It Will Be Amazing If It Doesn’t Collapse
The outspoken co-founder of GMO calls SpaceX ‘the craziest IPO in the history of man.’
https://www.morningstar.com/stocks/jeremy-grantham-spacex-it-will-be-amazing-if-it-doesnt-collapse
I realized that if you’re a big firm with stockholders and all that good stuff, you can’t fight a bull market. Keynes was right. He nailed it. … The stocks are going up—you recommend them. And everyone’s lining up to tell you to buy the craziest IPO in the history of man. In 50 years, they’ll be telling and writing stories about SpaceX, and they’ll be quoting you paragraphs from the prospectus, and you will be laughing at it.
Arnott: It’s certainly a very optimistic document about market potential.
Grantham: Well, it’s much more than that. I mean, 1.7 trillion for a company that’s rolling in red ink when 90% of the projection are on the AI of their currently third-rate AI offering who’s getting kicked around the block by Anthropic and OpenAI and so on. Just amazing. And the scale of it is amazing. And the fact that JPMorgan and others are all lining up to recommend it strongly to their clients. And of course, there’ll be a huge excess of buyers over sellers by design because, for one thing, it’s Nasdaq has cheated and changed the laws of the land so that they can squeeze it into the Nasdaq index despite the fact it has no earnings, etc., etc., etc. And what that means is there’ll be a lot of people who have to buy it for any index that is Nasdaq-y. So there’ll be much more demand than there are sellers.
9 Likes
I don’t buy IPOs, it’s best to wait for the hype to settle down, but I did check its covered call potential. Fabulous! About Grantham…
GoogleAI:
Jeremy Grantham is definitively a bear. The legendary investor and co-founder of GMO is widely known as a “permabear” for his constant focus on market bubbles, historically calling major crashes like the dot-com bubble and the 2008 financial crisis. He views the modern AI boom as another speculative bubble. [1, 2, 3, 4]
While Grantham has authored the book The Making of a Permabear, his bearishness isn’t indiscriminate. His specific market stances include: [1, 2]
- The AI Bubble: Grantham identifies the massive influx of capital into artificial intelligence as a classic bubble that mirrors the frenzy surrounding railroads and the internet. He projects that market valuations could decline severely once the hype dies down. [1, 2, 3]
- Global Opportunities: Despite his overall bearish outlook on U.S. equities, he points out that selected global markets—such as Japan, European value stocks, and emerging markets—offer relatively attractive valuations. [1, 2]
- Crypto Skepticism: He has expressed strong skepticism regarding digital assets, predicting that Bitcoin will ultimately dwindle away rather than hold stable long-term value. [1]
- Space and Innovation: He has openly criticized high-flying “story stocks,” such as the hype surrounding SpaceX, citing them as signs of late-stage speculative market peaks. [1]
The AI Bubble is a valuation issue. AI is here to stay but the Power Law Distribution predicts that 80% of the players will go broke. When, if ever, will SpaceX become cash flow positive? SpaceX is already its own customer with Starlink. Musk is talking about data centers in space. Technological innovation at SpaceX has been phenomenal reducing the cost of spaceflight considerably. I would not bet against Elon Musk but I see no need to rush into an IPO.
The Captain
4 Likes
SpaceX can acquire Tesla, then Tesla shareholders can join the Mars, rather Moon, mission and forget about more Earthly endeavors like taxis with geofences.
1 Like