtHB" rel="nofollow">https://archive.ph/kQtHB</a>
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I am short both Google and SpaceX RN; SpaceX's IPO smells foul. Google is an AI-bubble short; Anthropic and OpenAI haven't IPOed yet.
Not sure why you'd short Google. Their business was doing great pre-AI, and will likely do great regardless of what happens to AI. The rumors of their demise when AI hit the scene were clearly greatly exaggerated.
Excluding all the capex from AI this last quarter has been one of their best.
There is quite a bit of information out there as to how Google is achieving short term growth in their core search business. And boy, it is ugly. It does not signal long term continued growth.
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from your list, I think only Google has moat and something I would short least.<p>Google has hardware, software ecosystem, mobile ecosystem, controls browser, has access to 2B+ users, has talent to come up with ideas - perfect spot for AI
Now Microsoft, them I'd short. In a way I have by starting my own company to undermine their various competitive advantages comprehensively
The number of companies that default to using Teams shows why MSFT isn't going anywhere.
Microsoft bundles enough things at a low enough price that it seems silly not to use Microsoft if you are a corporation, because the alternative is to buy a number of different SAAS products (which are generally superior) at a higher price and have to deal with half a dozen to a dozen vendors.
I will be very concerned for MSFT if small companies start outperforming larger companies. That's when Microsoft's advantage disappears. If AI truly encourages smaller, flatter organizations. IMO large enterprise adoption is their moat.
The only strategy that can work against Microsoft is a full broadside. You can't try beat them in just one niche, you have to go after the whole tech stack they offer. That's what I'm willing to try doing.
Yes, exactly, would I bet that Microsoft’s products are inferior in quality to others. Yes.<p>Would I bet that other humans would believe that? Nope.
Microsoft has many of the same advantages but is incapable of judging the quality of the products it makes.
Time will tell but that feels foolish. MSFT is a terrible product company (look at copilot) but what they sell is a safe decision which is one of the most important factors for enterprise software. Nobody is close to replacing that.
I'm content for that be the narrative. Nobody is close, and what's more it's not even possible, and even if it was possible nobody would want it, and even if anyone did want it would only be a few people. ; )
Microsoft is in the same situation as IBM decades ago. „ nobody ever got fired for buying IBM“ used to be a common saying. If at all you’ll see a slow decline.
Concur; I am shorting them as well. Your approach is more clever!
Wow why has nobody thought of this /s
Microsoft is in a better position (as their b2b ecosystem can realistically be made LLM-agnostic), but Google will be fine.
Maybe you’re right but, man, there’s easier money to be made than betting against those two companies.
Have you seen Microsoft’s price over the last year. If AI doesn’t pan out they’re going to be the next IBM.
Agreed, and in my opinion he's 100% right. But I'm still invested in both.<p>The market hasn't been working on fundamentals for a long time. I have a fair amount of value stocks and a bunch of cash lying around, so I'll be ok.<p>I really feel for anybody trying to invest to grow right now; there's no obvious safer play.
Like?
> Like?<p>Vanguard’s total market fund (VTSAX). Just setup a monthly purchase and forget about it. Turn wealth building into a time problem instead of a skill/luck/cash problem. (Assuming time is on your side)
All of the quantum computing companies (Especially QUBT, which is outright fraud), although the window may have passed on that.
Google makes money hand over fist and they don’t have enough things to spend it on. AI is a natural fit for them to burn all their profits into. Gemini’s integration is, I think, absolutely awesome - it’s completely changing the way I interact with the concept of googling and finding answers, and is free of sign ups or purposeful interactions with the likes of ChatGPT or Claude where you know you’re AI-ing. So your short could work, but it’s not going to work for google’s involvement in an AI-bubble, it’s predicated on the entire market tanking, which should have been occurring for the past two years already if fundamentals and capex translating into profit were what the market cared about. But it seems like the market isn’t caring right now so you could be holding that short for quite a while before it turns into a major return.<p>SpaceX I actually bought at the IPO price because I think the company will be around in 30 years time, so as fraudulent and mispriced as it is, having a small holding over that kind of horizon I believe will be profitable. And I want to be that kind of old-timer who can chuckle at buying it at the IPO and holding through the crash and still holding when they are on Mars and beyond and SPCX is worth multiples of what it is today.
