SpaceX is Half a Trillion Short | My Stock Plan.

We see this target as likely very achievable. Boom. Wow. That's freaking awesome. That's almost as awesome as Lauren offering us a special flash sale and meet Kevin.com. Today only. In this video, we're going to provide an update on SpaceX, including the email that I just got, which is in my opinion big news for people with a SpaceX exposure or maybe who want SpaceX exposure. Keep in mind, I personally have exposure to SpaceX in my venture capital fund. The better SpaceX stock does, the better I do. So, I want to be clear about that. We haven't sold a single share. People have been asking me, "Oh, but Kevin, you know what? What price would you add at?" We've already made videos on that. We'll talk about that in a little bit. But in this video, I'm going to break down a bullish email that I got. Then, we're also going to look at what Goldman Sachs is saying and what Deutsche Bank is saying. And forgive me for just being a little clear when I point out like, "Yes, we're long. No, we're not short." Because some people seem like they just leave a comment and then leave and they don't actually watch. And I I think the vast majority of us, 99% of us, appreciate very clear and consistent information. And that's my goal here. Uh and and so that does make me positively exposed, but I also want to be realistic about the stock. And that's where my this is where I would add to the stock price targets come from. Okay, first let's start with the bullish email. So the bullish email is actually right here. It is an update for our venture capital exposure in SpaceX. We've got uh probably multiple seven figures in in SpaceX. Actually, certainly multiple seven figures in SpaceX. uh which is exciting since we invested back at, you know, 300 uh billion-ish dollars and uh we're uh we're well above that at this point. So, we're excited about that. We'll see where it ends up when we actually get the shares, how much we actually have, what the dilution was and all that. I don't know. But you'll find that this email was sent this morning on August 10th. If you remember, today is Lauren's birthday. So, Lauren is giving a little bit of special juice on a flash sale. We're going to have a coupon expire on Friday, but today only we're doing a little bonus flash sale. So, if you join with today's coupon code, you'll get a little extra. And that is a shout out to Lauren uh for for suggesting that. So, go check that out over at meetke.com. You can get that lifetime access to the alpha membership. But take a look at this. Here's the latest information that I have. Once the SpaceX funds fund continues with the unlocking process, you will see SpaceX fund shares slowly uh start showing common stock. A little bit of the right side of this email got cut off. I I'll show you a little bit more detail of that in just a moment. Once the common stock is in your account, we can hold the shares, sell a portion of shares, or sell all of them. This is a financial adviser. Now, this is the line that I think is the most interesting, and I'm going to actually pull up a better screenshot of it. It's right here. They say, "I have found that the that most clients plan to hold the shares." That's actually kind of cool. You know, that's kind of a way of saying people are looking at this like a long-term call option. And that's why we also got to look at the long-term debt exposure that this company's likely to get itself into. Uh so uh you know here's where they talk about the distribution process and how it's going to take in my opinion basically weeks to actually get the shares unlocked because there's so much bull crap that needs to go on in the background. Who cares? That's all suit crap. Doesn't matter to me. What matters to me uh are these three different institutional pieces and then we're going to look at uh something very important here in the earnings for SpaceX. So, uh, first, Goldman Sachs and, uh, Deutsche Bank are relatively bullish on the stock. There are a couple changes here that, you know, somebody sent me these documents and I'm like, "Oh, okay. I I hadn't thought about it this way, but I always like kind of seeing what the suits are saying." Some of the suits are now suggesting we could get up to five launch pads by the end of 2027, the end of next year. It's not that far away for the Starship. Now, obviously there's a lot of execution risk baked into this, but that's higher than the four that I thought. And I thought four was going to be a lot. You know, we're like at one functional right now, right? So, getting to the five by the end of 27, that's pretty good because it kind of helps you get more launches going, especially since that V3 uh that'll, you know, 10x the bandwidth capabilities for Starlink apparently doesn't fit in the Falcon 9 rocket. And that might be part of the reason why they're not taking orders for the Falcon 9 rocket anymore anyway past 2029 because they just want to send bigger uh you know lower cost per kilogram uh ships into space basically. There uh was talk uh here from Goldman about how Arpoo for Starlink exceeded their expectations. I honestly think these companies sandbagged their expectations