---
ticker: "SPCX"
company: "Space Exploration Technologies Corp."
date: "2026-10-20"
view: "Avoid"
fair_value: 81.61
price: 147.79
price_source: "market data quote, regular-session close (market data read-only: last regular trade $147.95 at 19:59:59Z, after-hours $150.95 at 20:44Z)"
price_time: "2026-10-20T20:00:01Z"
price_vs_fair_value: "+81.1%"
bear: 31.37
bull: 297.71
exit_price: 130.25
p_price_justified: "20-50%"
restated: "2026-10-26"
method: "case-spread-2026-10-24"
original_fair_value: 81.61
original_view: "Avoid"
page: "https://alpha.dming.si/research/2026-10-20-spcx"
---

# SPCX · Space Exploration Technologies Corp. · Avoid

Research report as of 2026-10-20, partly unblinded. Page: https://alpha.dming.si/research/2026-10-20-spcx

We value SPCX at $81.61 a share. The report's $147.79 price (Oct 20, 2026) was 81% above fair value: Avoid.

_Restated Oct 26, 2026 (method case-spread-2026-10-24); the report's original value was $81.61, Avoid._

| Lens | Range | Marks |
| --- | --- | --- |
| Our report | $31.37 to $298 | fair $81.61; original $81.61 |
| Our simulation | $37.41 to $260 | median $91.76 |
| Street targets (17) | $75 to $450 | average $213, median $211 |
| Price | | $147.79 |

Bands run from our bear to bull (the hollow mark is the original $81.61), our simulation's 10th to 90th percentile and the Street's low to high. Street targets forecast future prices, not value today. Market data, captured Oct 20, 2026.

| Figure | Value |
| --- | --- |
| Fair value | $81.61 |
| Price | $147.79 (market data, Oct 20, 1:00 PM PT) |
| Five-year return | -2.4% (a year, at the report's price) |
| Bear / bull | $31.37 / $298 |
| Exit price | $130 (on Dec 31, 2031) |
| Confidence | 12% |
| Price against our scenarios | The price is justified in 20-50% of our scenarios (3,000 simulated outcomes, each drawing the uncertain drivers from ranges we chose: our judgement, not a measured chance) |

**What the price needs.** Any one of these, on its own, would justify the price:

- New-capacity rent, yearly change: needs -10.0%, we have -20.0%

_This text argues the original call. The current figures are at the top._

As of 2026-10-20 · partly unblinded, three revisions unblinded (the revisions were
written after we saw the price) · blind commit `2fb2e247b` · market pass,
adversarial-review revision, Q3-call update and call-step review after it

**We rate SpaceX Avoid at $147.79.** Our central estimate of what a share is
worth today is $81.61, 44.8% below the price. The bear case (a severe but
plausible bad outcome) is $36.69 and the bull case (the matching good outcome)
$243.67. Avoid means fair value is under 0.85 times the price, a line of
$125.62; ours is well inside it, and only the bull case is above the price. The
value rests mainly on one number: how fast the rent that new AI computing
capacity earns falls each year. We assume 20% a year; the price needs 10.0%.

The central value was revised three times on 2026-10-20. The blind central,
committed before we saw the price, was $21.38. An adversarial review (a reviewer
sent to attack the work) moved it to $63.57. The Q3 call, held later that day
after the release and after our $147.79 price, moved it to $121.95. A second
review of that call step then found the exit capitalised a rent that was still
falling and that capital per gigawatt had not been refreshed for the guided
build; the central is now **$81.61** (bear $36.69, bull $243.67).
revision.txt bridges every dollar from $21.38. **The largest
change from the blind value is the rent on new capacity together with the
guided build, +$66.6, and it rests on management statements made after the
price.**

**Original call, Oct 20, 2026 (before the Oct 26, 2026 restatement)**

```
SPCX — Space Exploration Technologies Corp. — research view: Avoid
As of 2026-10-20 · partly unblinded, three revisions unblinded

Fair value today      $81.61 per diluted share (cost of equity 9.41%, beta 0.98); equity value
                      $1,066.8B on 13.072B shares (blind $21.38; $63.57 after the first review;
                      $121.95 after the Q3 call, before the call-step review)
Price                 $147.79, market data quote, 2026-10-20T20:00:01Z (regular-session close; market data
                      last regular trade $147.95, after-hours $150.95 at 20:44Z)  →  fair value
                      44.8% below the price
Five-year exit price  $130.25 on 2031-12-31 (mean of the long fade $100.05 and the outside view $160.44;
                      a 10- or 20-year fade gives $129 / $131; value-driver formula 13.7x as a check)
Five-year return      -2.4% a year from today's price on our central case (bear -16.3%, bull +20.5%);
                      under the 12% hurdle in the bear and central cases
Purchase price        $72.28 to earn the 12% hurdle; the 0.85x view line is $125.62
Bear / bull today     $36.69 / $243.67, each a consistent business outcome; case-weighted $110.90 (25/50/25, our weights)
Confidence            12% that value at the target date lands within ±20% of the central (subjective, not calibrated;
                      the yearly fall of the new-capacity rent alone moves the central from $75 at -30% to $148 at -10%)
Moat                  Starlink: the largest low-orbit network (about 75% of active maneuverable satellites,
                      S-1/A) launched on the cheapest rockets; SI: none shown yet, compute rented on 90-day terms
Market expects        an exit of $235.86 (32x our 2031 EBIT of $91.0B, or 22.5x an EBIT of $129B, 1.4 times ours);
                      on our build, the rent on new capacity falling 10.0% a year after 2027 instead of 20%
                      ($27.5B per GW-year in 2031 against our $17.2B)
Price needs           the new-capacity rent falling 10.0% a year (central -20%); no other single driver reaches
                      the price within its range
Odds in our scenarios 14% of simulated scenarios have fair value at or above the price (P(price justified);
                      10th-90th $58 to $173, median $79); a result of our ranges, not an independent measure
Key driver            rent on new capacity, yearly change after 2027: -30% is -$6.87, -10% is +$66.58 a share
Street                average target $213.04 (median $211, range $75-$450; market data, 2026-10-20);
                      revenue $109.0B in 2027 and $201.1B in 2028 against our $164.7B and $259.5B (the
                      estimates may predate the call)
```

**Terms used below.** Each report values a company three ways: the central case
is our best estimate, the bear case a severe but plausible bad outcome, and the
bull case the matching good outcome. SI is the Super Intelligence segment (the
former xAI and X), which also rents computing capacity to other AI companies.
A GW is a gigawatt of computing capacity; "rent" is the revenue a gigawatt
earns in a year, in dollars per GW-year, and "new-capacity rent" is that figure
for capacity built from Q4 2026 on. EBIT is operating profit and NOPAT is
operating profit after tax. WACC is the weighted average cost of capital (the
blended cost of debt and equity). The exit price is our estimate of the share
price on 2031-12-31, the mean of two methods: the long fade, which lets growth
and the return on new capital fall gradually toward normal levels over 15
years, and the outside view, which applies what comparable companies trade at.
"The Street" means the published estimates and price targets of Wall Street
analysts. The purchase price is the price at which a buyer would earn a 12%
yearly return (the hurdle) on our central case. The report checker (`scripts/research-check.py`) raises numbered
flags when a report shows a pattern that needs an answer; the flag number is
given in brackets next to what it means.

"What the Q3 call changed" labels each call figure as guidance from after the
price and says which were taken, discounted or left out; "What the call-step
review changed" answers the second review. The work was written by an analyst
who had seen the price, the reviewers' numbers and the call, so it is
**unblinded**: each change rests on a dated source, listed in
assumptions.md and data/q3-call-2026-10-20.txt.

