The Alchemy of Elon - Part 1

Space Crusade. Elon's Premium.

What's Elon doing with SpaceX and this recent $2 trillion IPO?

My working hypothesis is simple: Elon is using one of the greatest equity currencies ever to finance the world’s largest compute buildout. Space is just the vehicle that gets him there, both literally and metaphorically.

In my mind he's taking the hottest commodity in this market: compute, and going all in with other people's money (OPM).

Notice how I said commodity: Because producing compute is a capital-intensive, commodity-type business – not to mention cyclical.

Now, Elon knows this, and he knows that to make money in such a business you need to:

Have the best supply agreements
Be the lowest cost producer
...and have the market on lockdown!

We will look into each single point in the piece.

The SpaceX Moment

The culmination of the SpaceX IPO tells the story of one of Wall Street's greatest successes: Elon Musk.

And it masterfully combines the hype in compute demand under the overall AI Race – as it connects to the broader Space Race.

But it would not exist today without Elon's personality cult and "Reality Distortion Field" – reflected in the Elon Premium.

SpaceX is overvalued, obscenely overvalued, but as all great shorters know – shorting is difficult.

The uncertainty here is how that Elon Premium can be used to create future value.

To properly analyse the range of outcomes here, we will have to analyse Space Economics and AI Economics: from the Infrastructure layer to the Application and Interface layer. (Think GPUs and Data Centers, Cursor and X.)

As well as modelling the Elon premium, the Tesla relationship, the regulatory and political layer, global competition for space, orbital vs earthly compute, launch economics and more.