SpaceX worth $21 Billion

[Mushtang]

Yesterday I read an article that said the current worth of SpaceX is now $21 Billion, which wasn't the most amazing thing in the article to me. It totally blows my mind that a private company can be worth that much money and I'm glad that they're successful because I get free entertainment every time I get to watch a launch on YouTube. Someday I hope to see one live.

Surely, I thought, that's the biggest private company in the country. But no, the article said that SpaceX is the 3rd American company on the list. I never would have guessed the other two companies.

Uber is valued at $68 Billion

AirBNB (which I had heard of but had no idea it was even a $1 Million company) is valued at $30 Billion.

Using other people's cars and houses is big business in this country!

 

[aerostadt]

A private company is held by a few individuals or partners. There is no public stock and no public quarterly financial statement is necessary or expected. Essentially, the partners report to themselves.

 

[Zeus-cat]

Value is a subjective thing; especially for a private company. If any of them were to go public the value could go up or down substantially. As a private company they can say they are worth whatever they want and it doesn't matter.

 

[boatgeek]

A private company is held by a few individuals or partners. There is no public stock and no public quarterly financial statement is necessary or expected. Essentially, the partners report to themselves.

Not to mention that the partners get to decide how the company is valued. That value could be low (say only assets and expected profit from signed contracts) or high (including brand value, potential contracts not signed, etc.). They probably valued it high based on that $21B number, but who knows.

Once a company gets out to Wall Street, it's easier to value it (number of shares times price), but that price may also be unrealistic. For example, it's hard to imagine Tesla actually being worth about the same as GM despite the really cool cars. Maybe in a few years if the Model 3 works really well, but not now.

 

[manixFan]

Wow, I hate to say it but you guys ought to stick to rockets. A private company seeking funding doesn't get to say how the company is valued. They can't just make up some number. Investors funding a private company go over the books with a fine toothed comb, talk to existing customers, competitors, look at contracts, current performance, etc. The new money pretty much sets the value on the company, the board of directors has to accept the price if they want the funding.

And SpaceX isn't owned by just 'partners' or a few individuals, it's also owned by many of the thousands of employees who have stock in it as well as the prior investors and founders. I'm in the middle of investing in a startup with a small group and even for a relatively small sum very early in the game the amount of due diligence we as investors are doing is quite extensive to make sure the company is valued correctly relative to our investment. The founders either agree to our valuation or we walk with our money.

My neighbor for the last 20 years is a venture capitalist who retired in his 50's. He will tell you that for a company like SpaceX the valuation is done as though it were a public company trading on the stock market. The hope is that at some point the company is taken public and everyone cashes out by selling their stock in the IPO. So the investors are banking on their money helping the company grow and become successful so the increased valuation at the IPO justifies the risk they took.


Tony

 

[Woody's Workshop]

Hmmm.....
I wonder if that is AFTER Musk pays all his bills and debts?
Or before...

 

[Buckeye]

For example, it's hard to imagine Tesla actually being worth about the same as GM...

Amen to that. Wall street runs on hype and momentum, not reality. How else can you explain Tesla's valuation?



https://www.businessinsider.com/tesla-value-vs-ford-gm-chart-2017-4

 

[Woody's Workshop]

I find it hard to believe that GM passes Ford.
GM is run by professional, organized criminals. I know, my cousin married into the family.
With what they pay to advertise to buy their vehicles, they should put that money into making them better so they wouldn't have to advertise.
I was an auto body tech for almost 20 years. If you gave me a GM I'd take it.
But I would drive it straight to a Ford dealership and trade it in.
Remember the Citation?
My Uncle was a QC inspector on the engine line. He almost lost his job because he red tagged every engine.
He had to let them through and were put on the line and people bought them POS's.
The beginning of the corruption. My uncle was forced into retirement.
And when GM took the bail out, all the executives paid themselves a big bonus with the money and quit and left the country.
I can't believe anyone would buy their crap and support organized crime.

 

[Zeus-cat]

Wow, I hate to say it but you guys ought to stick to rockets. A private company seeking funding doesn't get to say how the company is valued. They can't just make up some number. Investors funding a private company go over the books with a fine toothed comb, talk to existing customers, competitors, look at contracts, current performance, etc. The new money pretty much sets the value on the company, the board of directors has to accept the price if they want the funding.

And SpaceX isn't owned by just 'partners' or a few individuals, it's also owned by many of the thousands of employees who have stock in it as well as the prior investors and founders. I'm in the middle of investing in a startup with a small group and even for a relatively small sum very early in the game the amount of due diligence we as investors are doing is quite extensive to make sure the company is valued correctly relative to our investment. The founders either agree to our valuation or we walk with our money.

My neighbor for the last 20 years is a venture capitalist who retired in his 50's. He will tell you that for a company like SpaceX the valuation is done as though it were a public company trading on the stock market. The hope is that at some point the company is taken public and everyone cashes out by selling their stock in the IPO. So the investors are banking on their money helping the company grow and become successful so the increased valuation at the IPO justifies the risk they took.


Tony

I didn't know there was an ESOP; that change's things and requires financial filings of some sort. As you said, once you get investors things are reviewed closely.