because if I look at Deutsche Bank, I could see that Arpoo was $66. Actually, this one's labeled Goldman, but it was definitely Deutsche Bank. Um, let's verify that. Yeah. Yeah, this is the DB logo right here. So, this one's DB. But anyway, uh, Arpoo was flat a quarteron quarter at 66 bucks. That's down quite a bit from $85 last year. Uh, 66 is the new number works out to a decline of about 23.5%. I guess that's not as bad as we thought when we initially saw SpaceX was doing like 50% off coupon codes for people to join uh Starlink. And I think there's a this idea that once you hook people in and they get their dish and it's installed, they're probably likely to keep paying. It makes sense. It's a good product. It's a good service. So, doesn't surprise me that they lower their prices before IPO and then raise their prices right after IPO. It's sort of like, hey, let's show how much user growth we have and we'll slow it down after IPO. I think that's a little bit what's happening here. Uh, satellites in orbit exited the quarter at 10,200 versus the 9.6 expected. I think a lot of these institutional writeups are honestly sandbagged on purpose so they can say, "Wow, everything beat whatever." What I think is most interesting is that SpaceX is targeting 5 to 10 gawatt in 2027 of compute. Now, we've seen Elon talk about this and we talked about what I call the bifurca bifurcation or the cataclysm in artificial intelligence investments. Uh, this morning we made a video on it and we talked about how on the left side on one side you've really got frontier level compute. You know, that's like Anthropic signing a deal with SpaceX. Anthropic also just signed a deal with Riot, the former, you know, crypto mining company. They signed a $9 billion cloud deal with them. I mean, they're like, you know, they'll sleep with anybody to get compute at this point. And and Elon knows that. And so Elon's like, I want to have the biggest boobs. I want to attract the most anthropic I can because they'll pay me a premium. We'll talk about that in just a moment. But this bifurcation here that we're having is really between a frontier, which is, you know, the latest and greatest LLM, your latest and greatest coding, whatever. Uh and then of course you're going to have your openw weight models not to be confused with open AAI which is obviously not openw weight. Uh so open weight and this is going to be your enterprise. Um in my video this morning we really talked about how this is likely to take over a lot in the future and you know we made some commentary around what we think would be great investments for this side winning but SpaceX doesn't have anything to do with this side in my opinion. you know, they're they're not going to provide 5090s for us. They're not going to provide RTX 6000 black wells. They're not going to provide little workstations for businesses who actually put AI to work, like reinvest SpaceX. And you have to know this if you're investing in SpaceX. I don't, you know, I just want to be clear about it. SpaceX wants the highest freaking margin compute possible. They don't give a crap if you're going to use Alibaba's Quen. They don't give a crap if you're going to use Meta's, you know, openweight LLM. What SpaceX wants is to make as much money from the highest margin homies possible. You know, we heard about this $500 billion joint, you know, Black Rockck and Jensen deal with Nvidia uh this morning. You, you know, like $300 billion of that is probably going straight into Nvidia's pocket. They love this, man. It's a giant circle. And Nvidia prints money uh and Nvidia is going to print more money over here and so is SpaceX. You know, SpaceX prints money selling to these frontier people. So, as long as the Frontier people keep spending like crazy, Elon's going to keep spending like crazy and providing it for them, great. These are different investment strategies, right? If you want that exposure to the frontiers, you get that Nvidia, you get that SpaceX. If you want exposure to enterprise AI the way it's actually changing businesses or or you know building ROI for people like I think what we're doing with reinvest you know those are not the two plays there are different options there and they're actually not in hardware at all. You could actually even make the argument that over here you know you're going to have the Marll. I mean we just made a video on this. The Marll, the LSCC, uh the Microns, right? Those all fall under this side. That's really important to reiterate here because I just want SpaceX investors to know that when you're investing in SpaceX, you are investing for that frontier LLM. None of that open weight stuff matters to you because you're not going to get the margin from there in my opinion. Now, is it possible that SpaceX will in the future host Enterprise AM AI sort of like an Azure or you know um I don't know any of the other providers maybe, but that's not where the high pay is right now. So, you want the big margin dollars to be over here where Anthropos spend god-awful sums to make sure they get to AGI, which I, you know, I think is a scam. I don't think it's going to happen, but that's fine. You know, whatever. SpaceX, it doesn't