Billionaire Jeremy Grantham says SpaceX IPO is 'craziest' in stock market history
Horizon Investments CIO Scott Ladner discusses SpaceX's future in the market with 'Claman Countdown.'
SpaceX is fast-tracked to the Nasdaq-100 Index, meaning that the stock performance of Elon Musk's rocket company is now directly linked to the retirement accounts, mutual funds and portfolios of millions of everyday American investors.
But self-proclaimed “permabear” markets and GMO founder Jeremy Grantham is deeply skeptical of the company's valuation and long-term investment thesis.
“Everyone is waiting to tell you that you bought the smartest IPO in human history,” Grantham told Morningstar's “The Long View” podcast. “In 50 years, they'll be talking and writing stories about SpaceX, and they'll be quoting paragraphs from the prospectus, and you'll be laughing about it.”
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“Eventually, the truth will come out, and this will be, of course, one of the most cherished historical events in history in retrospect,” Grantham continued. “It's going to be amazing, by the way, if it doesn't collapse, because it's going to require such huge advances in AI that our lives are all completely different.”
GMO founder Jeremy Grantham warns that investors will be “laughing” at future SpaceX stock valuations. (Getty Images)
SpaceX held its first IPO on June 12, and began trading at $150 a share, above its listing price of $135 a share. As of midday on Wednesday, the stock hovered around $149 per share and is down about 7% for the month to date.
Goldman Sachs, JPMorgan and Morgan Stanley posted bullish forecasts for SpaceX's valuation, Fortune reported, with price targets ranging from $205 to $300 per share.
Grantham also criticized Wall Street's advice for customers to buy SpaceX, adding that even if the market eventually warrants a higher price, society will be “anonymous” where “we'll be lucky not to be mistreated by our automaton friends.”
Elon Musk talks about SpaceX's journey and vision for the future ahead of the company's IPO.
SpaceX's rapid addition to the Nasdaq-100 Index affected its stock performance, and Grantham also said, “That means there's going to be a lot of people to buy it in any Nasdaq-y index. So there's going to be a lot more demand from sellers.”
“So with supply and demand the way it is, it's hard to imagine that the price won't go up, and maybe it will go up a lot,” Grantham said.
SpaceX's IPO raised $75 billion and was the largest IPO in history, surpassing Saudi Aramco's $29 billion IPO in 2019.
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Constellation Research founder R 'Ray' Wang discusses SpaceX joining the Nasdaq-100 and the triopoly of memory chip makers in 'Varney & Co.'
The IPO solidified Musk's status as the world's richest person, pushing his net worth to $1 trillion, a milestone no one else has reached before.
Founded by Musk in 2002, SpaceX has grown to the largest aerospace company in the world and great potential in commercial launch services. The company pioneered reusable rocket technology, helping to reduce launch costs and reshape the economics of the space industry. It is also a key contractor for NASA and the US government for public and national security operations.
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FOX Business' Eric Revell and Bradford Betz contributed to this report.