Partly unblinded at the start: the IPO price is derivable from the 10-Q, and
the masked S-1/A showed the dilution line and the AI CEO Award's grant value
(assumptions.md lists each; none enters the value). Two
pre-price documents the blind pass missed are now in: Google's $920 million a
month agreement (FWP, 2026-06-05) and a $1.11 billion a month deal from
December 1 (CFO, Goldman Sachs conference 2026-09-10). The market pass
(the step after the blind commit that reads the price, the Street and the odds:
market.py, market.txt, odds.json)
changed no blind input.

**Conflict of interest, with dollar effects.** This report was written by
Claude, a model made by Anthropic. SpaceX owns xAI (merged 2026-02-02), whose
Grok models compete with Anthropic's Claude. **Anthropic is also SpaceX's main
SI customer**: in May 2026 it agreed to pay $1.25 billion a month through May
2029 for compute at COLOSSUS and COLOSSUS II, an agreement either side may end
on 90 days' notice (S-1/A, 2026-06-03), $15.0B a year of the roughly $39B a
year of announced compute contracts (Google $11.0B, the December deal $13.3B,
customer unnamed). That Anthropic is the unnamed customer at 19.5% of Q2 2026
revenue is our inference. A buyer's interest is a lower rent. The first review
found the blind choices on SI that lacked measured support all leaned one way,
low: cash costs held at 36% of revenue (+$11.19 once corrected), capital per
gigawatt from two quarters that ran ahead of nameplate (+$28.03) and the Anthropic
fee decaying as if it were spot (+$0.08). **After the price, every revision moved
the value up: $21 to $63 to $122.** That run is a reason to doubt the revisions
whichever way the writer's bias runs, and the two places a choice can hide are
the exit-year rent and the pairing of the rent path with the build. The call-step
review tested both, and both moved the value down: the exit-year pull to the
rent that earns the WACC (finding R1 below) and the refreshed capital per
gigawatt (finding R2) took the central from $121.95 to $81.61. The remaining choices with no dated support
are the 20% yearly fall of the new-capacity rent (-$6.87 at -30%, +$66.58 at
-10%), the $42B level and the $120B-a-year build, each answered below.

## The first review raised the central from $21.38 to $63.57

Labels in the tables: F1 to F15 are the first review's findings, M1 is a
method change, C1 to C5 are the steps of the Q3-call update, and R1 to R8 are
the findings of the second review (of the call step).

The review's dollar effects below are on the model as it stood before the Q3
call (central $63.57, capital per GW $34.6B falling 5% a year); the call and the
call-step review follow. The central moved from
$21.38 to $63.57 (bear $12.88 to $12.83, bull $79.70 to $191.63, case-weighted
$33.84 to $82.90). The bridge, from `revision.txt` (each step on top of the ones
above):

| Step | Central | Change |
|---|---|---|
| Blind model, rebuilt from legacy switches | $21.38 | |
| F1 Anthropic fee flat to May 2029, the rest of the fleet at -5% | $21.46 | +$0.08 |
| F2 SI cash costs: fixed base plus 25% of revenue | $32.65 | +$11.19 |
| F3 SI capital per GW $34.6B (cumulative), not $46.1B (two quarters) | $60.68 | +$28.03 |
| F7 Starlink net adds 2027 6.4M, not 6.0M | $61.16 | +$0.48 |
| F12 Cursor awards: shares already in the count, no dollar claim | $62.86 | +$1.70 |
| F14 operating cash +$0.43, leases +$0.07, cash taxes after bonus depreciation +$0.91 | $64.27 | +$1.41 |
| M1 method field `86cdb4522`: the SI depreciation correction goes to the fade only, the outside view takes reported year-five EBIT | $63.57 | -$0.70 |

Two changes carry almost all of it, and the range around them is wide.
**Capital per GW** is the input the data fix least: $27.7B (servers, networking
and data-centre infrastructure gross over nameplate at 2026-06-30, 10-Q Note 5,
which leaves out construction in progress), $34.6B (cumulative SI spending of
$58.8B over 1.7 GW, which includes it) or $46.1B (Q2 plus Q3 spending over 0.7 GW
added, when construction in progress rose from $4.6B to $12.6B in H1). We use the
middle measure; the central is $48.33 at $40B and $35.49 at $46.1B (the
reviewer's $45 sits near these). The fall from 34.6 to 26.8 by 2031 at 5% a year
is our assumption and is the same size as the rent fall. **Cash costs**: Q1, Q2
and Q3 2026 cash costs were $1.43B, $1.42B and $2.61B on revenue of $0.82B,
$2.56B and $7.56B (S-1/A, Q2 and Q3 releases): the ratio fell from 55% to 34.5%
because most of the base is fixed, not because Q3 was a lucky quarter. A flat 36%
ratio would still give $46.97.

| Finding | Decision | Dollar effect on the central, and the reason |
|---|---|---|
| F1 rent decays on all GW; no dated series | Accepted in part | Split into the contracted fee ($15.0B a year, 0.83 GW at Q3's rent, flat to May 2029) and the rest: +$0.08. The reviewer's +$8.4 assumed the whole fleet flat, which the contract does not support. The "no dated series" sentence is struck: Ornn's index (volume-weighted transacted price, fetched 2026-10-20) shows H100 $3.12 (+17.7% in 30 days) and B200 $8.83 (+14.5%), but only today's snapshot with no history, so it does not set a trend; the Anthropic fee is about $5.27 a GPU-hour. Either side can end the contract on 90 days' notice, so flat is not a guarantee. Rent flat for the whole uncontracted fleet is +$36.30. |
| F2 cash costs a flat share | Accepted | +$11.19 (25% variable above a fixed base). Measured increments are 17.5% (Q1 to Q3) and 23.8% (Q2 to Q3); 25% is above both. 20% would add $7.20, 35% would take off $14.38. |
| F3 capital per GW | Accepted | +$28.03 (see above). |
| F4 coherence | Accepted as a check, no value change | Printed in output.txt: SI 2031 after-tax operating income is 8.3% of 2026-2031 SI spending against a 9.18% WACC, and the next gigawatt at 2031 economics earns 13.4% after tax; 20% more SI spending adds $6.10, 20% less takes off $6.12, half the central spend takes off $15.25. The central no longer spends like the bull and earns like the bear. |
| F5 ranges lean to the bear | Accepted in part | Rent triangle -15% to +8%, variable cost 15% to 40%, capital-per-GW base 27.7 to 46.1; the bull's rent moves from -2% to 0% (+$26.47 on the bull); weights stay 25/50/25 because nothing dated argues for others; the "under 1%" claim is dropped, odds are 4.3% and follow from our ranges. A rising-rent bull is not set: the only evidence for rising rent is one month of spot prices. |
| F6 stacked bear | Accepted | The Anthropic fee runs flat to the end of 2028 and then goes; rents fall 12% a year only on the rest of the fleet: +$0.10 for the contract, +$9.45 in all before the method fix (bear $22.33), then -$9.50 from the method fix: the bear's reported year-five EBIT is $6.3B against $24.0B with the normalisation added back, so its outside view falls from $46.39 to $16.07; bear $12.83. |
| F7 Starlink | Accepted in part | Net adds 2027 6.4M, the Q2 to Q4 run-rate of 1.6M a quarter: +$0.48. Rejected: ARPU flat (+$2.05), because the S-1/A (2026-06-03) says management expects ARPU to keep falling and one quarter's +$3 came from developed-market adds; enterprise and government +15 points (+$8.29), because 45% growth in 2027 gives $10.6B on a path whose quarter-on-quarter growth keeps slowing, +63% (Q2), +18% (Q3), our +8% (Q4), against $9.2B annualised Q4 and $11.2B if +8% a quarter held; Connectivity capex 20% of revenue (+$1.68), because Starlink V3 has one revenue flight (Q3 release). Mobile: no dated revenue figure exists, so none is modelled outside the enterprise and government path; the $19.6B spectrum earns its WACC on about $5.1B of 2031 revenue, and $5B of it is +$2.31. |
| F8 launch | Not changed | The 10-Q (2026-08-04) says launches of Starlink satellites earn no intersegment revenue and their cost is capitalised in satellites, so there is no revenue double count. Whether Connectivity capex holds that capitalised launch cost is not stated; the Q3 10-Q (not filed at 2026-10-20) settles it, and the reviewer's bound is $1-2 a share. Space growth of 18% is +$1.90. |
| F9 horizon | Accepted as a disclosure | Ten-year explicit (same drivers to 2036, SI spending held at the 2031 level, our extension): central $70.47 (+$6.90), bear $6.68, bull $333.48. The method's exit stays at five years. |
| F10 exit multiple | Accepted as a disclosure | The multiple is not the lever: 25.2x is +$4.69, 19.6x is -$4.96; mature return 21.4% is +$1.71; growth after 2031 of 4% is -$5.64. |
| F11 young-fleet margin | Accepted | Recomputed in preview.txt: 8.4% at blind inputs, 19.9% at Q3 costs and the cumulative capital, 32.3% at 25% variable cost, 8% stock pay and the cumulative capital (26.9% at $40B). The variant view reverses; see below. |
| F12 Cursor claim | Accepted | +$1.70. The 0.273B shares excluded from Q3 basic weighted shares are inside the count of shares outstanding (inference), so a dollar claim on top counts them twice; if they are outside the count, adding them gives $62.27 (-$1.30). The Q3 10-Q settles it. |
| F13 Musk shares | Rejected | Each tranche needs a non-market condition (a million-person Mars colony or 100 TW a year of off-Earth compute, S-1/A 2026-06-03), so they stay out; counted, the central is $57.81 (-$5.76). |
| F14 bridge | Accepted | Operating cash is one month of cash costs, not of capital spending (+$0.43); operating leases are not deducted because the lease cost is in EBIT (+$0.07); cash taxes after 100% bonus depreciation (IRS Notice 2026-11) with the deferral repaid over the fade (+$0.91; the reviewer's upper bound was +$1.5). Net cash $51.0B and the EchoStar terms were confirmed. |
| F15 beta | Rejected | The ten-peer set was fixed before the blind commit; the compute peers' beta of 1.14 gives $59.30 (-$4.27) and is printed. |

