David Rosenthal: evaluation

Transcript context

…Yes. Let's do it. There are at least three vectors that I can think of around bull and bear here. One is around Elon himself by people. You could call him the savior or you can call him an egomaniacal, work you to the bone, words we can't say on this show. David, any color that you want to add to narratives on Elon? What else could we add? It is interesting, though. Again, really until recording this episode now, I'd obviously thought SpaceX and Tesla had very different situations but I think the Elon randomness factor in SpaceX is just so much less than in Tesla probably, (1) because he has Gwynne, but then also (2) because Tesla (I think) is in a very good place now, but six months ago, Tesla was not in a very good place and SpaceX is. There's just less. Even though SpaceX is in many ways in a more politically sensitive position than Tesla, there's just less for one person to mess up right now. It's also a private company which is nice because if you could tune out all the noise around Tesla stock and only focus on the more intrinsic stuff, I think there'd be a lot less narratives period, 90% less narrative around Tesla. SpaceX has that. They also have the benefit of long term commitments with agencies and governments that can always come through on that cash to the extent that they can deliver. They have a guaranteed, stable, predictable revenue. The only thing that's not predictable is when you are going to crash that stage one into a drone ship and have to take a multi-dozen, if not $100 million, write off. That's the hard part that comes with the guaranteed contractual revenue. The other narrative that I think is important to highlight—the Elon one is one that everyone outside of aerospace talks about—the one that's more internally debated is around reusability. A lot of the SpaceX bears will tell you, that's total BS, that those things are reusable. It's total BS that even if they are reusable that it's cost-efficient. In fact, some of these people include CEOs of competing companies who when someone flags the point well. SpaceX is able to do this cheaper because they've performed this miracle of engineering of reusing the rockets. They'll say things like you don't know their cost structure. You don't know that it's actually cheaper. Examples exist in the past of the solid rocket boosters for example on the space shuttle, those white ones on either side of the big red tank. Those would fall back down to the ocean. They would be refurbished and then those would launch again. This thing theoretically has happened but the difference is with things like that is probably an order of magnitude more expensive where they basically cycle out every part, scrub it clean, and then send it back up. SpaceX is iterating toward this is the bulk case on reusability being able to just give a one or a two-day inspection on the rockets, then send them back without replacing anything, and only needing to replace things maybe every 10 times or so that you send it up. Right now, I think the maximum that they've sent a rocket back up or a stage one that back up has been three times. There are very real cost savings that you have here from not having to produce what the cost of goods sold is on a Falcon 9 but $20, $30 million rocket every single time. I think in the coming years, we'll see SpaceX actually able to get to the milestone of you just need to give it a once over and 48 hours you can fly it again. There's massive debate over whether the reusability actually provides the type of savings that SpaceX claims.…

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