Agathum advertising:
“On June 12, SpaceX will debut on the Nasdaq with a target
market capitalization of $1.75 trillion—more than the GDP of Spain, the
Netherlands, and Belgium combined. More than Microsoft, more than Alphabet. And
all this for a company that has never made a cent in net profit, has already
lost $4.28 billion in the first quarter of this year, and has an accumulated
accounting loss of $41.3 billion since its founding. Rockets are rising, but
numbers are falling. It's worth digging deeper into what's really going on
here, especially if you're considering investing.
Before you hit the “buy” button, stop for a minute and ask
yourself this simple question: what am I really buying? We’re not talking about
visions – who doesn’t have them? Not about Elon Musk’s charisma or the ability
to brag to friends that I’m a SpaceX shareholder. We’re talking about real
financial reality that can be calculated and verified.
AB Agathum’s bond issue is currently being distributed, and
it will last until June 10. The bonds are distributed at 9% annual interest,
with a term of 3 years. The full distribution prospectus can be found here:
https://agathum.com/investuotojams/
“But Amazon was also unprofitable!”
This is the first argument you’ll hear from SpaceX
enthusiasts, and it’s partly true. Amazon was also burning money on IPO day.
But look at the numbers more closely.
1997 Amazon went public with $148 million in revenue, a $30
million loss, and a $438 million market cap. It was a three-year-old company
that sold books online and was still finding its niche. SpaceX goes public
today with $18.7 billion in revenue, a $4.9 billion loss, and a $1.75 trillion
market cap—4,000 times the market cap that Amazon had on IPO day. Amazon was a
small company then. SpaceX is now one of the world’s largest companies by
valuation.
The difference is not just absolute, it’s structural. Amazon
was valued at 3 times its annual revenue on IPO day. SpaceX is valued at 93
times its annual revenue today—and that’s not a ratio of earnings (which don’t
even exist), but of earnings. Moreover, Amazon was growing at a rate of
double-digit quarterly growth at the time – SpaceX’s growth had already slowed
to 15% by Q1 2026.
And most importantly: Amazon’s $438 million valuation
mathematically gave it a chance to become a trillion-dollar company someday.
SpaceX’s $1.75 trillion valuation requires it to become a company that has
never been in history.
Amazon’s analogy is emotional, not analytical. It says
“someone did something like this once,” hoping you’ll stop counting too.
S-1 prospectus: official numbers
SpaceX filed its S-1 prospectus with the US Securities and
Exchange Commission on May 20. This is not a tweet from Musk, it’s an official
document (although, to be fair, it also contains dozens of photos of rockets).
Here, the company must disclose its true financial position. And when we dig
into the numbers, a few details emerge that space enthusiasts won’t tell you.
Free cash flow is minus $15.8 billion. That’s cash that’s
leaving the company much faster than it’s coming in. The accumulated accounting
deficit (colloquially, the company’s hole) is $41.3 billion. And one line
that’s not on the S-1: “retained earnings.” In 24 years, SpaceX has never been
profitable.
Warren Buffett’s explanation, made at the 2000 Berkshire
Hathaway shareholders’ meeting, is very apt:
“If you pay $500 billion for a business that pays nothing
now, in year three it has to pay you $60.5 billion a year forever to justify
that price. Every year you spend waiting for a bird in the bush means you need
more birds later.”
Let’s change the numbers to today’s numbers. If you’re
paying $1.75 trillion and want a 10% annual return, you need $175 billion in
the first year. If SpaceX makes zero profit in the first 10 years (which, given
its current trajectory, is already an optimistic scenario), then it needs to
generate $466 billion in net profit per year from year 11 onwards and forever.
For comparison: no business in human history has ever made more than ~$200
billion in profit per year. SpaceX should exceed the absolute historical record
more than twice – and maintain that level forever.
The math of growth is ruthless
There’s one rule that investors often forget in the euphoria
of scale: exponential growth gets harder as scale increases. Growing 30% from a
$100 million revenue base means finding 30 million $100 million in new revenue
is one solid customer, one new market, one favorable period of the year. To
grow 30% from $1 billion - you need $300 million in new revenue: dozens of
large customers, several countries, strong marketing. To grow 30% from $18.7
billion - how SpaceX needs to be generating $5.6 billion in new revenue in one
year. And that same pace needs to be repeated every year—from an ever-growing
base.
To reach $3.1 trillion in revenue (which is needed to
mathematically justify this estimate), SpaceX needs to grow at an average of
67% per year over 10 years—more than four times faster than it is now. The
numbers are moving in the opposite direction.
