If the losses are investment, why do they count against the company?

They do not count against the business — they count against the price. Spending heavily to build something valuable is often correct. But the spending has to be justified by an eventual return, and at $1.81 trillion the return required is roughly Apple’s annual profit, every year, forever. The losses are not the problem. The gap between the losses and what the price demands is the problem.

Isn’t a 41% fall exactly when a value investor should be buying?

Only if the price was reasonable to begin with. A fall tells you what other people are willing to pay; it tells you nothing about what the thing is worth. The whole discipline consists of holding those two ideas apart. A stock that has halved from an absurd valuation is a stock that is merely very expensive.

What would a fair price actually look like?

I do not know, and I am suspicious of anyone who tells you they do. That is not evasion — it is the honest output of the method. Graham’s approach requires earnings to work on. SpaceX does not have any. It can be valued by story, and it can be valued by comparison, but it cannot be valued by this method, and I would rather say so than invent a number that looks like rigor.

Why does the Tesla merger talk matter if it may never happen?

Because of what the argument for it reveals. When a bank’s stated case for a merger is that your stock makes good acquisition currency, it is telling you the stock’s most bankable feature is its price rather than its earnings. Whether the deal happens is almost beside the point. Someone thought that sentence was a selling point.

SpaceX Stock: A Big Fall That Isn't cheap | Wonderful at a Fair Price

top of page

Join us

bottom of page