SpaceX And The Limits Of Human Belief
Submitted by QTR's Fringe Finance
SpaceX is set to IPO today in what is expected to be the largest public offering in history. In my opinion, it may also wind up being one of the clearest temperature gauges we have for how much life is left in the current AI bubble.
I’ve said for weeks that I don’t view this as just another IPO. SpaceX now sits at the intersection of almost every narrative that has powered this market cycle: artificial intelligence, founder worship, passive flows, retail access, private-market exuberance, and investors’ willingness to pay nearly any price for a sufficiently futuristic story. And, in a couple days, options gamma.
At a reported valuation of roughly $1.77 trillion, I continue to think the setup for this name looks nothing short of completely deranged. Since I last wrote about it, another institutional investor has publicly questioned the valuation and I’ve decided what I’ll be watching closely (other than price) in the week or two after the IPO starts trading.
North Carolina state Treasurer Brad Briner, who oversees roughly $200 billion for the state’s teachers, firefighters and police officers, told CNBC that SpaceX is too expensive for his pension fund to own directly.
“There’s been a pricing issue that we’ve been concerned about for the last year or so with SpaceX. Elon Musk, an amazing entrepreneur, incredible technology to launch business, startling, etc. But at some point, things are fully priced.”
Briner said North Carolina has invested heavily in artificial intelligence startups OpenAI and Anthropic, but has avoided a direct stake in SpaceX because the valuation leaves little room for future gains.
“We’re trying to make a high-single-digit, predictable rate of return for our retirees. And we’ve got to consider valuation when we do that. And so, certainly, SpaceX at $1.75 trillion is a big valuation.”
That is a polite institutional way of saying what I’ve been saying less politely: this thing looks insanely overvalued any way you slice it.
Recall that before the valuation was reportedly brought down from the $2 trillion chatter, I called that number a trap door. I said investors were being led toward a $2 trillion trap door that I would personally avoid at all costs.
The number may have come down, but the basic absurdity remains. And most of the absurdity conveniently showered up around the time...(READ THIS FULL ARTICLE HERE).