Growth for a small business can come from almost anywhere:
more marketing, new geography, favorable market conditions. But the bigger a
business gets, the harder it becomes to grow. Competition emerges, and
expectations become harder to meet. Managers start acting as if the previous
growth rate is being maintained—and that’s when empire-building usually begins:
acquisitions that are too expensive, expansion costs that are too fast. SpaceX
is already at this stage—capital expenditures are growing faster than revenues,
and losses are only increasing.
For context: Historically, no business has ever generated
more than ~2.3% of US GDP in revenue—General Motors achieved that at its peak
in the 1940s with ~50% of the auto market, while Walmart is at ~2.2% today. To
justify that valuation, SpaceX would have to command 4.8% of US GDP in ten
years—double the amount of any company in history.
The Capex Problem: When Profits Disappear Back into a Black
Hole
There’s another detail the market doesn’t want to talk about
right now—capital expenditures. SpaceX isn’t the only company with capex that
exceeds any rational level. Look at its peers:
Google, Amazon, and Meta are at least making a profit before
they spend it on AI infrastructure—and even their situation raises questions
about whether those investments will ever pay off. SpaceX is in a different
league: it’s spending what it hasn’t even earned yet. It doesn’t lend profits
to the future—it borrows from the future.
Starlink: The Only Real Business
Let’s face it: there’s one segment of SpaceX that actually
works. Starlink, a satellite internet service, served 10.3 million subscribers
in 164 countries in 2025, generated $11.4 billion in revenue (up 50%
year-over-year), generated $4 billion in operating profit, and $7 billion in
EBITDA. It’s a real, working, profitable business.
But here’s a fundamental paradox: Starlink is SpaceX’s only
profitable segment. The launch business generates just $600 million in EBITDA
and requires massive investments. The AI infrastructure segment is burning
through tens of billions. Mars — not a penny of revenue yet. SpaceX’s entire
financial logic is based on one chain: Starlink makes money, funds rockets,
rockets launch more satellites, satellites make more money—and so on, hoping
that eventually everything else will pay off. It’s a rational strategy. But it
means you’re essentially buying a telecom company that’s subsidizing a space
empire—and paying 93 times its revenue for it. The best telecom companies in
the world cost 3-5x their revenue.
And where’s all the other value? Management says their total
potential market—the so-called TAM (total addressable market)—is $29 trillion.
That includes satellite internet, rocket services, AI infrastructure, orbital
data centers, Mars colonization, and more. To give you a sense of the scale of
that number, the entire European Union—27 countries, 450 million people—created
a GDP of $21 trillion in 2025. SpaceX values its potential market at a higher
value than the entire European economy. But why not – space is infinite, so TAM
can be anything, as long as it covers the Universe.
The €10,000 Test
SpaceX’s numbers are so big that it’s sometimes hard to
grasp their scale. So let’s take a specific number – €10,000 – and see what the
different options buy in purely accounting terms: what real share of revenue
and profit your stake represents in proportion to the 2025 financial results.
Money has an opportunity cost, so you need to compare it to something.
For comparison – Grigeo, a Lithuanian paper industry group
founded in 1822, which produces hygienic paper products and cardboard
packaging, is listed on the Nasdaq Baltic exchange. We chose it not because it
is the best investment in Lithuania, or even more so in the world, but because
it is a typical, unremarkable, but profitable business with real numbers. We
could have taken any other listed company - the principle is the same.
The table speaks for itself. When you invest €10,000 in
SpaceX, your proportional ownership represents $107 in income and $28 in loss
per year - not because SpaceX is a bad business, but because the asking price
for it is so astronomically high that even $18.7 billion in income becomes a
miniature amount. Meanwhile, the same €10,000 package of Grigeo shares
represents €17,007 in income and €1,159 in net profit - real, audited, already
existing money.
Here lies a simple but often forgotten understanding: one
euro is one euro - it doesn’t matter, where it comes from. A euro earned by
selling toilet paper at a Maxima supermarket is just as real as a euro earned
by launching a rocket to Mars. The only difference is that one is already in
your account, and the other has never been. Investors often pay bonuses for
history, vision, and a charismatic leader, but price and value are always the
most important: a great business bought too expensively can destroy capital
just as effectively as a bad business.
“Value” and “growth” investing – an artificial division
The financial world likes to divide investors into two
camps: “value” investors buy cheap, slow-growing companies; “growth” investors
buy expensive, fast-growing ones. SpaceX is, of course, a “growth” stock, and
Grigeo is a “value” one (revenue grew 16% in 2025, EPS over the past three
years averaged 4% per year). Many analysts take that distinction for granted.
But this distinction is artificial and misleading. Growth is
a part of value, not a separate category. If a company is growing and that
growth generates excess profits, it is actually more valuable and the higher
price is justified. But if growth requires constant capital burning, if each
additional euro of revenue brings the company less value than was invested to
obtain it, such growth reduces the value of the company, not increases it.