## The Q3 call raised it to $121.95, on management statements made after the price

The call was held 2026-10-20 at 13:30 PT, after the 8-K and after the $147.79
price. **Every figure in this section is management guidance or press report
from after the price.** The primary source for the call is the Investing.com
transcript (in.investing.com, "SpaceX tops Q3 2026 estimates, shares jump after
hours"), which describes itself as AI-assisted. We read it through a summarising
fetch, not the raw page, so the figures below are as that summary gave them and
the wording of any quote is unchecked against the recording; the transcript
names the CFO "Brad Coffman" and sometimes "Bret", while the filings name Bret
Johnsen, so its speaker labels are not reliable. Earlier in the day we had only
Dow Jones headlines, the market data live blog and search summaries; they agree with
the transcript on every number below. Saved in
data/q3-call-transcript-2026-10-20.txt and data/q3-call-2026-10-20.txt. The contract terms
and the two contracts the blind pass missed are from primary documents or a
transcript of a conference before the price.

**What we found that predates the price.** Google agreed on 2026-06-05 to pay
$920 million a month from October 2026 through June 2029 for about 110,000
Nvidia GPUs, with capacity ramping through September at a reduced fee; either
party may end it on 90 days' notice after 2026-12-31 (FWP 2026-06-05,
`data/filings/fwp-2026-06-05-google.html`). The CFO said on 2026-09-10 that a
new hosting deal starts December 1 at about $1.11 billion a month, on "90-day
with a 90-day out, so roughly six-month commits" (Investing.com transcript of the
Goldman Sachs conference). Announced compute contracts are now about $39B a
year (Anthropic $15.0B, Google $11.0B, December $13.3B), every one with a
90-day exit. The blind model had Anthropic only. Adding the two to Q4 2026 is
worth +$0.04 (C1 below); their weight is in what they say about price per unit.

| Item (after the price unless noted) | Said | What we did | Why |
|---|---|---|---|
| Q1 2027 revenue | $33B to $37B | Taken as a test of the first quarter. Our central implies $28.5B (-14% against the low end), the bear $26.2B, the bull $32.7B | One quarter ahead from a company with 90-day contracts is the best-founded number in the call, and the central still sits under it; we did not raise the central to it because part of it is renewals and Starlink growth we cannot see. The first guide ever given; not extended to later years |
| Q4 2026 capex | $35B to $40B in total (Q3 was $19.6B) | Taken: SI $34.5B, total $37.75B | A quarter that is mostly ordered |
| Nameplate compute | almost 2 GW by late October; 2.5 to 3 GW at year end | Taken: 2.5 GW at year end, the low end of the range | Reported capacity and a near-term guide |
| Compute pricing | "slightly above the high end of the $30 to $50 per watt range" (CFO) | Read as annual revenue per watt; central $42B per GW-year in 2027, bear $40B, bull $50B; see below | The level is our judgement, set below the $50B that payback needs |
| Payback | under a year on new deployments (CFO); six months next year possible, not certain (Musk) | A check on the level, not an input | At $37.3B of capital a GW and a 75% cash margin, payback inside a year needs about $50B of revenue per GW-year |
| Renewals and spot | renewing "at higher dollars per watt, not lower"; compute rented "at effectively the spot market rate" (Musk) | Not taken as a forecast. Both are statements about the next renewal, not a series | A rent that follows the spot rate is a rent that falls when supply arrives; the central falls 20% a year |
| Contracts | mostly 90-day with a 90-day out (CFO, 2026-09-10, before the price; Google FWP; S-1/A for Anthropic) | Bear side: the new-capacity rent falls 30% a year in the bear against 20% in the central and 12% in the bull | A 90-day contract is a call option for the buyer, and the rent can reset every six months |
| Backlog | $63B, of which $17.5B deferred revenue; about $42B within a year | A test, not an input. $42B is 25% of our 2027 central revenue of $164.7B | Backlog counts enforceable commitments, and 90-day contracts have little of it; our 2027 depends on renewals and on customers we cannot name |
| 10 GW incremental in 2027 | "highly confident" (Musk), 13 GW by the end of 2027; a 20 GW power and cooling plan; "20 GW of upside" | Not taken. The central adds 3.2 GW in 2027 ($120B at $37.3B a GW) | 10 GW is about $370B at our capital per GW against $138B a year at the Q4 pace, funding is not shown, and the WSJ headline is "SpaceX Plans More Borrowing" |
| The $120B-a-year SI build in 2027 and 2028 | none; not guidance | Our extrapolation of the Q4 run-rate ($138B annualised) to $120B | The build is the second half of the largest bet in the report (R6 below) |
| ARR | $100B by the end of 2026, "based on the month of December" (CFO); AI ARR $500B to $1T by the end of 2027 (Musk) | The CFO's figure is a check on the level (about $40B per GW-year on 2.5 GW); Musk's is not used | ARR is not defined in anything we hold |
| SI operating profit | $431M reported, $1.6B before $1.2B of Cursor stock pay | Nothing new | The Q3 release's figures, already in this report |
| Compute split | roughly 50/50 internal use and third-party rental, perhaps 60/40 either way (Musk) | Not modelled | The model rents all added capacity at the new rent; internal use earns software margins, in the market's side below |

