The false—or at least highly questionable and unsubstantiated—claim is “Now with this incredible deal, SpaceX is now GAAP profitable under the existing rules” simply because Google bought $11B of compute from SpaceX. It depends on how much it costs SpaceX to provision and operate the compute, and it depends on what other expenses and revenues they have.

A quick peek at their S-1 filing shows a $5B annual loss last year. Unless SpaceX is selling compute to Google at a 50% margin (unlikely but possible), they’re not going to turn a profit because of this deal. Any profit that does result will be small.

Google’s equity investment and P/E multipliers are irrelevant and have no bearing on SpaceX’s profitability. It should also be noted that when there are no earnings (i.e. net profit), the P/E ratio is NaN. There are no “securitized profits” when there are no profits.

And I have no idea why the OP responded to my response about the math not making sense the way they did. I said “equity investments aren’t revenue”. The response strongly implied that they believed equity investments in a company are revenue. Perhaps I read that wrong, and if so, I owe OP an apology.

If there’s financial engineering going on with SpaceX, it’s not merely because they have customers who are also equity stakeholders in a company. This is as common as the day is long. The top level comment is just a red herring.

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jsnell 8 hours ago | parent [-]

Oh, if that was your objection, why did you identify the issue as "But it is not revenue for SpaceX, which is the error OP made"?

> A quick peek at their S-1 filing shows a $5B annual loss last year. Unless SpaceX is selling compute to Google at a 50% margin (unlikely but possible), they’re not going to turn a profit because of this deal. Any profit that does result will be small.

The cost of AI data centers is almost entirely the capex (10% opex, 90% depreciation), so the costs aren't meaningfully affected by whether the DC is idle or operating at full load. They're renting their DCs to Anthropic and Google for a combined $25B/year. The loss of the AI division is about $2.5B/quarter. The math is pretty obvious.

> Google’s equity investment and P/E multipliers are irrelevant and have no bearing on SpaceX’s profitability.

Indeed. But the OP did not claim that either.

	▲	otterley 7 hours ago \| parent [-]
		> why did you identify the issue as "But it is not revenue for SpaceX, which is the error OP made"? It was an error by implication. They responded with something that appeared to disagree when I responded that any profit SpaceX earns under GAAP solely depends on the revenues and expenses, and is not dependent on Google’s investment. > The cost of AI data centers is almost entirely the capex (10% opex, 90% depreciation) The operating costs might not vary much, but these boxes are not cheap to power, house, and cool. Not sure about the 10% opex claim, but am happy to see real world numbers.