matter to SpaceX. It's like, sign the contract and pay us. We don't care if you get AGI or not. But anyway, um the estimates of 5 to 10 gawatts by 2027. This is actually really important because you know if I go look at the balance sheet for SpaceX, you're going to find something here. We've got $93 billion of cash plus uh 6.4 of marketable. We've got about hundred billion of cash, right? We have about $13 billion in bills. You'll find that right here under current liabilities. And I take the deferreds out. So, you know, that gives us about $86.9 billion to work with. That's great. But capex for SpaceX is probably going to go from $18 billion a quarter to $25 billion a quarter to my guess is going to be somewhere around $50 billion per quarter. So, I honestly think that 86 billion, this is my prediction, $86.9 billion maybe makes it to year end, but Elon is going to blow it. Like, I shouldn't say blow it. That sounds bad. Spend it all. Okay, he's going to spend it all. $86 billion is going to get you like 2 gawatt. Okay, 86 billion equals about 2 gawatts of compute. You want those Vera Rubins. You want the best Vera CPUs and the the GB300s. You want the best uh or or the Reubins. You want the best possible product. It's going to cost you closer to $50 billion a gigawatt. And so that next 8 gawatt is going to cost you probably somewhere around $400 billion. And so if I add that together, I I need probably to be safe $500 billion. I need an extra $414 billion. So where is $414 billion going to come from? Well, that $414 billion is not going to come from the cash flow statement because the cash flow statement is already getting burned by capital expenditures going into rockets and and satellites, right? Like I'm I'm excluding the uh the the AI investments here which represent about 85% of this. Uh if so, if I take this and multiply that by about 85, that's about 24.2. That leaves me with about yeah about $4.2 2 billion dollar going to rockets and the other parts of the businesses. That means we are negative cash flow, right? We basically spend all of our operating cash on the space and communications business, the connectivity business, Starlink, right? That's fine. Then on top of that, we're investing an extra in in this case in the last 6 months $24 billion into compute. That in my opinion on a six-month basis is going to get to the point, mark my words, where it ends up saying hundred billion. That would work out to $50 billion on actually it might even be more than that. That that might on a six month. Yeah. 6 months. 100. Yeah, cuz this is six months. Six months. Yeah, that's that's right. 100 billion on the six months. That would work out to 50 billion on the quarter and that would work out to about 200 billion on the year. That's I think what it's going to say. So you you know you're really going to get aggressive here in the spending. And then the question is where's that money going to come from? Yeah. 50 billion per quarter, 100 billion on 6 months, 200 on a year. That seems appropriate. And if we get to 200 on the year, that means by the end of 2028, Elon's probably spent all of the money. Uh all $500 billion. You know, maybe it takes until the middle of 2029, but before the end of the decade, he's going to blow half a trillion dollars. He is a trillionaire after all. Uh anyway, so I think he's going to make this investment that's going to be really good for those downstream frontier beneficiaries that we're talking about in this bifurcation side, right? He hasn't announced raising that extra money yet, though. And the question is where is that going to come from? Is it going to come from share sales or is it going to come from more debt? Well, management argues it's going to come from debt. Now, financing as just XAI sucked because they were paying 12.5%. That sucked. But they've actually derisked SpaceX and now, you know, basically the compute side is the more expensive side to finance, but they've derisked it drisked it with Starlink and Starships, which is great. And so they're actually able to borrow on 30-year fixed well 30-year notes at 6.65%. And 5-year notes at 5.35. Now, at the time, that was about 115 basis points more than the equivalent yield of the 5-year or 30-year Treasury at the time. If they went to borrow again today, it would probably be even more expensive just because rates have gone on up even more. I mean, the 10ear is at 4.7, partly because of this Iran drama that just unfortunately keeps going. Yeah. The the 30-year right now is at 5.25. The 5-year Treasury, if we pull up the current uh on it, it is sitting at 4.41. H 4.41 4.41 plus 1.15. they'd probably be borrowing at about 5.56. So, an extra 20 bips or whatever here on the 5-year. Not horrible, but the point is this also isn't cheap debt. It's not like China who's borrowing at, you know, 1.9%. China has lower inflation, so they say, so their yields are substantially lower than ours in America. Uh, but even though this looks like expensive debt, it's way cheaper than if XAI were standalone. And it's way cheaper than what Coreweave is borrowing at, which is borrowing at over 10% as well. So SpaceX actually made this debt cheaper to get. And so I think