**Per watt, and the level we use.** The CFO's words: pricing is "currently
tracking slightly above the high end of the $30 to $50 per watt range"; the
range came from Mr. Musk on the Q2 call ("my guess would be somewhere between $30
and $50" for "monetization per watt"). We read it as annual revenue per watt of
nameplate, so new capacity earns $50B or more per gigawatt-year against the legacy
fleet's $18.1B. Four checks agree and we do not model the other reading: payback
inside a year on a $37.3B gigawatt needs about $50B of revenue; the CFO's $100B
of annualised revenue on the month of December over about 2.5 GW is about $40B per
GW-year; Google's $920M a month on 110,000 GPUs (FWP 2026-06-05) is about $100,000
a GPU-year, which at 1.4 to 2 kW a GPU (our estimate) is $50 to $70 a watt-year;
and the Q1 2027 guide of $33B-$37B needs about $48B on roughly 1.4 GW of new
capacity once the legacy fleet and the rest of the company are counted. What is
uncertain is the level and whether it lasts, not the unit. Our central is $42B in
2027. It is a judgement: the December run-rate is $40B, and the payback figure is
$50B; we sit above the run-rate because Musk says renewals are higher, and below
the payback figure because the contracts are 90-day and a seller states the best
price. The bracket in the odds is $25B to $55B. For and against the level: Morgan
Stanley (sell-side) has weighted pricing at $31 per watt in Q4 2026 falling to $17
in Q4 2027 (the case for a lower level and a faster fall); Ornn's spot index is rising
(H100 +17.7% and B200 +14.5% in 30 days; one snapshot).

**Testing the model against the guide.** Before the call, our 2027 revenue was
$87.1B in the central and $96.2B in the bull; a Q1 2027 guide of $33B-$37B annualises
to $132B-$148B, 1.5 to 1.7 times that. The guide justifies a different shape, not a
bigger version of the old one: the legacy 1.7 GW at about $17B, and new capacity at
$42B. The revised central 2027 revenue is $164.7B (bull $203.5B, bear $144.9B), more
than the Q1 guide annualised because the build roughly triples capacity during 2027;
the Q1 test above is the one that can be checked in a quarter. Customers must fund
$133B of 2027 SI revenue against $28B annualised in Q3; the backlog is $63B, about
$42B of it within a year. That funding is untested: no signed contract or customer
balance sheet we hold supports the remainder.

**What the guide does not settle, and the contract structure's due.** A 90-day
contract with a 90-day exit lets a buyer reprice every six months. Supply is
coming (Musk's 10 GW and 20 GW targets are for SpaceX alone). The bear therefore gives
the new-capacity rent a 30% yearly fall from $40B (2031: $9.6B, under the $20.2B
that earns the WACC at the bear's costs) and loses Anthropic at the end of 2028. The
central falls 20% a year to $17.2B in 2031 (just above the $16.6B that earns the
WACC); the bull falls 12% to $30.0B. The spread between them is the report: $74.74
at -30%, $81.61 at -20%, $148.19 at -10% (the exit-year pull to the normal rent
fades away as the rent holds, below).

## A second review of the call step cut the central to $81.61

A review of the Q3-call revision (central $121.95) found eight things. The bridge
from $121.95, from `revision.txt`:

| Step | Central | Change | Bear | Bull |
|---|---|---|---|---|
| Review's result (M1, method field) | $63.57 | | $12.83 | $191.63 |
| C1 Google at the full fee from October and the December deal, in Q4 2026 | $63.61 | +$0.04 | +$0.04 | +$0.02 |
| C2 Q4 capex $34.5B for SI and 2.5 GW at year end (legacy single rent) | $66.48 | +$2.88 | +$0.63 | +$5.93 |
| C3 new capacity earns $42B (bear $40B, bull $50B) per GW-year in 2027, falling 20% (30%, 12%) a year | $99.09 | +$32.61 | +$2.32 | +$185.81 |
| C4 SI build at the Q4 run-rate: 120, 120, 110, 100, 100 (bear 100, 40, 15, 10, 10; bull 140, 140, 130, 120, 110) | $133.08 | +$33.99 | +$2.47 | +$83.31 |
| C5 growth after 2031 of 4% (bear 0%, bull 8%) | $121.95 | -$11.13 | -$2.05 | -$42.73 |
| R2a capital per GW refreshed: (58.8 + 34.5) over 2.5 GW, $37.3B, not 58.8 over 1.7 GW | $108.19 | -$13.76 | -$2.11 | -$35.29 |
| R2b capital per GW no longer falls 5% a year (bear 3%, bull 7%; bull now falls 3%) | $86.35 | -$21.84 | -$1.28 | -$47.74 |
| R1 exit-year new-capacity rent pulled to the rent that earns the WACC (bull set to zero) | $81.61 | -$4.74 | +$23.85 | $0.00 |
| R1b release review: the same rule applied to the bull (47% at its -12% a year), no exception | $81.61 | $0.00 | $0.00 | -$97.26 |
| Revised | $81.61 | | $36.69 | $243.67 |

The largest change from the blind value (the checker's large-move flag, flag 1) is the pair C3 and C4, +$66.6.
After the call-step review, the largest single move from $121.95 is R2b, -$21.84.

| Finding | What we did | Effect |
|---|---|---|
| R1 (high). The exit capitalises 2031 EBIT that the model had falling | New `Case.normalisation`: the exit-year new-capacity rent is pulled to the rent that earns the WACC on that year's gigawatt ($16.6B in the central on $37.3B of capital, $20.2B in the bear), on the gigawatts added since 2026, after tax. It goes to both halves of the exit (the method takes `normalisation` in the fade and the outside view). The pull is full for rent changes of -20% or worse and fades to zero at -5%, one rule for all three cases. The call-step version exempted the bull; the release review removed the exception (R1b), since the bull's own rent falls about 12% a year, which the rule pulls 47% of the way | Central -$4.74; bear +$23.85 (its 2031 rent of $9.6B is below the $20.2B that earns the WACC, so the pull goes up: a rule that only cuts would be a bias); bull -$97.26 with the exception removed. After R2 the central 2031 rent ($17.2B) is already close to normal, so the exit is not on a peak; EBIT does fall from $119.6B in 2029 to $91.0B in 2031 as the rent does, and on our ten-year extension it rises to $155B by 2036 |
| R2 (mechanical). Capital per GW divided Q3's $58.8B by 1.7 GW after the build had been added | Refreshed to (58.8 + 34.5) over 2.5 GW, $37.3B (the Q4 flow alone is $43B per GW added). The yearly fall is dropped: no dated source shows it, and third-party estimates put a Rubin-class gigawatt near $50B (SemiAnalysis) | R2a -$13.76, R2b -$21.84 (central). At $43.1B the central is $79.53 (-$2.09) and at $50B $77.99 (-$3.62), so the base is not the lever once the fall is gone; the fall was |
| R3. Drop the alternative reading of the per-watt figure; justify the $42B level | The per-watt figure is modelled as annual revenue per watt only; the Q1 test and four checks are in the section above. $42B is below the $50B payback needs and above the $40B December run-rate; both are named | No value change |
| R4. Re-source the call | Investing.com transcript read (through a summary), CFO name flagged, Musk's renewal and spot statements and the 2.5 to 3 GW and 13 GW figures added. The $120B-a-year build for 2027 and 2028 is relabelled our extrapolation of the Q4 run-rate | The backlog figure of about $42B within a year is now from the transcript |
| R5 (judgement). A 20% yearly rent fall with a build at 86% of the bull's is not coherent when the marginal gigawatt earns well over the WACC | After R2, the central pairs them: the marginal 2031 gigawatt earns 10.0% after tax against a 9.18% WACC (the central 2031 rent $17.2B against $16.6B that earns the WACC), so supply stops where the rent reaches normal. That is the pairing we print as chosen. The other pairings, printed in market.txt, are below | See the table below |
| R6. C3 and C4 as one bet | They are: the rent a new gigawatt earns, and how many are built at it. Together +$66.6 from the blind value; neither is checked against a dated series | Stated in the decision block and below |
| R7. Plain sentence on direction | Written in the conflict paragraph: every revision after the price moved the value up ($21 to $63 to $122); R1 and R5 test the two places a choice can hide, and moved it down | |
| R8. Disclose the compute-peer beta and the customer funding | Compute peers' Blume beta 1.14 gives $76.64 (-$4.98). $133B of 2027 SI revenue must be funded by customers against $28B annualised in Q3; $63B of backlog, about $42B within a year; the rest is untested | Disclosures |

