Source: Fortune
Summary
Steve Eisman, known for shorting the housing market before the 2008 crash, thinks SpaceX is overvalued. He compares its revenue to Kellogg’s, which makes Froot Loops, and notes that SpaceX is valued at 100 times its revenue, while Kellogg’s is not. Eisman also criticizes SpaceX’s plans for asteroid mining and its focus on AI, which he believes is becoming increasingly capital-intensive and has no “moats” to protect providers. He suggests that companies like Nvidia, Arista, and Cisco, which supply equipment to hyperscalers, are better investments.
Our Reading
The numbers tell one story. Steve Eisman is known for his contrarian views, and his take on SpaceX is no exception. He thinks the company’s valuation is absurd, and its plans for asteroid mining and AI are unrealistic. Eisman’s skepticism is not just about SpaceX, but also about the hyperscalers’ future in AI, which he believes is becoming increasingly competitive and capital-intensive. He suggests that companies that supply equipment to hyperscalers are better investments. Eisman’s views are not just about the numbers, but also about the narrative that surrounds SpaceX and the hyperscalers.
The strategy enters a familiar phase. Eisman’s criticism of SpaceX’s valuation and plans is not new, but his views on the hyperscalers’ future in AI are more nuanced. He thinks that the hyperscalers are becoming increasingly dependent on capital-intensive AI projects, which will require them to raise more funding through stock offerings. This, he believes, will make it harder for them to maintain their competitive edge. Eisman’s views are not just about the hyperscalers, but also about the companies that supply them with equipment.
One original observation: Eisman’s views on SpaceX and the hyperscalers are not just about the numbers, but also about the narrative that surrounds them. He thinks that the hype and hysteria surrounding these companies are fogging minds and obscuring the reality of their financials and competitive positions.
Author: Evan Null
