I sincerely hope the market is not willing to value this sort of deal at a P/E ratio anywhere near 94.

Off the top of my head, there is a very well established business involving buying expensive things and leasing them to the companies that intend to operate them so they can sell services: aircraft leasing.

AER is the biggest player and they have a P/E ratio of, drumroll please, 6. And I expect that GPUs, despite currently looking like an appreciating asset, will actually depreciate faster than aircraft in the long run.

> Truly a brilliant deal for everyone involved.

Except for people who have pensions/investments in whole market class investments who become exposed to an over valued company with a propped up value.

> If SpaceX maintains this revenue multiplier

Yeah, if a ridiculous premise is given you'll reach a ridiculous result.

> and they get to join the index next year without a rule change.

You seem to have ignored the 50% float rule. SpaceX is proposing to go public with about 5% of the float, but S&P requires 50%.

Do we think that the market will absorb the release of 45% of the shares? I'm dubious.

SpaceX is valued at that revenue multiple because of its expected revenue growth rate.

This deal is part of that revenue growth. So the new revenue would be already partially or even fully priced-in.

Perhaps it reduces uncertainty around the growth rate, but expectations were already sky-high, as shown by the multiple!

Maybe they just need compute. Isn't that the more obvious reason. It's good that they own part of them and that's a bonus but the idea that the senior brass is orchestrating this to increase the paper value of something some division in google owns strikes me as wrong.

> SpaceX is trading at a whopping 94x revenue. This deal increases SpaceX's revenue by $11 billion per year. If SpaceX maintains this revenue multiplier, then the single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars.

That final number doesn't make sense: if you're trading shares at $X revenue, increasing the revenue by $Y multiplier doesn't increase the share price by the same multiplier.

> masterful piece of financial engineering

Love how we assign positive adjectives to unethical practices by corporates

I don’t think your math is correct. Profit is revenues minus expenses. Unless Google’s purchase of compute brings SpaceX’s revenues into profit territory (such that their total revenues exceed their expenses), SpaceX still won’t be profitable. This is accounting 101.

Google’s investment in SpaceX is completely orthogonal to the analysis. Equity investments aren’t revenue for the issuer. (Gains on sale would be revenue to the investor, in which case, this would be Google, not SpaceX.)

> Truly a brilliant deal for everyone involved.

Same thing they used to say about Lehman.

Brilliant meaning clever, like a well thought out scam.

Not brilliant meaning something actually positive for humanity in any respect at all.

This is the first time I get to understand why it is important to have big companies as your early investors.

> and makes 50 billion

assuming google sells, the stock tanks, nobody wants to buy next year

is this masterful? more like a scam

Now with this incredible deal, SpaceX is now GAAP profitable under the existing rules, and they get to join the index next year without a rule change.

Didn't they also run up against a "minimum free float" rule?

For your math to make sense, Google would have to sell its stake this year

There may be more to it than buying compute but what you're saying does not make sense for Google. More likely Google wants a good relationship with SpaceX and possibly to buoy the stock, but it's a bad NPV trade

> SpaceX is now GAAP profitable under the existing rules

We'll need to see audited financials, but if this part is true people are going to be upset. I wonder if all the people who have been acting like the S&P rules came down from the mountain with Moses will start lobbying to change them to keep SpaceX out?

And to be clear, I think SpaceX is way overvalued and I wouldn't buy it stand alone. But there are a lot of companies in the S&P 500 I wouldn't buy stand alone, yet I still own a a lot of an S&P 500 ETF. /shrug

So SpaceX is selling inference capacity. Who else is? What were the competing offers for Google and Anthropic?

So they have followed the rainbow and found some pots of gold... And then they all lived happily ever after.

Apart from the peasants of course.

> this single deal boosts SpaceX's valuation by 94 x 11 billion = $1 trillion dollars

That's not how valuations work. Also, it is not unlikely that SpaceX's valuation drops post-IPO (tech was 6.65% in the most recent trading session) due to its very rich valuation and a long tenured investor based that is probably looking to get liquid.

Google is renting compute from SpaceX because they need GPUs and SpaceX owns a huge supply of them and has excess capacity bc no one uses Grok. Google has stated that this is a temporary arrangement while they continue to build out their own capacity.

Isn’t the revenue modifier a result and not the cause?

Would you really expect a company to increase proportionally in value when they increase their revenue?

They still need 10% float and 1 year of bake time, so the rules are still doing some work for us

why revenue that barely cover the estimated revenue (and depending on assets yet to be acquired) boost valuation? is everyone an idiot?

So masterful that a random guy on HN can see right through it.

Let’s just call it what it is. It’s just basic fraud. They created a very temporary revenue injection right around the time of the IPO to defraud investors as much as they possibly can. Some businesses do this kind of thing just before they die because…why not?

Except they’re paying $30b (the deal is signed for almost 3 years), there’s no reason to believe that SpaceX maintains revenue multiples and this deal creates a trillion in value, liquid cash is not the same as pre-IPO shares. And finally, the deal comes down to $11 per hour of h100 equivalent, which is pretty much within market which experiences a severe lack of supply.

Do you really think its honest to call this Financial Engineering over Fraud?

Utterly nauseating. Why would google help prop up this company and its figurehead? Maybe this is finally the straw that breaks the camel’s back for me and google.

prompt engineering, harness engineering, agentic engineering, financial engineering

AI is really a pioneering engineering field