**Rent and spend paired** (market.txt; central value; 2031 marginal-gigawatt return):

| Pairing | Value | 2031 rent | Marginal return | GW |
|---|---|---|---|---|
| A (chosen): $42B falling 20% a year, spend as guided | $81.61 | $17.2B | 10.0% | 16.4 |
| B: rent persists, falling 10% a year, spend 1.15x (supply answers the return) | $164.45 | $27.6B | 24.7% | 18.6 |
| B2: rent falling 10% a year, spend as guided | $148.19 | $27.6B | 24.7% | 16.4 |
| C: sell-side path (Morgan Stanley), 2027 rent $24B falling 20%, spend as guided | $69.76 | $9.8B | -0.4% | 16.4 |
| C2: the same rent, spend 0.6x (build cut to the return) | $55.66 | $9.8B | -0.4% | 10.5 |

A is coherent by the rule that the build stops where a new gigawatt only earns its
cost of capital. B is coherent in the other direction (rent that holds invites
more building, 24.7% return) and is the market's world: the price needs a fall of
10.0%, and B2 at that fall is $148.19, the price. C is the sell-side's world, with
the build left running into a rent below cost, and C2 is its coherent version.

## What SpaceX sells: Starlink makes the money and Super Intelligence is the bet

SpaceX reports three segments, and their segment operating income adds up to
the company's; there is no corporate line (Q3 2026 release).

- **Connectivity (Starlink)** sells satellite broadband. 13.6M consumer
  subscribers paid $69 a month on average in Q3 2026; enterprise, government
  (Starshield) and mobile customers paid $2.13B in the quarter, up 91% in a
  year. Revenue was $5.25B in Q3 at a 45.1% operating margin, after
  depreciation of satellites over five years. This is the business that makes
  the money: $5.2B of the $0.7B nine-month operating income (the other two
  lost money).
- **Space** sells launches. Customers bought 12 launches in Q3; 23 more were
  internal, mostly SpaceX's own satellites, whose launch costs are capitalised
  in Connectivity rather than sold. Space revenue was $1.77B, and the segment
  lost $7M after $1.2B of research and development, mostly Starship. Customer launches have been
  flat at 33-45 a year since 2023 (S-1/A).
- **Super Intelligence (SI)** is the former xAI and X: Grok, the X
  advertising business, Cursor (bought 2026-08-14) and, since May 2026, compute
  rented to other AI companies. SI revenue jumped from $0.8B in Q1 to $7.56B in
  Q3, of which about $3.75B is Anthropic (inference from the contract) and
  $0.61B is six weeks of Cursor. SI earned $0.43B, or $1.66B before Cursor
  award expense, on $16.4B of capital spending in the quarter.

The company spent $48.1B on capital in the first nine months of 2026, $40.0B of
it on SI, against $13.1B of operating cash flow. The $85.7B IPO (June 2026)
and $25B of notes pay for it: cash and securities were $89.9B and debt $38.8B
at 2026-09-30, including $13.3B of sale-leaseback debt owed to a fund run by a
SpaceX director (10-Q note 17). Backlog was $47.5B at 2026-06-30 (10-Q note 3),
56% to be recognised within a year, and $63B at 2026-09-30 with $17.5B of it
deferred revenue (the call, after the price); it counts enforceable contracts and
does not say how much of the Anthropic fee lies beyond a 90-day notice, so it is
not a model input.

## Q3 2026 revenue nearly doubled from Q2, with no guidance to beat

Before the call SpaceX gave no numeric guidance, so there is no guidance record to measure;
the four reported quarters are the record. Against Q2: revenue $14.58B against
$7.81B, operating income $2.79B against -$0.14B, Starlink adds 1.6M against
1.7M, ARPU $69 against $66, nameplate compute 1.7 GW against 1.4 GW, launches
35 against 38. The vendor's figures (EPS $0.35, revenue $14.575B) match the release;
The vendor's statement shows revenue as 0, an market data error.

## Where we differ from the blind report: SI's margin depends on which rent it earns

The blind report argued that Q3's 21.9% SI margin (before Cursor award
expense) was a young fleet's, and that a fully depreciated gigawatt would earn
8.4%. That used $46.1B of capital per GW and a 34.5% cash-cost ratio that is
mostly a fixed base. Recomputed from the same Q3 rent of $18.1B per GW-year, with
depreciation at 1/5.5 of capital (preview.txt): 19.9% at Q3's cash costs and
$34.6B of capital, 29.5% at a 25% variable cost, 8% stock pay and $37.3B of
capital. At the Q3 call's $42B per GW-year the margin is 50.8%, and 27.5% at the 2031
central rent of $17.2B. The model's 2031 SI margin is 25.5% (the fixed cost base
and the depreciation on the whole fleet are in it). The rent on new capacity, not
the cost, decides the value, and the only evidence for it after the Q1 guide is
management's own word. Because the exit rent is the one that earns the WACC at the
case's own costs, the cost assumptions now matter through the path, not the exit:
variable cost at 35% moves the central by only -$1.39. That is a consequence of
the exit rule, not a finding about costs.

In the revised central, SI is $66.9B of the $91.0B of 2031 operating income,
Connectivity $22.6B and Space $1.5B; the blind central had Starlink as two-thirds.
The value rests on whether compute rent holds. The company's own case, that it can
rent compute at $50 a watt or more while the cost of a gigawatt falls, is the
bull.

## The forecast: 2031 operating income of $91.0B in the central case

`model.py` builds each segment from its own drivers; `output.txt` prints every
year. All drivers are listed with sources in `assumptions.md`.

| 2031 (US$ B) | Bear | Central | Bull |
|---|---|---|---|
| Revenue | 101.0 | 320.7 | 637.6 |
| Starlink consumer subscribers (M) / ARPU ($) | 28.9 / 49.5 | 40.4 / 58.0 | 46.9 / 67.5 |
| Connectivity revenue / operating income | 31.5 / 11.3 | 50.5 / 22.6 | 69.0 / 35.1 |
| Nameplate compute (GW) / SI revenue | 6.4 / 63.8 | 16.4 / 262.7 | 20.4 / 558.0 |
| New-capacity rent per GW-year, 2027 / 2031 | 40.0 / 9.6 | 42.0 / 17.2 | 50.0 / 30.0 |
| SI operating income | -9.1 | 66.9 | 286.0 |
| Space revenue / operating income | 5.6 / -1.6 | 7.5 / 1.5 | 10.6 / 3.9 |
| Operating income | 0.7 | 91.0 | 325.0 |
| Year-five NOPAT after the rent and depreciation corrections | 52.4 | 78.8 | 197.5 |
| Net cash (debt) at the exit | 113.2 | 209.6 | 746.3 |
| Exit price: fade / outside view / mean | 54.44 / 62.65 / 58.55 | 100.05 / 160.44 / 130.25 | 345.60 / 432.17 / 388.88 |
| Fair value today | 36.69 | 81.61 | 243.67 |

