r/valueinvesting
Applying Graham/Buffer/Lynch valuation on to SpaceX
Graham, Buffett, and Lynch models show SpaceX's rumored $1.75T IPO valuation is vastly overpriced, with fair value between $50B and $350B.
- Starlink possesses real competitive barriers in orbital slots and first-mover scale.
- Starlink shows legitimate fast grower dynamics with 50% revenue growth and doubling subscribers.
- Massive cash burn: $4.9B net loss, $41B accumulated deficit, and xAI burning $30B+ annually.
- Dual-class governance structure and Musk's unchecked control warrant heavy valuation penalties.
- The $1.75T IPO valuation implies 20 years of flawless execution, offering zero margin of safety.
Graham would land in the $50–100B range using net asset value and GAAP earnings discipline. The $4.9B net loss, $41B accumulated deficit, and xAI burning $30B+ annually in capex would result in no margin of safety calculation even getting close to the IPO price. He’d value Starlink’s earnings power at maybe $60–70B and net out the rest as liabilities.
Buffett would be more generous on Starlink’s moat — real competitive barriers in orbital slots, regulatory approvals, and first-mover scale — but would penalize heavily for the dual-class governance structure and Musk’s unchecked control. He’d likely isolate Starlink as a $150–200B standalone business and treat everything else as either zero or a liability, landing around $150–250B total.
Lynch would be the most forgiving, crediting Starlink’s 50% revenue growth and doubling subscriber base as legitimate “fast grower” dynamics. But even he caps PEG at roughly 2x, and at $1.75T you’re pricing in 20 years of flawless execution. He’d call it a $200–350B company at fair value — a buy at one-fifth the IPO price.
A few facts:
Starlink has a TAM ceiling. The vast majority of the people it says to target don’t even have $1 a day to live on.
Space exploration is a hoax. Nothing it can capture in space is economically viable. Maybe space tourism but that means dropping the launch cost to be close to the airline first class level.
Space data center is a hype. Nobody can show a plan for the space data center that is economically better than the ones on earth.
LEO constellations are indeed fancy new tech. You will not get the bandwidth at scale from a few geosync sats, and you certainly won't get low latency.
I'm just saying the TAM isn't as limited as people claim and never claimed this was value. Not every investment mentioned in every comment thread in a value investing sub needs to be a value investment.
Satellite backup for every cell phone in the world is an insane claim but pretty on brand for Elon pumping his stock I suppose . Their satellites have very limited bandwidth and it’s mainly the main addressable market is rural areas with relatively low density.
There's already a program running today with t-mobile. It's for backup outside cell regions so it doesn't need to support a lot of users at once.
A valuation that’s still a trillion or so? I would be curious on the math there.
1.3 trillion if I remember correctly….He published everything on YouTube, I just can‘t put a link in, otherwise the post gets deleted.
He only took the space section into consideration....no AI...so far he has been quite good....I remember he valued Intel at 18.99, I know it has become a meme now....but 18.99 was a floor for the stock.
Buffett would have told Elon to fold his operation in 2008.
Using old school valuation from folks that couldn’t wrap their mind around AI is just false sense of security.
I doubt Starlink is going to be able to double revenue due to bandwidth saturation. They are already stacking satellites 3 layers deep. And the life span of each cube is 3-4 years so that is a 100% CAPEX spend every 3 1/2 years. The satellite cell phone business won’t be able to compete with ground based antennas. Musk folded his terrible investment in AI data centers to run his failed Grok AI into SpaceX so he could goose the revenue but the refresh cycle on everything I the data centers is <3 years so more CAPEX just to stay even.
There are three promises you should never take and Musk likely makes them all.
Graham was good in his day. It’s a different world. Waiting for stocks that meet his criteria means you will be in cash forever.
I agree we live in a new ild world of Netherland tulips
I don't understand your logic. If you want value, look at telecommunications, staples, utilities. Those are stable and grounded. Growth isn't grounded and has the most volatility. Trying to examine the business model especially when it's going into uncharted areas is a fools errand. Why are you applying value-nomics to a growth stock?
Also, I don't have any shares and think it's stupid, but a lot of old money (Saudis, Blackrock) is invested and those people aren't easily fooled.
Value investing is all for growth of revenue and profits. This one growth just 15% yoy quarterly. profit minus 95% and growing 900% negatively.
Your Bachelor of art applied to stocks, pro-ping narrative over numbers. Thanks I will pass on your lessons
Saudis old money, visionaries. LOL
No one is buying spacex for fundamentals, and it was always gonna make a silly move post ipo. Will it drop eventually, maybe. But if you only ever buy the sector leader it is a buy. If you think space is some crazy TAM we have only scratched the surface of its a buy. Not my thing though