Elon Musk: Always A Douche

[celedhring]

How much of the IPO valuation was down to pie in the sky dream visions that Musk is promising?

Iirc about 90% of the valuation comes from exorbitant estimates on future AI revenue. So people are buying into Grok.

I know absolutely no one that uses Grok in any kind of professional setting. It seems to be seriously behind Gemini/ChatGPT/Claude on that regard?

[The Minsky Moment]

Grok is behind now but it has unique future prospects.  The other models are quickly running out of human generated data to train on. Grok will be first to add all the data from the Martian internet and thus get a decisive advantage.

[Crazy_Ivan80]

Grok is behind now but it has unique future prospects.  The other models are quickly running out of human generated data to train on. Grok will be first to add all the data from the Martian internet and thus get a decisive advantage.

Not sure potatoes will add that much data

[crazy canuck]

Grok is behind now but it has unique future prospects.  The other models are quickly running out of human generated data to train on. Grok will be first to add all the data from the Martian internet and thus get a decisive advantage.

Not sure potatoes will add that much data

Musk will always have the Joe Rogan Experience content to further enrich his AI

[grumbler]

Grok is behind now but it has unique future prospects.  The other models are quickly running out of human generated data to train on. Grok will be first to add all the data from the Martian internet and thus get a decisive advantage.

Not sure potatoes will add that much data

But these are Martian potatoes!

[HVC]

That was quick. After its bumo SpaceX stock has already raced to below its opening value.

[Valmy]

Who knows what it means. It will probably go racing back up eventually.

[Sheilbh]

Maybe - I sort of thought this was an interesting comparison (via Adam Tooze) which is explicitly about Anthropic overtaking OpenAI for the first time, but also bodies SpaceX at the end. It seems to me that it's basically a meme stock (albeit underpinning a company that does more launches annually than all other companies/countries combined - for now):

Because the two firms are both young and fast-growing, they measure their notional annual turnover by multiplying the figure for the most recent month by 12—a number called annual recurring revenue (ARR). Futurum, a tech-research firm, notes that Anthropic accounts differently for sales through cloud-computing partners, which may flatter its figures. Nonetheless, the trend is unmistakable. Anthropic's ARR has raced past OpenAI's (see chart). Anthropic's valuation, too, has surpassed OpenAI's, reaching $965bn in May, compared with OpenAI's $852bn in March. Anthropic has told investors it will generate an operating profit in the second quarter, which would make it the first AI lab to do so, according to Futurum. There are other signs of strength. For all the talk of an AI bubble, Anthropic's most recent valuation, at just over 20 times ARR, should be judged in the context of recurring revenues that grew fivefold in the past five months. "It is not necessarily cheap but at these growth rates it is not insane," says Harrison Rolfes of PitchBook, a data-gatherer. OpenAI is more richly valued. The recent IPO of SpaceX valued it at more than 90 times revenues.

[mongers]

Wasn't P-to-E ratio once a thing or am I misremembering my A-level economics? 

[Sheilbh]

Wasn't P-to-E ratio once a thing or am I misremembering my A-level economics? 

I think ARR tends to be the metric more used on businesses with subscription models or (high-growth) start-ups because they normally operate at a loss for many years (and possibly it's relevant for software more generally because of the nature of its input costs?). I think P-to-E would be more for established businesses - and probably there is a point where companies move from one category to the other.

[The Minsky Moment]

Wasn't P-to-E ratio once a thing or am I misremembering my A-level economics? 

That is so 2001.  "Earnings" are for losers.

The analysts throwing around these ARR metrics are suffering from the Wylie Coyote fallacy (you defy gravity as long as your legs are moving fast enough) or trillion pound baby fallacy, depending on your preference.  Yes, if revenue grows 5x or 6x indefinitely, then these companies will eventually grow into their massive capex deficits. For all of them to make that however, entire populations will have to survive on ramen, rags, and massive amounts of AI token buys by 2030.