The bear is one world, with its timing separated: the contracts are honoured
through Q1 2027 (the guide holds), Anthropic serves notice in 2028 and leaves
with that year, the new-capacity rent falls 30% a year and the legacy fleet's 12%,
SpaceX cuts SI spending to $10B a year by 2029, Starship slips and Starlink
grows more slowly at lower prices. Its 2031 SI loss is depreciation on the
2026-2028 build and a rent of $9.6B; the exit then does two things for it: the
depreciation correction replaces the harvested fleet's depreciation with the steady
state of $10B of spending (+$27.2B of NOPAT in the fade), and the rent pull lifts
the exit-year rent to the $20.2B that earns the WACC (+$24.7B). Both are the
method's year-five rules applied the same way as in the central, and together they
are why the bear is $36.69, not $12. The bull is management's case nearly as stated: $50B
per gigawatt-year and 12% a year off it, building $140B a year to 20.4 GW, SI at 51%
margin and 2031 revenue of $638B, with the exit rent pulled by the same rule as the others: 47% of the way from
$30.0B to the $12.9B that earns the WACC at the bull's costs (-$83.0B of NOPAT). There
is no exception for the bull. Its $243.67 is above the price; it needs every input at
once, we do not expect it, and at 25% it contributes $61 of the case-weighted $110.90.

**Exit.** The method's default, unchanged: the mean of the long fade and the
outside view at the peers' 22.5x EV/EBIT on reported year-five EBIT, with the
new-capacity rent pulled to normal in both and the SI depreciation correction in
the fade only (method commit `86cdb4522`). SpaceX has no fiscal-year multiple of its
own (losses before the IPO), so the ten peers' median stands alone. The central
outside view ($160.44) is 60% above the fade ($100.05). The input behind the gap is
the return on new capital: the peers' multiple prices peer economics (the compute
peers' median after-tax return on capital is 35%, peers.txt), while the fade prices
SpaceX reinvesting 29% of its profit at the 13.9% mature return to grow 4% a year,
13.8x year-six NOPAT, after starting at the volume-only 26.7%. The depreciation
correction is +$11.4B of central NOPAT in the fade ($104.5B of SI depreciation to the
$90.0B that year-five SI spending implies at 4% growth); the rent pull is -$4.5B in
both. The multiple itself is not the lever (+$5.56 at 25.2x, -$5.89 at 19.6x).
The ten-year extension (same drivers to 2036, SI spending held at the 2031 level,
the new-capacity rent floored at the normal rent after 2031) gives the central
$104.66, the bear $39.61 and the bull $139.59: EBIT rises to $155B in the central by
2036, so the five-year exit is not capitalising a peak.

**Bridge.** Free cash flow is kept to the exit and negative free cash flow is
borrowed at 6.03% (central net debt peaks at $17.6B in 2027, 0.17x EBITDA,
against a 3.75x covenant). Cash taxes follow 100% bonus depreciation on 90% of
capital spending (IRS Notice 2026-11) with the $10.8B opening loss carryforward
used at 80% of taxable income; the deferral is repaid evenly over the 15-year
fade, $22.5B of present value deducted at the exit in the central. Less one
month of year-five cash costs as operating cash ($9.6B) and the litigation accrual;
plus digital assets. Operating leases are not deducted (the lease cost is in
EBIT). Today: no Cursor claim, because the unvested Cursor shares are in the count
(below). Shares 13.072B: today's class A and B less Mr. Musk's 1.302B restricted
shares, whose vesting needs a million-person Mars colony or 100 TW of space data
centres (S-1/A), plus the diluted increment and the EchoStar shares. Counting the
restricted shares would lower the central value to $74.22.

**The share count, checked at the market pass** (market.txt; 10-Q Q2 2026
cover and notes 12-14, Q3 release). Every class: class A 8.240B and class B
5.339B outstanding at 2026-09-30; class C was reclassified into A and all
preferred converted at the IPO, so none is left (the 10-Q cover at
2026-07-28 shows 7.696B A and 5.485B B). Mr. Musk's 1.302B restricted class B
are issued and inside the class B count: the SpaceX CEO Award (1.000B, 15
tranches from a $500B to a $7.5T market cap, each also needing a
million-person Mars colony) and the AI CEO Award (0.302B, 12 tranches from
$1.065T to $6.565T, each also needing 100 TW a year of compute off Earth). We
leave both out because each tranche needs its non-market condition. The 10-Q
excludes 1.331B performance awards from diluted shares, so about 0.029B
belong to others, with no terms given; not counted. Options (0.472B) and RSUs
(0.122B) at 2026-06-30 are in the count through Q3's 0.533B diluted increment;
counting them gross instead is a small change (-$0.38). EchoStar's 0.262B
shares are counted now, with its 2027 cash. Q3 basic weighted shares (11.942B)
are about 0.27B fewer than the Q3 additions would give if all counted in basic,
so about 0.27B of the new shares look like unvested restricted stock, most
likely the Cursor holders' time-vesting awards (our inference). The blind model
charged them twice, in the divisor and in a $22.2B dollar claim; the revision
drops the claim (+$1.70). If they are outside the count, adding them gives
$79.95 (-$1.67). The Q3 10-Q's equity note, not filed at 2026-10-20, settles
it. Central equity value is $1,066.8B ($81.61 x 13.072B); at the price, $1.93T.

**Cost of equity.** 9.41% from the method's 5.29% risk-free rate and 4.20%
premium and a 0.98 beta, the Blume-adjusted median of the ten peers. The five
compute peers alone give 1.14 (cost of equity 10.08%) and $76.64 (-$4.98): printed
because the compute business is the value, and we kept the ten-peer set fixed
before the blind commit. A beta of 0.60 gives $97.54.

### The drivers that move the value most

| Driver | Central | Change | Per share |
|---|---|---|---|
| Rent on new capacity, yearly change after 2027 | -20% | -30% / -10% | -$6.87 / +$66.58 |
| Rent on new capacity in 2027 (per GW-year) | $42B | $30B / $50B | -$7.84 / +$5.15 |
| SI capital spending | $100-120B a year | 20% lower / higher | -$9.19 / +$9.20 |
| SI capital spending | $100-120B a year | half | -$22.96 |
| SI capital per GW, yearly change | 0% | -5% | -$12.72 |
| SI capital per GW, 2026 base | $37.3B | $43.1B / $50B | -$2.09 / -$3.62 |
| SI variable cost, share of revenue | 25% | 35% / 20% | -$1.39 / +$0.68 |
| SI cash costs a flat 36% (the blind assumption) | | | -$24.55 |
| Rent on the legacy 1.7 GW, yearly change | -5% | -10% / flat | -$2.49 / +$3.04 |
| Growth after 2031 | 4% | 8% | +$8.02 |
| Enterprise and government growth | 45% falling to 15% | 10 points lower / 15 higher each year | -$3.40 / +$7.72 |
| Starlink net adds in 2027 | 6.4M | 4.5M | -$2.14 |
| Connectivity capex share in 2031 | 25% | 32% | -$2.16 |

The fall in the rent has a lopsided effect (-$6.87 against +$66.58) because the
exit rent is pulled to normal when the rent falls and left alone when it holds. At
-10% the pull is a third of the way and the exit capitalises a rent of $27.5B.
Spending more on SI now raises the value at the margin (20% more is +$9.20): the next
gigawatt at 2031 economics earns 10.0% after tax against a 9.18% WACC (a $17.2B
rent against $16.6B to earn the WACC). That conclusion is the rent assumption
restated.