they'll keep issuing debt here. I do think at some point it will become I I should make that note here will become cheaper to issue stock. And because there are A and B classes, Elon doesn't have to dilute his ownership of the company by issuing stock to common shareholders to us retail people. This means that if SpaceX continues its retracement here, there will come a point where they'll just decide to issue stock instead of taking on more debt. But I think the vast majority of what they take on will be more debt. Deutsche Bank thinks they'll get to about $300 billion of debt by the end of the decade. That would mean they'd probably have to issue 300, you know, well, they'd probably issue somewhere around $275 billion of debt. and and and then in my you know with my math maybe a couple hundred billion dollar 140ish billion dollar worth of equity. So I think you're going to get a combination between here and there and that's a lot. That's a big raise. Remember Google was in the process of raising and still is about $80 billion. And you know it hasn't been horrible. it like the market's been doing okay, but Google peaked out when they said they were going to issue $80 billion and so it's been tough for them to get past this 374 level. You can see this reject reject reject reject over and over and over again. If you look at actually the uh SpaceX technicals, we can see we really tried to break out of 13334 today. We struggled during most of the day. Look at this clean rejection. Clean rejection. Rejection. Rejection. Rejection. Right at the end of the day, that to me looks like leveraged ETF buying. Right at the end of the day, right at the end of the day, you get this pop. That's almost certainly ETF buying, especially the leveraged ETFs. Almost certainly. But, um, but that's an important line for SpaceX because it's your next retracement line and we've been holding that pretty well. So, uh, my my belief and and I maintain this, uh, you know, and and we I try to pat myself on the back, but we were right when we said there was a shot this was going to run up 30% and there was going to bleed out. It's literally exactly what happened. And now I try to pat myself on the back. It's just, okay, so what do we think is going to happen next now? Well, we could keep seeing this retracing mostly because it takes so long for these shares to lock up. And the benefit of this or free up, I should say. The benefit of that is people are going to look and go, "Well, it's rising. Why do I need to sell?" So, the very lockup pressure that might cut and run if the stock's in freef fall might see the stock slowly climbing up and then I'm in no rush to liquidate. Why why sell? You know, you're still going to see some selling pressure. And I'm not sure that it's actually hit yet uh in terms of of those locked up shares. Obviously, we had selling pressure over here, but uh uh you know, this this is good. Hey, you you want to see if you want the entire economy to hold up, you want to see SpaceX do well because they're going to keep spending money on artificial intelligence, uh, you know, frontier level chips and it just keeps the circular economy going, which ultimately trickles down to everybody else. Oh, less plebs. Now, anything else in these institutional notes to look at? Well, again, my opinion, they're going to issue a lot of debt and they're going to have to issue shares by the end of the decade. uh unless they just want to go into the end of the decade with like, you know, $400 billion dollars of debt, which maybe they will. I don't think they're going to pay off any of their debt anytime soon. I did think this was very bullish here by Deutsche Bank. Deutsche Bank here suggests that Cursor has annual recurring revenue of $4 billion in June. And in their projections to get to a hundred billion dollars of annual recurring revenue by the end of the year, their projections are that SpaceX is going to be able to 3x Cursor's uh annual recurring revenue. I think that's very very hopeful. Maybe they could pull it off. Uh but I think the biggest component is actually the Neocloud side here. And on the Neocloud side, Goldman actually argues that they're likely to hit it. Take a look at this. So, if I go right here, uh we got the five launch pads. Where is the $100 billion? Well above the right over here. This is where they talk about uh the uh pricing per gigawatt hour. Even Goldman's like, "Wow, they're signing contracts for well above our long-term assumed pricing per gigawatt." There's a lot of debate about this. the the people who are blind bulls get mad at me when I'm like, "Wow, these prices are kind of ridiculous per gigawatt hour that um you know, SpaceX is charging." I think there might be something else going on here. Like maybe Google is willing to sign these ridiculous prices because they hold $95 billion of SpaceX stock. 