SpaceX Went Public - A Disaster Waiting to Happen

give me $500 when I invested into

SpaceX. I I think I would. Yeah.

>> No, I wouldn't. You would not go

through.

>> No, but I hope my index funds aren't

automatically doing it.

>> Hi, welcome to another episode of Cold

Fusion. Space X is an incredible company

with impressive achievements. It brought

the price of space launches down by 85%.

Objectively, that is astonishing. The

company also made reusable rockets

reality. Many critics said that was

impossible. If you love your engineering

and physics, yep, great company. But now

there's a massive problem. Recently,

something has gone terribly wrong with

the company. It's no longer what most

people think it is. Let me ask you a

question. What type of company do you

think SpaceX is? You might say a rocket

cargo company that operates satellite

communications. For those who are more

optimistic, you could say that SpaceX is

an exploration company who will take

humanity to the moon and beyond. Well,

according to their own S1 filing, the

documents a company needs to file before

it goes public on the stock market. Both

of those answers are wrong. Generally,

S1 filings list the industry category

that a company is under. For example,

the industry code 3760 is for

spacecraft. 3182 is for defense and

aeronautical. Other companies like

Virgin Galactic, Boeing, etc. All file

under these categories. But for SpaceX,

they filed under the industry code of

7370.

That's computer programming and data

processing. Oh, it looks like SpaceX is

officially filing to be an AI data

center company. That already raises an

eyebrow, but it's worse than that. To

understand how, you first need to

understand what a TAM is. TAM stands for

total addressable market. It's the

maximum revenue opportunity available

for a product or service if you achieved

100% market share. It basically

represents to your investors what the

market for your product is. Looking at

the prospectus, SpaceX's TAM is 28.5

trillion, approximately the size of the

GDP of the United States. Okay, that's

pretty high. But that's not the bizarre

part. The strangest part is only 15% of

this market is space and communications,

and it's written right here in front of

your face in plain text on page 11.

So 85% of the company is essentially

just a rapper for yet another LLM and

data center business like Anthropic or

Open AI. I know some of you guys have

commented that you're getting sick of

hearing about AI, but this isn't funny

anymore. It's getting really serious.

When SpaceX went public, it was the

largest launch of any company in the

history of financial markets, larger

than Amazon, Google, Alibaba, and even

Saudi Aramco. In the first few hours of

trading, SpaceX blasted past a valuation

of $2.3 trillion, instantly becoming the

seventh most valuable company and worth

approximately the same as the country of

Canada. For some people, this seemed

like a sign of strength, but for others,

it was terrifying. The signs of an

overheated market. But that's not all.

The story of the SpaceX IPO is telling

us something if we listen closely. It

shines a light on the state of the

current financial market. A corporation

is hiding an AI company losing a billion

dollars a month inside the brand of a

perfectly healthy rocket company just so

investors fund it. Let me say that

again. In 2026, a corporation can

disguise an AI company losing almost a

billion dollars a month inside of a

perfectly healthy rocket company, sell

it to investors, and get away with it.

You know, your expectation is not going

to be a good investment. And that that's

the part that I'm trying to understand.

I found that that

never been a great bet to bet against

Elon.

>> I I I'll grant you all that. If you

again look at the S1, the TAM, the total

addressable market is defined at 28.5

trillion. 85% of that TAM is an AI. So

even if everything you say about SpaceX

and Starlink is true, the entire company

is being bet on AI in terms of of its

future, not on space and and not on

Starlink.

Those are his words, not mine.

>> It's a mess. And in this episode, it's

going to be a wild ride. And a

disclaimer, none of this is financial

advice. If you want to buy the stock,

buy it. If you don't, don't. But let's

get into it.

You are watching Toll Fusion TV.

>> There's a lot of excitement about what's

going to happen.

>> Everything they can possibly do to

guarantee a pop is being done.

>> This is going to become the largest

company on the planet.

>> For over two decades, SpaceX earned its

dominance the hard and old-fashioned

way. Three catastrophic early failures,

a near bankruptcy that must described as

existential, a methodically driven slow

rise, and finally a near monopoly on

orbital launches. In a company full of

moonshots, if we isolate Starlink, it's

the only thing that actually makes

money. The Starlink internet service has

a constellation of over 9,000 satellites

and generated 11.4 billion in revenue

and 4.4 billion in operating profit in

2025. But the rest of the company is

another story. And trust me, we'll get

to that. And from here, the controversy

begins.

When people talk about the broader

market, they're referring to the S&P

500. It includes all the big names like

Apple, Nvidia, Microsoft, and Amazon.

SpaceX had hoped to fasttrack its way

into the S&P 500 immediately upon

listing. This was essentially changing

the rules. They were essentially forcing

the general public to buy the stock.

