AI Summary
5 min read“The only thing that’s kind of sort of profitable is the satellites,” says Patrick Boyle, a finance professor and portfolio manager, of SpaceX. “The rocket launch business loses money. And most of the launchers are launching their own satellites. So when people point out that the satellites are profitable and the launches are unprofitable, that’s sort of like McDonald’s saying, ‘Well, we’re profitable on the hamburgers, but we’re losing money on the buns.’” That blunt assessment frames a deeper puzzle: why is Wall Street unanimously bullish on a stock that has fallen 13% in a week and 34% from its peak, despite joining the NASDAQ 100 and receiving buy ratings from 18 of 19 analysts?
The SpaceX Valuation: A Trillion-Dollar Fantasy
SpaceX went public at $135 per share, popped 18% on its first day, and has since fallen back. It now trades below its opening-day price. The company did roughly $19 billion in revenue over the past 12 months, giving it a price-to-sales multiple of about 101x. That is already extreme. But Wall Street’s price targets are far more aggressive. Goldman Sachs targets $205 (a $2.7 trillion market cap, 139x sales). JP Morgan says $225. Deutsche Bank says $255. Morgan Stanley says $300. And Raymond James says $800 — implying a $10.4 trillion market cap and a price-to-sales multiple of 542x.
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What you'll learn
- 1 (01:34) **Introduction & Guest** - Host Ed Zitron welcomes Patrick Boyle (professor, portfolio manager, YouTuber) as fill-in host; brief origin story of his YouTube channel and teaching career.
- 2 (05:14) **SpaceX IPO Performance & Valuation** - SpaceX joins NASDAQ 100, receives 18/19 buy ratings from Wall Street, yet stock falls 6% in a day and is down 34% from peak.
- 3 (09:10) **Wall Street Price Targets Are Absurd** - Host reads analyst price targets: Goldman $205, JP Morgan $225, Deutsche Bank $255, Morgan Stanley $300, Raymond James $800.
- 4 (12:10) **The "AI Company" Rebrand & Historical Bubbles** - Analysts justify valuation by calling SpaceX an AI company (3.5% market share) and comparing it to railroads, electric grid, and internet.
- 5 (18:10) **The Henry Blodget Parallel & Structural Conflicts** - Patrick explains the dot-com era conflict: analysts publicly praised stocks while privately calling them "POS" to win investment banking fees.
- 6 (22:47) **Regulatory Rollback & Systemic Risk** - Former SEC chair Arthur Levitt warned the rule change could "make Wall Street analysts corrupt again."
- 7 (30:48) **Is This a Bubble?** - Patrick is torn: sophisticated investors are skeptical, but retail may be suckered; the "bifurcation of suckers vs. non-suckers" may provide downside protection.
+ Full timestamped outline available in the app
Guests on this episode
Show Notes
Patrick Boyle, professor at King’s College London and portfolio manager, fills in for Scott. He and Ed discuss how SpaceX’s stock has traded over the past couple weeks. They break down the price targets that analysts have issued and explain why they’re concerned about potential conflicts of interest in equity research. Then, they discuss why crypto bros don’t find crypto exciting anymore and have moved onto AI. Finally, they explore why the housing market is showing new signs of strain and what it would take to get home prices back to a reasonable place.
Patrick Boyle is a professor at King’s College London and a portfolio manager with more than 20 years of experience at hedge funds, investment banks and private wealth management firms. He’s also the author of several books on finance and hosts the podcast, Patrick Boyle On Finance.
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