According to the scriptwriters at CNBC today, SPCX is “rocketing higher.” That is the language of promoters. The IPO stock was priced at $135 and opened at $150 on Friday. Today SPCX closed at $201.80 after reaching a high of $225.64.
The price premium is entirely Elon Musk.
The stock could go to $800 as far as I care. It’s worth $60 or $70, maybe.
On a corporate health scale of 1 (worst) to 5 (best), SpaceX ranks a 1 for Profitability and Relative Value and 2 for Growth and Cash Flow. As a company, SpaceX is a dog. SPCX isn’t an investment; it’s, at best, a speculation and, at worst, a gamble.
I am a fiduciary who invests in companies, not stories or concepts. SpaceX does not come close to my Gate One filter: strong balance sheet and profitable operations. I will no more normalize the price of SPCX than I would the behavior of politicians who are not fit and proper for public office. Whatever the media says or the public generally believes is based on sentiment.
Investor sentiment, as Investopedia defines it, is the overall attitude, mood, or collective psychology of market participants. Rather than being based on concrete facts or financial performance, it is primarily driven by human emotions like optimism, fear, greed, and uncertainty.
For investors, concrete facts and financial performance are the basis of my Gate One filter. If a company doesn’t pass the Gate One test, it has no possibility of joining my watchlist, where the stock must then pass Gates 2, 3, and 4 before being purchased and held as a position in my portfolio.
Oligarchs, Private Equity, and the Integration of Public Markets
What’s happening in the big picture of market dynamics today has been recently defined by Warren Buffett as gambling at a level he has never before seen.
I have a slightly different take. I see the market today as the result of oligarchs promoting the integration of private equity and public markets, where insiders know best about valuation and convince the public to accept their version in order to exploit the ignorant public that falls for the fear-and-greed trap.
This is not a healthy market for investors.
In my career, I saw the same split from reality in 2000 and again in 2006. In 1987, 2001, and 2007, I saw what happens to investor funds that fail to act like investors and that don’t understand the importance of risk management.
I don’t expect the SEC to step in to protect the public in this case because the SEC is a government agency, and the government today sides with the private equity oligarchs who control the trillionaire and near-trillionaire oligopolist corporations. The SEC went AWOL in 2000 and again in 2006. Who knows what the newly appointed SEC head Kevin Warsh and his associated Fed governors are likely to vote on monetary policy. Inflation is soaring. That is a fact. Will they take steps to stop it, or once again go AWOL and enable the market itself to pull the plug on speculation?
The Pied Piper
I’m also saying that Elon Musk and SpaceX are the market’s pied piper, which is unfortunate because that story does not end well, and there is no need for it.
Corporate earnings worldwide are strong. Many international markets and parts of all markets are fairly priced. Opportunities to invest properly abound.
The same was true in 2006 when the authorities allowed hedge funds to trade like individuals but with zero regulation to prevent the size of financial accidents that would take the whole financial system down. These funds got too deep into soaring real estate prices, not stock market prices of investible companies. They sucked up mortgage-backed securities that were basically worthless, financed by debt they couldn’t service when the real value of those securities hit the market. That reality collapsed the global banking system in 2008.
Are we going to see the same thing happen in the next year because private equity took control of public markets and legitimate investment once again?
SpaceX is not a fit and proper public company when the public float was just $75 billion on the valuation the company placed on itself at $1.8 trillion. The authorities should never have allowed that, but instead broke their own rules to enable it.
So when the inevitable collapse of private equity finally occurs, as it did in 2007 after I was screaming from the rooftop that “Books Will Be Written” about that deplorable situation, will the authorities own up to it? They never have in the past, so I’m not expecting any change now.
What You're Actually Buying
Understand what you are buying. This is an artificial intelligence conglomerate with a rocket subsidiary, not a pure-play launch company, and it is losing money today. A lot of it.
The company lost roughly $4.94 billion in 2025, and reporting says SpaceX disclosed about a $5 billion net loss that year on $18.7 billion in sales. Although I cannot verify this, the company’s AI unit apparently burned through $7.72 billion in the first quarter this year. It’s a fact that more than three quarters of the raise was committed before it arrived: repayment of debt held by Valor Equity Partners, X Corp, and xAI investors, plus a spectrum payment to EchoStar. Total debt sits near $29.1 billion, including a $20 billion bridge loan that must be repaid within roughly six months of the IPO closing.
Morningstar puts fair value near $780 billion, roughly 48 percent below the offering mark and 65 percent below today’s closing price. Even at its ridiculous $1.8 trillion valuation, the ask works out to about 67 times sales, roughly three times Nvidia’s multiple on the same basis.
The Control Structure: No Voice for You
On governance, Musk controls roughly 82 percent of the vote on a 42 percent economic stake, and only Musk can remove Musk. Your Class A shares give you economics — a claim on future profits and losses. But they give you virtually no governance: no vote that matters, no recourse against management, and no ability to influence the board. Reporting says Musk cannot be dismissed from his roles without his own approval under the proposed structure.
The filing carries explicit language warning of significant future equity issuance. The company’s own risk factors concede it cannot yet source enough chips for orbital artificial intelligence and that its flagship chip project may fail.
This is an artificial intelligence conglomerate burning cash, offered at a valuation that requires near perfection, in which you will have no vote, and where the only check on management is management itself.
The Index Trap
On price, a thin float plus a syndicate of more than twenty banks plus a fast track into the Nasdaq 100 within about fifteen trading days creates mechanical buying that can hold the price up regardless of fundamentals — at least for a while.
Once SPCX enters the major indexes, every fund tracking those indexes must buy it, regardless of price and regardless of any governance objection. You may end up owning a slice of this founder-controlled, money-losing conglomerate, with no governance rights, not because you analyzed it and chose it, but because it landed in the index your retirement fund tracks.
The Bottom Line
The whole analysis reduces to one sentence. This is a historic, possibly era-defining company, offered at a price that requires its optionality to pay off, with a governance structure that gives the buyer no recourse if it does not, and a near-term price likely held aloft more by index mechanics than by cash flow.
This is a market that has lost its way, where hype has replaced analysis, sentiment has replaced fundamentals, and private equity oligarchs have integrated public markets to exploit the ignorant public.
SpaceX and its promoter Elon Musk are the market’s pied piper. The story does not end well. There is no need for it. Opportunities to invest properly abound elsewhere.
The only question that remains is this: when the inevitable collapse finally occurs, will the authorities own up to it? They never have in the past. I’m not expecting any change now.