Fasttracking its way into the index

would have forced every 401k and even

pension funds to buy the stock. This

isn't just American citizens we're

talking about, but investment funds of

everyday people all around the world.

roughly 14 billion of automatic passive

fund inflows going straight into SpaceX.

It would have been a massive wealth

transfer, but thankfully the index

committee said no. Why? SpaceX was just

too risky. To join the S&P, a company

first must be profitable in its most

recent four quarters. SpaceX didn't meet

the mark. Despite posting 18 billion in

revenue in 2025, which was a 33%

year-over-year increase, it lost 5

billion for the same year. So the S&P

500 refused to play ball and now that

$14 billion in passive funds is off the

table. But the NASDAQ, they said yes. So

there still will be some passive

funding. And because SpaceX will be

fasttracked onto the NASDAQ index, major

funds will be forced to buy some shares.

>> A lot of Australian investors will be

exposed to SpaceX whether they want to

be or not.

>> SpaceX spent years dismissing the public

markets. Elon Musk had watched what

quarterly earnings obsession did to

Tesla. For a company that measures

success in orbital mechanics in decades,

impressing shareholders in a 90-day

cycle seemed like a poor fit. In fiscal

year 2023, Spac X's capex was manageable

at 42% of revenue. And in 2024, SP X was

even profitable, clearing about 791

million in net income for an

expense-heavy rocket company. That is

remarkable. So, what changed? two

letters AI. In February of 2026, Space X

merged with XAI. Now, the company's

performance was in shambles. After the

merge, the required retrospective

accounting attributed to that net loss

of 5 billion we talked about in 2025.

XAI is a company that's bleeding so much

money that it needed the public to fund

it. Starink profits alone weren't nearly

enough. Career market analysts like

Michael McCarthy say investors should be

extremely cautious. No matter how we cut

the numbers, they simply don't add up.

>> In 2025, XAI was losing $2 for every

dollar earned, burning through

approximately $28 million per day.

Quarterly losses accelerated through the

year. By Q1 of 2026, XAI's capital

expenditure alone reached $7.7 billion.

That's an annualized pace of 30.8

billion, more than double the entire

prior year. In that same period, Spac

X's capital expenditure had gone from

that manageable 42% of revenue to 215%

of revenue.

Objectively, Spac X was a great company

by itself. There was no need to shove AI

into it. Every dollar that XAI burns is

a dollar that the rest of the company

could have used. So to summarize, in one

transaction, a focused aerospace

business became a conglomerate of

rockets, satellites, social media, and a

chatbot in the form of Grock. Up next,

we'll see some of the bizarre things

happening with XAI, and then we'll take

a close look at Space X's biggest bet,

data centers in space. But first, this

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for supporting Coldfusion. Now, let's

get back to these data centers in space.

Since AI is 85% of the company's

proposed market, we're forced to look at

how XAI is performing in the LLM

landscape. So users switch between Chatg

GPT, Claude, Gemini, and Grock

consistently. Critics argue that AI is

essentially a commodity at this point.

Nobody talks about Grock being the

market leader except for users on the

Xplatform. In fact, according to some

estimates, Grock only has 0.4% 4% of

enterprise use in the AI sector.

Enterprise is where all the money is. So

that's not a good sign. All right. Well,

maybe the management team is a

star-studded lineup of smart people, so

they'll figure it out, right? Well,

perhaps not. Musk founded XAI with 11

co-founders in 2023. Today, all 11 have

left. There's zero remaining. Okay, so

that's not encouraging, but that's still

fine. They can still make money by

selling compute to other AI companies.

Well, there's some problems there, too.

The deals so far don't give an aura of

confidence.

Google entered a partnership with XAI to

lease some GPU compute for $920 million

a month. Sounds great, but when you look

deeper into the deal, there's a strange

smell. Firstly, either party can

terminate the contract with 90 days

notice. Okay, that's a bit tenuous. But

reading further, you learn that Google

has a 6% stake in XAI. And there you go,

that smell gets stronger. It smells like

yet more circular financing with a

sprinkle of revenue boosting for the

SpaceX IPO season. Okay, so what about

Anthropic? Didn't they sign a deal with

SpaceX in May of 2026? Yes, but the way

that deal came about is hilarious. It

turns out that XAI screwed up the design

for their first mega data center. For

some reason, they built it with three

different types of GPUs. This meant that

the fastest GPUs were just sitting there

idle, waiting for the slower ones to

finish. The result was that AI training

only ran at 11% of full capacity

according to sources. Seeing that it was

useless for training, XAI decided to

rent out the data center and move the

training of Grock to a new one. So,

that's not a great sign in management

competence, but okay, that's fine. The

company can still make money with a data

center in space.

