While many investors will clamor to get newly minted SpaceX stock into their portfolios, others are staying on the sidelines, warning that the hype, rather than business fundamentals, is inflating the market value.
Mike O’Rourke, chief market strategist at JonesTrading, said Friday’s debut “will go down in investing infamy.”
“The largest IPO in history is a perfect storm of everything that is wrong with Wall Street and the clearest signal that we are in the midst of an equity market bubble,” he said in a note Thursday. Once the stock goes public, he wrote, “the financial markets will bestow more than $3.25 trillion of equity market value… on Elon Musk’s enterprises, not because of his ability to generate profits, but because of his vision.”
O’Rourke isn’t an outlier.
Earlier this week, veteran investor James Chanos, who famously predicted and profited off of Enron’s collapse in 2001, called the SpaceX debut a “hopes-and-dreams IPO,” driven more by speculative fervor for AI and Musk.
Michael Burry, whose winning bet against the US housing market was chronicled in Michael Lewis’ “The Big Short,” has also been critical of the hype around the IPO.
“Nothing in that S-1 suggests it is worth $1 trillion let alone $2 trillion,” Burry wrote on Substack, referring to the company’s regulatory filing.
Analysts from Morningstar said that they think the company has been “significantly overvalued” at $1.5 trillion and that investors will be able to buy the stock “at more attractive levels” down the line. They value the company at $780 million.