## The price needs the rent on new capacity to fall 10.0% a year, not 20%

At $147.79 the market pays $1.93T for our 13.072B diluted shares (the vendor's
market cap, $1.95T, uses 13.18B). Holding our central operating path and
cost of equity, the price needs an exit of $235.86 on 2031-12-31 against our
$130.25: $2.90T of enterprise value after the central exit bridge, 32x our
2031 EBIT of $91.0B, or 22.5x an EBIT of $129B, 1.4 times ours and 40% of our
2031 revenue (market.txt).

The figure that closes the gap is the yearly fall of the new-capacity rent. On
our build (16.4 GW in 2031), the price needs the rent to change -10.0% a year
after 2027 instead of -20%, which ends 2031 at $27.5B per GW-year instead of
$17.2B; SI revenue is then $409B, total revenue $467B and EBIT $189B at 40%. Building
more helps when rent holds and hurts when it falls (market.txt; the pull to normal
fades to zero by -5%):

| SI capex vs central (2031 GW) | rent -30% a year | -20% | -10% | 0% |
|---|---|---|---|---|
| 0.50x (9.1 GW) | $54.9 | $58.7 | $94.0 | $176.1 |
| 1.00x (16.4 GW) | $74.7 | $81.6 | $148.2 | $303.2 |
| 1.15x (18.6 GW) | $80.7 | $88.5 | $164.5 | $341.3 |
| 1.50x (23.8 GW) | $94.6 | $104.6 | $202.4 | $430.3 |

At a 10% yearly fall the price needs the 2027 rent at $41.9B, our central, so the
two readings of the gap are the same one: if the rent falls 10% a year from $42B,
the price is fair.

**The Street through our model** (Street analyst estimates, read 2026-10-20; the
file does not say whether they include the call). The Street's revenue is below
ours: $109.0B in 2027 and $201.1B in 2028 against our $164.7B and $259.5B, and its
EBITDA is $35.1B and $67.0B against our $102.1B and $165.5B. Its EBIT field does
not reconcile with its own EPS (2028 EPS $4.76 is $62.2B of net income against a
$16.7B EBIT); our 2028 after-tax operating income is $85.6B. The Street's average target
($213.04, $194.71 discounted one year at 9.41%) needs, on our model, the new-capacity
rent to fall 8.4% a year after 2027, everything else central. If the estimates predate
the call, the Street is catching up to the guidance and its target is the stale half
of a moving number; either way our central is below both the price and the Street.

**The odds** (odds.json): the Monte Carlo puts P(fair value at least the price)
at 14%, with a 10th to 90th of $58 to $173, a median of $79 and a mean of $99, the
median 3.5% under the central. The mean is above the central and the median below it
because the rent-change triangle (min -40%, mode -20%, max +5%) is wide on the side
where the value is steep: it explains 76% of the variance alone, the legacy rent change
36%, SI spending 23%, capital per GW's yearly change 17%, variable cost 15%. The
simulation uses the same exit rule as the central, so a persistent-rent draw is not
pulled back to normal (the pull fades to zero by -5%). The +5% top is Musk's "higher
dollars per watt, not lower" taken as a rising rent; the first version of the range
stopped at -5%, which left management's own statement outside it, and the result then
was 2.9%. These odds follow from our ranges and are not an independent check. The
blind version of this paragraph said "under 1%"; the review showed that no case had
rising rent and that the result held by construction.

**Is a risk charged twice?** (the checker's flag for a value far below the price, flag 3). SI depreciation is charged once, and the
bear's harvest depreciation is corrected in the fade only. The new-capacity rent
pull to normal sets the exit rent, not a cost, so it does not repeat the rent path's
fall. Stock pay is a cost in each year and the share count is held flat, so it is
not also diluted. Debt for the build is charged once, as interest in the net cash path.
The Cursor awards were charged twice in the blind model (shares and a dollar claim)
and are now charged once. Anthropic leaving is in the bear only, with its timing
separated from the rent fall. The deferred tax is charged once, as a present value
at the exit. Short contracts are charged once, in the rent's yearly fall; they are
not also in the cost of equity. Known limit: with the exit rent set by the WACC at
the case's own costs, cost assumptions affect the value through the path and not the
exit.

## The case for the price, argued as hard as we can

The price is right in a world where SpaceX's new compute keeps earning close to
what the CFO says it earns today. Built in full, on our own model:

1. **The rent holds.** The price needs the new-capacity rent to fall 10.0% a
   year, against our 20%. The case for it: frontier models earn more per token
   as they get better, the buyer pays for finished capacity, and the CFO says
   pricing is above the top of last quarter's range with payback in under a year.
   Musk says renewals come "at higher dollars per watt, not lower". Google
   ($920M a month) and the unnamed December customer ($1.11B a month) signed
   after Anthropic's $5.27 a GPU-hour, at higher implied rents, and the Ornn B200
   index read $8.83 on 2026-10-20 (one snapshot; H100 +17.7% and B200 +14.5% in
   30 days). If compute stays scarce through 2031, rent holds with the value of
   what it trains, and the build answers it: B in the pairing table is $164.45.
2. **The software sits on top.** Grok, X and Cursor (about $4.7B a year, bought
   2026-08-14) earn software margins on capacity SpaceX owns. Our model
   lumps them with rented compute at one fixed-plus-variable cost structure; the
   Street's EPS needs SI cash costs near 19% of revenue. Musk puts internal use at
   about half of compute. If most SI revenue becomes Grok and Cursor subscriptions
   rather than rent, a lower cost ratio is reachable, but the exit rule makes the
   cost ratio matter little to the central (35% variable cost is -$1.39).
3. **Scale and cost.** SpaceX builds data centres fast (COLOSSUS II's first
   cluster in 91 days, S-1/A) and owns its power and launch; Musk says it may
   deploy power and cooling faster than all others combined. At the Q4 pace of
   build (1.15x) the central is $88.5; at his 10 GW for 2027 it would be higher
   still if the rent held.
4. **Options the model leaves out.** Starship has one revenue flight; the AI CEO
   Award's 100 TW condition says management means data centres in orbit;
   Starlink Mobile on EchoStar spectrum closes in 2027; its revenue sits only
   inside the enterprise and government path. Musk's merger comments about a
   Tesla combination (no timeline given), and chips from a Terafab by 2028, are not
   modelled.
5. **The record.** Starlink went from nothing to 13.6M subscribers and a 45%
   margin; the people now building SI built that.

**Why we still say Avoid.** The central ($81.61) is 44.8% below the price and
$44 under the 0.85x line ($125.62): this is not a margin call. The case-weighted
value ($110.90) is also below the price; only the bull ($243.67) is above it. The
value is a bet on one number, the yearly fall of the rent on new capacity, between
-10.0% (the price) and -20% (ours), and the evidence for either is one CFO statement,
one quarter's guide and one CEO remark against contracts that the buyer can end in 90
days; the sell-side's own path (C) is lower than ours. The purchase price ($72.28) is
51% under the price. We hold Avoid with 12% confidence. **What settles it:** Q1
2027 revenue against $33B-$37B (our central implies $28.5B), SI revenue per average
gigawatt-year in Q4 2026 and Q1 2027, the price of the first contracts that renew
after their 90 days, SI capital per GW added over the same quarters, and two quarters
of SI cash costs under 25% of revenue.

The bear could be too kind or too harsh: it keeps Starlink growing and leaves the
800 MHz spectrum purchase (price not disclosed) out, assumes the guide holds
through Q1 2027, and is lifted by the same exit rule as the central.