SpaceX has filed with the FCC to build a

space cloud of up to 1 million

satellites. Orbital AI compute is

targeted to begin by 2028, but launching

a million satellites is a lot. The

Starlink network has 9,000 satellites,

so imagine over 100 times that number

orbiting the Earth.

2 years ago, I literally moderated a

panel on Space Junk, and I was even on

the news talking about it. Although

SpaceX's satellites have autonomous

avoidance systems, coordinating 9,000

objects and coordinating 1 million

objects are two completely different

challenges. I truly believe that if we

don't want space debris becoming a hot

topic in 15 to 20 years, sending 1

million satellites into orbit with GPU

technology that will be outdated in 3

years just isn't a good idea. Or am I

the crazy one here? Maybe there's

something I'm missing, but it doesn't

look like a financially competitive idea

at all. In fact, it seems kind of

wasteful. It seems like even in the best

case scenario, with every new GPU

release from Nvidia, the orbital data

center will become less and less

competitive over time. In the worst

case, if LLM algorithms get vastly more

efficient or AI running locally on

devices becomes the norm, that seems to

me like a huge threat to the central

thesis of a space data center. But I do

get the basic idea here. On my last

episode about data centers, I got so

many comments from you guys saying how

horrible it is living next to them. Some

of your stories were heartbreaking. So

yes, I can see people wanting an

alternative, but as for actually putting

data centers in space, I'm just not so

sure personally. So it remains to be

seen how well this works out

economically.

From an engineering point of view,

leaving aside the cost of launching that

much mass, dissipating the heat

radiation from the GPUs will be a

challenge. In space, there's no air, no

water, and no convection. So radiating

heat away becomes very inefficient. But

this is their area of expertise, so they

probably got it figured out. That being

said, there are some other things to

consider though. They are as follows.

Cosmic rays and protons can cause bit

flipping in memory resulting in errors

in calculations. And that's not great

for some of the most densely packed

transistor technology in existence. And

also, energetic solar particles can

destroy unshielded GPUs. Van Allen belt

electrons degrade solar panels over

time. And most devastating of all, solar

flares can cause massive radiation

sparks, resulting in the potential loss

of the GPUs. To fix this, each satellite

must require heavy radiation shielding

and possibly redundant systems. Without

it, the data center performance will

inevitably degrade over time. All of

this at mass and cost. But what do I

know? Obviously, I'm not sure what the

future holds. So, we'll have to wait and

see if this risky long shot plays out.

So, if orbital data centers don't end up

working in the prospectus, there's still

talk of asteroid mining and Mars

colonies. So, that's got to be worth a

lot of money, right? or even so, SpaceX

only believes that it's a subset of 15%

of their market. Remember, 85% is AI.

So, when you think about it, the company

themselves don't really believe that.

It's a bit of a shame that AI is now 85%

of SpaceX's addressable market. This is

essentially what investors are buying

according to their own filings. So, what

will happen to the stock? Well, nobody

really knows, but the general consensus

is that it's going to rocket up as it

launches. Then, there will be a slow

grind downwards.

SpaceX was a genuine world-class

aerospace company with a profitable

satellite internet business that had no

competition. If these were normal days,

they would have IPOed on the basis of

steady growth. There was zero

competition, so they could have jacked

up their prices as much as they wanted.

That should have been enough for

investors. But everyone caught the AI

bug. And now, for some reason, AI has to

be 85% of their business. XAI is

essentially a Trojan horse because in

the prospectus you have to scroll

through 11 pages of rockets and talk of

reaching the stars before you get to the

financial details that reveal that the

whole plan is to float an AI company.

Investors seem none the wiser here. Last

time I checked there were like 200

something. They're probably going to go

over to $500 million.

>> Hundreds of thousands of dollars. 35.

Really? What is he selling? He's selling

real estate on Mars. The S&P 500

thankfully said no to this, but the

NASDAQ said yes. So, look, who knows? I

could be completely wrong. A rabbit

could be pulled out of a hat and SpaceX

could rise to hundred trillion valuation

in 5 years. But as for right now, it

seems very risky and there's also a bad

financial smell. Anyway, I'm done

talking about it. I'm just going to get

the popcorn. Right. So, thanks for

watching. What do you guys think about

the SpaceX IPO? Do you think things are

going to go great and it's going to make

a lot of money or do you think it's just

a quick panicked cash grab off the back

of the AI boom? Let me know your

thoughts in the comments section below.

Feel free to subscribe if you liked it.

My name is Dogo. You've been watching

Cold Fusion and I'll catch you again

soon for another episode. Cheers, guys.

Have a good one.

Sweet for

Cold Fusion. It's new thinking.