Stock Market History Is About To Be Made (Get Ready)

Key Concepts

• S1 Filing: The registration document filed with the SEC for companies going public.
• Total Addressable Market (TAM): The total revenue opportunity available for a product or service.
• Grok: An AI chatbot developed by xAI, integrated into the X platform.
• Colossus 1 & 2: Data centers used by xAI for training AI models.
• Starship: SpaceX’s flagship heavy-lift launch vehicle.
• Starlink: SpaceX’s satellite internet constellation.
• Free Float: The portion of shares that are publicly tradable.
• Lockup Period: A window of time after an IPO during which insiders are restricted from selling their shares.
• NASDAQ 100 Fast Entry Rule: A policy change allowing large-cap companies to enter the index shortly after their IPO.

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1. The Misleading Nature of the SpaceX IPO

The speaker, Alex, argues that the SpaceX IPO is structured to deceive retail investors. While the company is marketed as a space exploration pioneer, the S1 filing reveals a different reality:

• Industry Classification: SpaceX filed under code 7370 (Computer Programming and Data Processing) rather than aerospace or defense codes.
• TAM Discrepancy: Only 1.3% of SpaceX’s $28.5 trillion TAM is related to space. 93% is attributed to AI, placing it in direct competition with established giants like Google, OpenAI, and Anthropic.
• The "Space" Narrative: The S1 filing uses imagery of rockets and Mars missions to appeal to investor sentiment, despite the bulk of the business model shifting toward AI and data processing.

2. The xAI Acquisition and Financial Risks

A significant portion of the video focuses on the acquisition of xAI, which the speaker characterizes as a "wealth transfer" mechanism:

• Product Performance: xAI’s flagship product, Grok, has seen low enterprise adoption. Research indicates that enterprise users spend less than half the time on Grok compared to ChatGPT.
• Regulatory and Legal Liabilities: The filing lists ongoing investigations regarding the generation of illicit and non-consensual images by Grok. SpaceX has set aside $530 million to cover potential legal claims.
• Infrastructure Inefficiency: The Colossus 1 data center, which houses 220,000 Nvidia GPUs, reportedly operated at only 11% compute capacity due to the use of mixed GPU generations (H100s, H200s, and Blackwell chips).
• Inter-company Transactions: SpaceX is purchasing Tesla products (Mega batteries and Cybertrucks) at full sticker price, effectively using shareholder capital to support other Musk-owned ventures.

3. The "Space" Business: Performance and Reality

• Rocket Business: Despite being 24 years old, the rocket business generated $4.1 billion in revenue but incurred a $657 million operating loss in 2025.
• Starship: While critical for the company's long-term vision, Starship accounts for only 14% of total capital expenditure (capex). The speaker notes that SpaceX spent 60% more on data centers for xAI than on its entire space business combined.
• Starlink: Identified as the "crown jewel," Starlink is the only profitable segment, with $11.4 billion in revenue and $7.2 billion in operating profits. However, investors cannot buy Starlink in isolation; they must buy the entire SpaceX entity.

4. Governance and Shareholder Rights

The speaker highlights extreme risks regarding corporate governance:

• Voting Control: SpaceX utilizes a three-class stock structure. Elon Musk owns 42% of shares but controls 85% of the voting power.
• Performance-Based Pay: Musk was granted $175 billion in performance-based shares. The speaker notes that these can be used as collateral for personal loans even before milestones (like a Mars colony) are met.
• Legal Waivers: The charter includes a "corporate opportunity carve-out," allowing insiders to pursue business opportunities elsewhere without offering them to SpaceX. Furthermore, shareholders waive their right to a trial by jury.

5. The NASDAQ 100 and Index Fund Exposure

The speaker warns that the NASDAQ 100’s recent rule changes facilitate this IPO:

• Fast Entry Rule: Allows SpaceX to enter the index 15 days after the IPO, forcing index funds (and the retail investors who own them) to buy the stock regardless of its valuation.
• Free Float: With only 4–5% of shares being publicly tradable, the price is highly susceptible to manipulation by insiders.
• Lockup Evasion: Unlike standard IPOs, SpaceX insiders have shortened lockup periods, allowing them to sell shares shortly after the first earnings report or if the stock price rises by 30%.

Synthesis and Conclusion

The speaker concludes that SpaceX is currently valued at 94 times revenue—significantly higher than high-growth tech companies like Palantir—despite lower margins and slower growth. The combination of a misleading business focus (AI vs. Space), extreme insider control, and the forced inclusion into the NASDAQ 100 makes this IPO a high-risk scenario for retail investors. The speaker advises avoiding the stock and suggests alternatives like the Vanguard Information Technology ETF (VGT) for those seeking exposure to the tech sector without the risks associated with the SpaceX IPO.