X Prize Foundation Executive Chairman Peter Diamandis dismissed valuation concerns around Space Exploration Technologies Corp. (SpaceX) during a CNBC interview on Monday, following the company's IPO last week. Diamandis, who first invested in SpaceX in 2013, argued the company is being priced as a normal space company when it actually combines three converging businesses: launch monopoly, Starlink, and frontier AI efforts. His defense comes amid concerns from Morningstar analysts who noted last week that the SpaceX IPO is overvalued, and short-seller Jim Chanos who said the valuation aim was built on "hopes and dreams."
Diamandis told CNBC that investors are not buying just revenue but "humanity's future economy," adding that he expects revenue to scale significantly. SpaceX shares were up more than 13% in Monday's midday trade.
Starlink Generated $1.19 Billion Operating Income in Q1
Diamandis said that while everyone is fixated on SpaceX's rocket launches, Starlink is the profit engine. According to SpaceX's regulatory filings, the Starlink business's operating income in the first quarter came in at $1.19 billion.
"I think of the launch business as the moat that SpaceX has, Starlink is the cash flow engine, and the AI satellites that Elon has announced... he's shown us 11 million square feet of production, and he just showed us the AI satellites, all of these are under one ticker, and it's three exponential curves that are all accelerating," Diamandis said.
Diamandis described Starlink as becoming the new communications layer and infrastructure for the entire planet. He also added that SpaceX is now becoming a hyperscaler, citing compute contracts signed with Alphabet Inc.'s Google and Anthropic.
Diamandis Sees Tesla-SpaceX Merger as Inevitable
Diamandis said that he believes the odds of Tesla Inc. folding into SpaceX are at 100%, adding that the synergies between the two companies make a potential merger logical.
He said that Musk never wanted to be Tesla CEO, but he built it because he thought it was important. Diamandis added that Musk's focus was always on SpaceX.
"Bringing them together really consolidates them and enables him to really guide the combined company," he said.
Diamandis also cited Tesla's Gigafactory and SpaceX's Terafab projects, saying that they borrow resources and deliver products to each other.
During an interview earlier on Monday, Wedbush's Global Head of Tech Research, Dan Ives, echoed similar sentiments regarding the SpaceX and Tesla merger.
"I would be shocked if it doesn't happen just given the synergies, given the cross pollination, and also for Musk himself, I think it makes the most sense to have all that AI technology under one hood, especially given the controlling nature of SpaceX," Ives said.
SpaceX Stock Climbs 13% in Monday Midday Trade
Retail sentiment on Stocktwits around SpaceX trended in the 'extremely bullish' territory, with message volumes at 'extremely high' levels at the time of writing.
SPCX stock is up 17% year-to-date, while TSLA stock is down 9%. The S&P 500 ETF (SPY) is up 27% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 41%. The iShares A.I. Innovation and Tech Active ETF (BAI) is up 93% during this period.
FAQ
What did Peter Diamandis say about SpaceX's valuation on Monday?
Peter Diamandis dismissed valuation concerns during a CNBC interview on Monday, arguing that SpaceX combines three converging businesses—launch monopoly, Starlink, and frontier AI efforts—and that investors are buying "humanity's future economy" rather than just current revenue.
How much operating income did Starlink generate in Q1?
According to SpaceX's regulatory filings, the Starlink business's operating income in the first quarter came in at $1.19 billion. Diamandis described Starlink as the profit engine while the launch business serves as the moat.
What are the odds of a Tesla-SpaceX merger according to Diamandis?
Diamandis said he believes the odds of Tesla folding into SpaceX are at 100%, citing synergies between the two companies, shared resources between Tesla's Gigafactory and SpaceX's Terafab projects, and Elon Musk's focus on SpaceX.
