Their technical accomplishments are doubtlessly notable, but does the expected business growth justify this valuation? Honest question, how many things do we really need to send up there that reducing the cost to orbit by 100x will trigger Jevon's paradox and lead to 100x more launches?

I suppose "data centers in space" is the current answer but again, I'm suspicious about its feasibility.

Barring that, until we have another "killer app" besides Starlink, like a giant orbital space station or a moonbase, I'm curious whether there is enough demand.

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marcus_holmes 4 hours ago | parent | next [-]

Personally, I think that valuing businesses by their expected growth is doing really bad things to our society.

We used to value businesses by their current returns, usually dividends paid to shareholders. And we treated any statements about their future plans as interesting but not something anyone should trust.

Now we value stocks on what their price will do in the near future, because the primary return to shareholders is an increase in share price, effectively speculation rather than dividends as the method of returning value to shareholders. So we're incentivising companies to be constantly pushing their share price up (rather than paying decent dividends), which does bad things to both the company and the economy as a whole.

It's not how the system was intended to work and we find ourselves on a treadmill of constant growth that is killing everything good.

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hibikir 2 hours ago | parent | next [-]

Valuing anything by its expected, long term value is just accurate. You'd consider the longevity of, say, a garment when you purchase it. The fact that a car has a lot of miles in it, and therefore will need replacing earlier, is something that any reasonable person will consider with its valuation. We spend money educating children not because of the value of the knowledge that second, but the expected value in the future, including how it'll be useful to learn other things.

So of course we price businesses based on the expected long term value of the shares, as best as we can guess it. But the fact that a company degrades in value as it "overgrows", and engorges itself to become an entity that can't innovate or do anything efficiently in itself goes into the price too. It's not as if a place like IBM doens't want to grow: We just know they won't.

As for speculation rather than dividends, I suspect the real medium why this happens isn't just need for infinite growth: Again, as growth expectations slow down, price moderates: See Paypal vs Stripe. The issue is mroe of a principal-agent situation, as it's very difficult for the median shareholder to, say, force Zuck to stop spending money on the metaverse. And it's not just at the top level: We have a lot of incentives in organizations for people to push for more hires, even when there's very little value to be had. Anyone with a long career can see how much less tense a growing company is that one that has decided its headcount is stuck for a long time, or possibly shrinking.

Principal Agent problems are just much more annoying to put a blame on, because instead of being able to blame some exec all on their own, we get to look at ourselves too, and how what is good for us differs so much from what is good for employers too. The blame is spread thinly, and the behaviors that would lead to more efficient companies are also worse for workers. Then it's suddenly people easier to like, and we don't like where "try to be profitable at the most optimal size" takes us.

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kanwisher 3 hours ago | parent | prev [-]

Imagine valuing Google in early 2000s on its revenue and dividends. It would have nearly zero value, but if you bought then you knew it was going to be one of the biggest companies in the world.

Only boring stable companies that have no growth like Coca-Cola make sense only valuing without further growth.

	▲	marcus_holmes an hour ago \| parent [-]
		Agree, but Coca-Cola has plenty of value despite being "boring" and "stable". The post I was replying to was saying that SpaceX had no growth and therefore little value. That's a mindset that sees companies as speculative assets that are only valuable if their price is set to change in a way that a speculative profit can be made. SpaceX is making money and doing well, the business fundamentals are working out, and it is valuable because of that. If it turns into a boring, stable, company then that's a good thing - it's less likely to spend $10B of shareholder funds chasing some sci-fi pipe dream (instead of, say, spending $1B testing its assumptions first) in the hope of continuing to be valued as a "high-growth" stock.

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laughing_man 35 minutes ago | parent | prev | next [-]

Starlink seems like a no-brainer at this late date, but I remember thinking "He'll never be able to make money from internet satellites. This has to be some kind of scam. Look what happened to Irridium."

Data centers in orbit certainly seem like a pipe dream, but SpaceX certainly has the technology it needs to put them there, and that's a huge competitive advantage (like it was for Starlink) if they do turn out to be feasible.

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WalterBright an hour ago | parent | prev [-]

For many decades, the only way the commercial aviation business survived was carrying the mail.