> Gemini’s integration is, I think, absolutely awesome - it’s completely changing the way I interact with the concept of googling and finding answers,<p>Oh, me too. The way it writes things that look like they address my question, and then links references that totally don't makes me dread Googling in a way I hadn't yet. For probably five years, I've been doing DDG first and Google when I DDG doesn't work well and usually Google doesn't either, so I already have dread for Google, but this makes it worse.
Nailed it. I didn't state this explicitly, but:<p>> So your short could work, but it’s not going to work for google’s involvement in an AI-bubble, it’s predicated on the entire market tanking<p>Is indeed a required assumption. <i>Major return</i> is not going to happen with this, <i>Not losing a big chunk of my money</i> is the goal!<p>> SpaceX I actually bought at the IPO price because I think the company will be around in 30 years time, so as fraudulent and mispriced as it is, having a small holding over that kind of horizon I believe will be profitable. And I want to be that kind of old-timer who can chuckle at buying it at the IPO and holding through the crash and still holding when they are on Mars and beyond and SPCX is worth multiples of what it is today.<p>I think that's a fine play as well. The short is more of an "This IPO price doesn't make sense; sell within a year after it settle"
Short Google? Early is wrong you know?
That’s brave, and I don’t mean that shittily, but more cautiously. Like, I’m thinking of the Simpsons shirt-tugging meme when I read this.<p>I’ve always been hesitant to short stocks because of the old adage “the market can stay irrational longer than you can stay solvent” and the market has a REAL vested interest in seeing these companies not explode.<p>Good luck on this one, genuinely, because you may need it.<p>(That said, if you DO win big on this one, I think we’re all fucked, so maybe I shouldn’t be wishing you TOO much luck. =) )
Sage advice!. In shorts like these, there's no outcome that "wins big" unfortunately, unless you do it with large amounts of money. (Unlike a long position on an individual stock that 10xs, or options which are much riskier). But... it will ideally make the landing softer after the Fall.
SpaceX near $100/share is a great long position now, IMO.
Google is not a good short. They are actually one of the companies that will likely come out on top when the AI-bubble has popped.<p>Anthropic and OpenAI though will likely be dead, killed by cheap open weight LLMs and local LLMs.
Most sane comment.<p>Even in the last Elon Musk interview by The Economist, he admited that it's likely China will win at the end.<p>The gap is so close now. Opinions matter not, the Chinese will have their own GPUs, RAM and everything they need.<p>Giants like google and spacex are the few that can handle it because their business is not only about shipping the best models.
I expect China to eventually develop or sidestep EUV lithography. When that happens it’s over.<p>It will also crash the price of chips globally. These high prices are kind of artificially buoyed by the fact that China can’t obtain ASML machines. This keeps China’s vast proven ability to scale manufacturing off the playing field.<p>This is so clearly the Chinese century. Doesn’t mean the US, EU, etc become backwaters. England was a huge influence on the 20th century. It does mean that China will drive tech and the global economy forward.
It isn't currently —for google— only about shipping the best models, but in the future however...
Why is this not seen as a circular deal? But other oracle debt is said to be circular
Bad decisions like this explain a lot
FIFY: Google discloses $94B loss
They didn't invest 94B$<p>But yes the stock could go down much further and I hope they are willing to show the losses if they can show this as gains today.<p>Imagine the next call being about how their 95$B went to sub 30B$..<p>Will that be a negative line item. I don't see the point in disclosing this stake as earnings.<p>But I do get that accounting was made as a tool for companies to show off.
Accounting goes back thousands of years. It was not made as a tool to show off. Lesson is more that tools can be abused for other purposes than intended.
They don't have to be willing because hiding the losses would be a crime. And it still doesn't matter b/c anyone with a calculator can tell you exactly what the value of their position is on any given day. The $94 billion is 2.4% of Google's market cap, so even if SpaceX goes to zero it will be barely noticeable from the background noise of the stock price movement.
It will be difficult since they acquired it for less than a billion 10 years ago.<p><a href="https://www.theguardian.com/science/2015/jan/20/spacex-funding-google-fidelity" rel="nofollow">https://www.theguardian.com/science/2015/jan/20/spacex-fundi...</a>
"The company’s marketable equity securities include $80 billion in shares subject to short-term restrictions and $14.1 billion subject to long-term restrictions"<p>Actually more like $14.1 and whatever value the other $80 is worth when they sell. Which is probably going to be worth well North of whatever is lost on the $14.1 B long-term... All part of the scam to inflate the value of the AI bubble
hate makes people stupid.
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