Diamond: SpaceX
It’s a rare IPO prospectus that reads like the script for a season of Apple TV’s astronaut thriller For All Mankind, but SpaceX is an unusual company with no shortage of vision to boldly go where no-one has gone before.
Pity the poor analysts who have sharpened their model-building skills over years of poring over conventional businesses. They now find themselves faced with the challenge of estimating the future value of a business — such as asteroid mining — that doesn’t even exist yet, let alone the cash flows from a colony of a million people on Mars.
The company claims that its mission is to extend “the light of consciousness to the stars”, whatever that may mean, and it certainly entails an unprecedented level of trust in the eccentric plutocrat Elon Musk, who has a governance structure that essentially guarantees him complete control of the company forever. SpaceX is investing heavily in AI hardware to catch up with Anthropic, Google and OpenAI, and the eventual plan is to build a huge network of solar-powered data centres in space.
Much depends on the success of its Starship V3 rocket, which has, however, shown a rather alarming tendency to blow up in the past couple of years.
With a valuation likely to be around $1.75-trillion, SpaceX’s IPO, closely followed by those of Anthropic and OpenAI, is guaranteed to blow up trading volumes on Nasdaq. With new rules allowing the stock to join the Nasdaq 100 a mere 15 days after listing, a tsunami of passive buying is expected to be triggered.
PRINT HEAD: Cheap, but expensive
Dog: easyJet
Rather than attempting to build colonies on Mars, budget airline easyJet has the rather simpler task of shovelling punters down to the Costa. But it has suffered a winter of discontent as it announced an interim loss of £552m, the worst first-half performance in its 30-year history, excluding the pandemic.
It has also warned that bookings for the summer are a little behind where they were at this time last year, as customers adopt a wait-and-see approach to the conflict in the Middle East and the chaos at EU borders.
Rising oil prices saw easyJet hit by £25m of extra fuel costs. However, there was better news from its holidays division, which grew customers by 22% year on year, and overall its load factor improved to an impressive 90%. It is also opening bases in Milan and Rome and introducing new flight and hotel packages in Germany.
The group was clear that it wasn’t seeing any disruption to fuel supply despite the blockage of the Strait of Hormuz, with production increases in Norway, West Africa and the Americas as well as a loosening of sanctions in Russia making up the shortfall.
The airline has a reputation for grabbing passengers with appealingly low prices and then gouging them mercilessly for allocated seats, baggage and food. These ancillary services account for about 27% of group revenue.
Despite the poor interim results and the lack of visibility for the rest of the year, the group remains optimistic about its strategy with a target of £450m of pre-tax profit by 2030 and £1bn in the medium term.