## What would change the view

| Date | Event |
|---|---|
| about 2027-02-25 | Q4 2026 results (the earnings calendar's estimate; not announced); the first Q1 2027 read |
| first half 2027 | 800 MHz spectrum purchase closes (Q3 release) |
| about 2027-11-30 | EchoStar spectrum closes: up to $8.5B cash and 261.8M shares (S-1/A) |
| any quarter | notice under the Anthropic, Google or December agreements (90 days) |
| May 2029 | the Anthropic agreements' end date; June 2029 the Google agreement's |

Falsifiers, each moving the view toward a case:

- Q1 2027 total revenue below the $33B low end of the guide moves us toward the
  bear; at or above $37B toward the bull ($243.67).
- The first renewals of the 90-day contracts priced below $30B per GW-year, or
  any notice ending the Anthropic, Google or December agreements, is the bear's
  world.
- Renewals at or above $50B per GW-year with 2027 capacity delivered: the rent
  persists and the exit rent should not be pulled to normal (central $148.19 at a
  10% fall).
- SI cash costs above 40% of SI revenue for two quarters (Q3 34.5%).
- SI capital per GW added above $45B in Q4 2026 or Q1 2027 (central $37.3B; the Q4
  flow is $43B) is -$2 to -$4 a share at a $43-50B base.
- Q4 2026 capex outside $35B-$40B, or nameplate compute under 2.3 GW at the year end.
- Starlink net adds under 1.2M a quarter for two quarters, or ARPU under $62.
- Connectivity capital spending still above 30% of Connectivity revenue in
  2027 while V3 satellites fly on Starship says Starship's cost cut is late.

## Next results preview: Q4 2026

Due about 2027-02-25. The company has not announced the date; 2027-02-25 is the
Earnings calendar's estimate and is not confirmed. The company gave a
Q4 capex range ($35B-$40B) and a Q1 2027 revenue range ($33B-$37B) on the call
(after the price); it gives no other numeric guidance. Values from `model.q4_2026()`;
ranges and reasons from `preview.py` (`preview.txt`).

| Metric | Value | Low | High | Reason |
|---|---|---|---|---|
| Total revenue ($B) | 19.24 | 16.3 | 22.0 | Starlink adds at the Q2-Q3 pace, a full quarter of Cursor, Anthropic at $3.75B, Google's full $0.92B a month, the December deal for one month |
| SI segment revenue ($B) | 12.31 | 9.2 | 13.5 | Q3's $7.56B plus Cursor days, Google's step-up (the part already in Q3 is not known and may double count), $1.11B for December |
| Income from operations ($B, GAAP) | 2.12 | 0.3 | 4.0 | Q3 cost ratios less $2.33B of Cursor award expense |
| Diluted EPS ($) | 0.16 | -0.05 | 0.5 | Operating income plus about $0.07B net interest, no tax, 12.81B shares |
| Starlink consumer subscribers (M, year end) | 15.2 | 14.8 | 15.7 | 13.6M plus 1.6M, the Q3 pace |
| Total launches in Q4 | 36 | 30 | 42 | 40, 38, 35 in Q1-Q3 as Falcon 9 cadence falls |
| Capital expenditures ($B) | 37.75 | 35.0 | 40.0 | The company's own guide, $35B-$40B (after the price) |
| Nameplate compute (GW, year end) | 2.5 | 2.3 | 3.0 | Almost 2.2 GW by the end of October plus two months at Q3's pace; the call guided 2.5 to 3 GW (after the price) |

The most important is SI revenue, because it carries the key driver. Q4's
guide for Q1 2027 is the test: our central implies $28.5B. A $1B surprise in Q4 SI
revenue is $1.90B of revenue per gigawatt-year, 10.5% of the legacy level; held
as a new level it moves fair value by $1.31 a share, while as a one-quarter
event it is worth $0.06 (output.txt). The new-capacity rent is the number to
watch, and the first quarter in which the 90-day contracts have renewed
once is the first read of it.

## Sources

- SpaceX S-1/A, filed 2026-06-03 (EDGAR, CIK 1181412)
- SpaceX 10-Q for the quarter ended 2026-06-30, filed 2026-08-04
- Q2 2026 release, 8-K exhibit 99.1, 2026-08-04; Q3 2026 release, 8-K exhibit 99.1, 2026-10-20
- 8-K on the Cursor merger closing, 2026-08-14
- Free writing prospectuses: Google cloud service agreement, 2026-06-05
  (`data/filings/fwp-2026-06-05-google.html`); CFO interview, 2026-06-09
  (`data/filings/fwp-2026-06-09-cfo.html`)
- Market data statement endpoints for SPCX and ten peers, and the peers' market data profile betas, fetched 2026-10-20
- Exit anchor history, `data/exit-anchor.json`, `scripts/research-anchor-data.py`, fetched 2026-10-20
- Method inputs (risk-free rate, premium): `method.py`, Damodaran 2026-10-01
- Market pass, read 2026-10-20 after the blind commit: market data quote (20:00:01Z),
  Market data profile, Street analyst estimates and price-target consensus; market data
  `get_equity_quotes`, read-only (20:44Z); all in `data/market/`
- Revision, 2026-10-20: Ornn GPU rental price index,
  https://data.ornn.com/gpu-cloud-price-comparison (`data/ornn-2026-10-20.txt`);
  IRS Notice 2026-11, interim guidance on the additional first year depreciation
  deduction (`data/irs-notice-2026-11.pdf`)
- Q3 call, 2026-10-20, after the price: Investing.com earnings call transcript
  (AI-assisted; read through a summary; CFO name mislabelled), Dow Jones Newswires
  headlines via news feed, the market data live blog; Goldman Sachs
  Communacopia, 2026-09-10 (Investing.com transcript); Q2 call 2026-08-04 (Motley
  Fool transcript); all in `data/q3-call-transcript-2026-10-20.txt` and `data/q3-call-2026-10-20.txt`. Third-party figures used as
  counter-evidence, not inputs: Morgan Stanley's per-watt path (sell-side, as reported),
  SemiAnalysis's cost per gigawatt (as reported). Not read: the recording and any 8-K slides.

## Report-checker flags and how each was answered

- Flag 1 (large net move, +$60, from the blind value): the largest change is the pair C3 and
  C4, new capacity at $42B per GW-year and the build at the Q4 run-rate, +$66.6;
  it rests on the CFO's per-watt figure and Q4 capex guide, management statements
  made after the price, tested against payback arithmetic, the Q1 2027 guide and
  Google's fee per GPU. After the call-step review the largest single move is
  the capital-per-GW fall removed (-$21.84).
- Flag 3 (value -44.8% from the price): "Is a risk charged twice?" above.
- Flag 4 (outside view 60% above the fade): the return on new capital, under "Exit".
- Flag 14 (simulated median under central): the median of $79 is 3.5% under the
  $81.61 central because the rent-change triangle is wide on the side where the value
  is steep; see "The odds".
- Flag 16 (P(price justified) low): 14%, a product of our ranges; the world where the price
  is right is the rent falling 10.0% a year, under "The case for the price".
- Flag 17 (fair value against the discounted target): the Street's target needs an 8.4%
  yearly fall of the new-capacity rent; see "The Street through our model".
- Flag 18 (narrow range against targets): the ranges were widened in the review revision
  and again for the call (new-capacity rent -40% to +5% a year, $25B to $55B in
  2027) and again here (capital per GW $30B to $50B, yearly change -5% to +5%).
- Blind-commit warning (the price 147.79 appears in the blind data): the match is a CSS
  coordinate, `left:147.79pt`, in the S-1/A's HTML, not a price.