SpaceX\u2019s stock-market debut has now minted CEO Elon Musk as the world\u2019s first trillionaire, but not everyone is convinced of the company\u2019s valuation. Among the skeptics is famed investor Michael Burry, who recently revealed that he is choosing neither to buy in, nor to wager against SpaceX, despite his skepticism.<\/p>\n
In a post on Substack, (1) the investor, best known for predicting the U.S. housing collapse before the financial crisis, said he examined several options trades betting against the rocket-and-AI company, but has decided to pass.<\/p>\n
Must Read <\/p>\n
Put options are among the most common ways investors bet against a stock. They give the holder the right to sell shares at a predetermined price, called the strike price, before a set expiration date. If the stock falls below that level, the investor profits.<\/p>\n
Burry says a put option with a $100 strike price expiring in December 2028 was trading at approximately $25. Similar contracts expiring in June 2027 and December 2026 were priced around $13 and $6.75, respectively.<\/p>\n
\u201cTempted by that one. But no thank you,\u201d Burry said of the December 2026 option, adding that \u201cwith any luck,\u201d SpaceX stock will settle somewhere in the mid-$200s.<\/p>\n
SpaceX\u2019s stock has been trading between $190 and $200 per share following its highly anticipated debut on June 12. If Burry were to buy put options with a $100 strike price, he\u2019d be betting that the stock would fall below $100 \u2014 a drop of more than 50%.<\/p>\n
Despite his reputation for bearish (2) (or pessimistic) investing, Burry emphasized that he currently has no position in SpaceX.<\/p>\n
\u201cI am not involved with SpaceX now. Neither short nor, ahem, long,\u201d he said.<\/p>\n
The investor is no stranger to betting against popular companies. (3) A regulatory filing from November revealed the billionaire\u2019s hedge fund purchased five million put options on Palantir, a surveillance tech company that has had an incredible run on the stock market, and one million on giant computer chip manufacturer Nvidia, among others.<\/p>\n
Debate over SpaceX\u2019s valuation <\/p>\n
Burry hasn\u2019t just decided to pass on wagers against SpaceX. He\u2019s also calling into question its nearly $3-trillion market valuation, calling it \u201cfundamentally a small space company.\u201d<\/p>\n
Burry argues the company is still too niche to be able to dwarf many established businesses, fortunes and national economies, pointing out that it still generates less than $20 billion in annual revenue (4).<\/p>\n
\u201cWith that $2.8 trillion, SpaceX\u2019s market cap could buy Page, Brin, Bezos, Zuckerberg, Ellison, Arnault, Huang, Buffett, and Ortega and still have $1 trillion left over,\u201d Burry said, naming off a cadre of billionaires.<\/p>\n
SpaceX debuted with an IPO priced at $135 a share. (5) It sold more than 555 million shares to raise roughly $75 billion, making it the largest IPO in history.<\/p>\n
Burry isn\u2019t alone in his concern about SpaceX\u2019s valuation. There has been heated debate over whether the company is overvalued. On Wednesday, the stock fell for the first time (6) since the company went public, breaking a three-session streak. The reversal raised questions about whether the frenzy around the stock can be sustained.<\/p>\n
Musk, however, doesn\u2019t seem too concerned. In a post on X, (7) he said he believes SpaceX could generate $1 trillion of revenue in 2030.<\/p>\n
Read More: About 1 in 5 Americans over 50 has zero retirement savings. Here’s why it’s not too late<\/a><\/strong><\/p>\n Echoes of the dot-com bubble <\/p>\n Burry\u2019s skepticism extends beyond SpaceX. He has previously warned the rapid rise of artificial intelligence-related stocks bears similarities to the dot-com bubble of 1999 and 2000. He argues that many technology companies are being driven too aggressively by investor excitement and public momentum.<\/p>\n According to Burry, stock prices have become increasingly disconnected from traditional indicators such as economic data and consumer sentiment. That environment, he believes, creates the potential for sharp corrections.<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/strong><\/p>\n Article Sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines<\/a>.<\/p>\n CNBC (1<\/a>), (5<\/a>); Investopedia (2<\/a>); Yahoo Finance (3<\/a>), (4<\/a>), (6<\/a>); X (7<\/a>)<\/p>\n This article originally appeared on Moneywise.com<\/a> under the title: Michael Burry is questioning SpaceX’s $3-trillion market valuation \u2014 and says he’d be tempted to bet against it<\/a><\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"SpaceX\u2019s stock-market debut has now minted CEO Elon Musk as the world\u2019s first trillionaire, but not everyone is…\n","protected":false},"author":3,"featured_media":876383,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[24],"tags":[44705,180940,356175,159,783,2527,2437,336503,67,132,68],"class_list":["post-876382","post","type-post","status-publish","format-standard","has-post-thumbnail","category-space","tag-market-valuation","tag-michael-burry","tag-put-option","tag-science","tag-space","tag-spacex","tag-stock-market","tag-strike-price","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/876382","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=876382"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/876382\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/876383"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=876382"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=876382"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=876382"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}