95% of their entire equity portfolio at Google is SpaceX. But anyway, uh you know, people get mad at me for saying that, so whatever. Obviously, there's some debates here. Uh SpaceX has obviously uh established a dominant position within the market. That's fine. Here, this is where they also talk about having 10 gawatt of terrestrial compute within the next 2 years. That two years, you got to come up with the money for that. Within the next two years is before the end of 2028. They're going to have to come up with 400 billion bucks. I love the word terrestrial as well, not to be confused with extraterrestrial. So you're basically like, hey, you know, you borrow money and build it on Earth. Keep in mind, like 40% of that is expected to go to the big guy. The big guy in this case is Jensen, not to be confused with any other big guys. Star like Arpoo. Okay, where the heck was that note? I'm going to find it. But anyway, there is a little note where they break down how much is going to come potentially on a per uh hour GP. I found it per uh hour GPU basis and how they're going to add up this annual recurring revenue. So, first of all, they actually say we see this target as likely very achievable. Boom. Wow. That's freaking awesome. That's almost as awesome as Lauren offering us a special flash sale and meet Kevin.com today only. All right, take a look at this. We see this target is very achievable to triple SpaceX's ARR annual recurring revenue by December. Wow, that's really bullish. But then in fairness, when we add it up, I could see how they get there. I've got 3.75 from Anthropic. I've got another 3.3 from the government according to Goldman here. Is this Goldman? Nope. Deutsche Bank again. Sorry. Uh, plus Google at three billion a quarter. Well, that alone right there puts you at uh three or 10.1 billion a quarter. Okay, that's already $40 billion ARR right there. And then if you add in a mystery one, that gets you halfway to the 100 ARR by December only for the Neoclouds, not including Starlink launch services uh you know X whatever. Now this is obviously the odd table here and this is the pricing per uh GPU hour. We could see that uh Deutsche Bank's estimates are that Anthropic is only paying somewhere around $5 per GPU hour, which is appropriate. About 755 for the GB200's, about 350 for the H100's. Totally appropriate. Uh for the latest and greatest chipsets here though, the GB300, you've got a whole range over here. You got 11.45, 1175, and $6.96 at a larger purchase right here. So, it seems like when somebody comes in and wants to have a bulk order, they get like 50%. Okay, maybe not 50% off, but 6.96 divided by, you know, divided by 1155. That's 40% off, man. That's a pretty good coupon code. That's like a flash sale right there. Not to be confused with a memory. Uh but anyway, they do say there is some risk that Google could end up terminating because they're just at such an expensive level. I honestly don't think so because they own way too much SpaceX stock to terminate. Uh and then of course Vera Ruven is expected to deliver up to 10x token efficiency relative to Blackwell. Uh and those were some of the other estimates. So you know let's let's put all this together. Let's take out the whiteboard here. People always like it when I bring up the whiteboard. I think I don't I don't know. I say that, but you have to leave me Oh, you have to leave me a comment if that is true. But what I'm going to do here is I'm going to write down when I buy and when I sell. Um, if we get uh Okay, so this is going to be the sell and and I'll send an alert when and if I sell to everyone who's a course member, but this will be a trigger. Okay. If RSI on the weekly is over this number, that's going to be a sell. Okay. And then for the buy, for a long-term buy, I want to be able to acquire this uh between the two prices that I'm listing here. Above that, I'll I'll like in between that range, I'll hold. Okay. above that range uh I'll you know above the RSI I'll sell and uh and and if we get to this target that's what we'll buy ready for it right here RSI weekly exceeds 69 okay relative strength index that's not a price you could see the uh RSI right now on the weekly basis is 55 so we're accelerating here okay I don't think we're going to get to 69 anytime soon. I would probably say honestly it probably has to be 69 and 200, right? Like if it goes up to 149 tomorrow, I I mean the RSI weekly won't be there at 69, but it probably something like this. Okay, so RSI relative strength index weekly over 69 and $200 a share. At the very least, you set some trailing stops. Uh, and then the buy for for long-term investing probably somewhere around here. That's where I feel there's actually some margin of safety because I honestly I think they're going to take on a crapload of debt. Like Elon doesn't care. This is this is his mission. This is his hurrah, baby. Hurrah. So anyway, my take. I hopefully I've been transparent enough here and if I piss some people off on social media want to make some content and make fun of me. Well, that's all right. I still love y'all and I'm still going to provide my point of view. Thanks for watching. We'll see you in the next one. Goodbye. Good luck. >> Why not advertise these things that you told us here? I feel like nobody else knows about this. >> We'll we'll try a little advertising and see how it goes. >> Congratulations, man. You have done so much. People love you. People look up to you. >> Kevin Pafra there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.