00:00What exactly are the expectations here, Julie, because I never know what to make of really any Elon Musk company.
00:04Are people going into this looking for an actual revenue, an EPS number, or are they looking for whatever sort
00:11of a moonshot, you know, pie in the sky, you know, forecast that Elon Musk might give about where this
00:19company might actually go in the future?
00:22First of all, thank you for having me, Romain.
00:25That's a great question.
00:26I'd say off the bat, SpaceX IPO to great expectations.
00:31And it's not clear to us, and I would be remiss not to mention Nick Del Deo and Craig Moffitt,
00:37my colleagues, co-cover SpaceX with me.
00:39And our point of view is that we're probably not going to hear all that much tomorrow to help us
00:45reset those expectations.
00:46And the way that we think about projections and forecasts versus the rest of consensus is that, look, we're well
00:53below consensus on the AI and connectivity segments of the business for a number of reasons that we can talk
00:59about.
01:01And tomorrow we're probably not going to hear anything that's going to either prove or disprove this forecast.
01:07Well, we'll talk about the AI and connectivity.
01:08And just give me a sense here of how you value this company, Julie, in terms of, like, I mean,
01:13is it a rocket launch company?
01:14Is it an AI company?
01:16Is it, you know, Starlink?
01:18Is it all of the above?
01:20Um, SpaceX, in our view, sort of has almost a bit of an identity crisis.
01:26Um, if you think about it, they have so many different parts of the business.
01:30And, um, for us, the crown jewel is really the launch piece of the business without the bottleneck rocket capability.
01:37It's difficult to think of the connectivity business being, um, available.
01:42The, uh, AI orbital data centers wouldn't even be a topic of discussions without it.
01:48And then when we think about valuing a business such as this, you have the piece that we call the
01:53known knowns and known unknowns, which are really the, the, the connectivity and the terrestrial AI piece that you can
02:01put, uh, numbers around.
02:02And then you have a component in the business that's likely going to come from the launch bottleneck for all
02:08sorts of space-related TAM expansionary activities that are difficult to put a finger on today, but are absolutely necessary
02:15to include in the valuation if you believe in this category of one launch position.
02:20Give me a sense of what you expect with regards to, uh, CapEx spend and what I presume is going
02:25to be cash burn.
02:27We, we continue to expect, uh, elevated levels.
02:31Um, I think tomorrow, what you're really going to see coming out of the numbers is, um, you're, you're probably
02:37going to see a beat in the AI business.
02:39Um, and you're also going to see continued spend in that business.
02:44Uh, if you remember, um, SpaceX signed, uh, these terrestrial, uh, infrastructure as a service deals with Google, with Reflection
02:54AI, with Anthropik at significantly advantage dollar per gigawatt, uh, pricing.
03:00And they're going to continue to invest behind that business as long as you see that there is a continued
03:06bottleneck and, uh, request for compute capacity.
03:09Now, based on my colleague Nick's research, um, this pricing is two to three times what you typically see is,
03:17uh, uh, a neocloud and there's going to be a question of sustainability going forward, but tomorrow you're probably going
03:23to see that be a, a positive or a good guy.
03:26Bye.
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