Quote · Excess Returns
The Trillion Dollar Gap | Aswath Damodaran on SpaceX, AI and the Big Market Delusion
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Why valuation should use distributions instead of false precision
At 22:05 · chapter starts 20:00
Point estimates create false precision. Damodaran argues probability distributions over inputs show both a central estimate and the range of error, countering hubris. [1] — Aswath Damodaran "For companies like SpaceX where the outcome distribution is enormous, point-estimate valuations create false precision and invite overconfi…" 23:00
Damodaran's intrinsic valuation of SpaceX came in at approximately $1.3 trillion, well below the market price of $2.7 trillion at time of recording.
Damodaran's intrinsic valuation of SpaceX lands at roughly $1.3 trillion — less than half the market price of $2.7 trillion. The gap is not about doubting SpaceX's engineering brilliance or market position; it's about what the price already assumes about AI unit economics, gross margins, and future growth that haven't materialized yet.