SpaceX is growing. But as long as growth is financed not
with earned money but with new investors – as in this IPO – a reasonable
question arises: who is financing what? Is growth creating value for
shareholders, or are shareholders financing growth for management’s ambitions?
The answer is that there is more.
The Graveyard of History: Those Who Changed the World but
Killed Investors
In every era, there has been a company that seemed
invincible. They had a real product, real growth, real users, real visionary
leadership. But they cost so much that the math just didn’t add up. Here are a
few famous stories and Virgin Galactic ($SPCE) as one example that is
interesting in our context.
Notice the general rule: all of these businesses survived.
Cisco still dominates networking infrastructure. Peloton bikes are still
rolling. Zoom conferences are still happening. The business didn’t collapse –
the valuation collapsed. But when expectations diverge too far from reality,
the correction is usually unexpected and painful.
Here’s another subtle point worth mentioning: the stock
price often peaks long before the business peaks. A company can report
excellent quarterly results, and the stock has been falling for a year because
expectations were simply too high. A common investor wonders: how is it
possible that revenue is growing while the stock is falling? The answer:
because a stock price not only the present, but also expectations.
The Danes have already said no
Sometimes the most persuasive opinions come not from
analysts or blogs, but from institutions that manage other people’s money and
are legally responsible for it. The Danish pension fund AkademikerPension,
which manages about $25 billion worth of academic savings, has become one of
the most prominent voices in this story.
In late May, the fund said it would not buy SpaceX shares at
any price close to $1.8 trillion — either on IPO day or in the secondary
market. Chief Investment Officer Anders Schelde called the management structure
“catastrophic” and said SpaceX could not reasonably be valued at more than $1
trillion. The fund specifically rejected: Musk’s veto on his removal, mandatory
arbitration of shareholder claims, and a move to Texas, which requires holding
up to 3% of the shares to initiate certain legal actions. The fund’s
description: “the most management-friendly governance structure ever offered to
the U.S. public markets at this scale.”
Pension funds are not prone to drama, they don’t write hot
articles. They just quietly calculate the risks and make decisions. When such a
fund publicly says “no” and gives reasons, I think it’s worth listening.
“While the music is playing, you have to dance”
In July 2007, just before the financial crisis, Citigroup
CEO Chuck Prince gave an interview that has since become the most quoted
statement in the financial world: “While the music is playing, you have to get
up and dance. We’re still dancing.” A few months later, the music stopped.
Citigroup fell 90%.
In 2011 In the movie Margin Call, the character John Tuld –
a bank CEO played by Jeremy Irons – explains how it always happens: “It’s just
money. It’s made up. Pieces of paper with pictures on them so we don’t have to
kill each other just to get something to eat, it’s been like this since we
started putting value on things.” And he adds that the music always stops the
same way – only each time another person is left standing without a chair.
The SpaceX IPO hype moment feels similar. Social media is
whispering about the “once-in-a-lifetime opportunity.” Venture capitalists are
lining up. Retail investors are given as much as 30% of the IPO shares – three
times more than usual for a mega-cap IPO. That’s not what usually happens when
valuations are conservative. That’s what happens when sellers want to make sure
there are enough buyers to support a high price.
Sure, SpaceX could continue to scale successfully. Starlink
is already the world’s internet infrastructure with aggressive plans for the
future. Mars, maybe. Musk is a genius. But genius and good investment are two
different things. And $1.75 trillion is a very expensive ticket price for a
rocket that has never made a profit.
The price is the only information you really own. Everything
else—visions and projections—is provided by sellers for free. And no
coincidence.
There’s another important detail: the narrative is always
strongest before growth actually starts to slow. Investors extrapolate current
momentum into the future because the past few years have seemed extraordinary.
And the more they believe, the less predictable the future usually becomes. The
music does indeed go on. Whether it is as famous or has become a bit quieter –
decide for yourself.
Good investment.
Conflicts of interest
AB Agathum has positions in the Alphabet, Grigeo and
Berkshire Hathaway companies mentioned in this article. We may buy or sell
these shares at any time without prior notice.
This article is for informational and educational purposes.
This is not an investment recommendation. All figures are based on publicly
available data (SpaceX S-1, May 2026; Grigeo 2025 annual results). Investing
always involves risk.
About AB Agathum
AB Agathum’s activities since 2012 include the purchase,
sale, management and rental of real estate objects, as well as the management
of a diversified public securities portfolio. Currently, the company manages
~30 million euros in assets: about 24 million euros in real estate portfolio
and about 6 million euros in securities portfolio. AB Agathum has issued a
public bond issue of 2 million euros, which is listed on the Nasdaq Baltic
Exchange.”
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