Watching SpaceX stock trade in its early days as a public entity feels like witnessing a triumphant rocket launch. The rapid rise of its shares is nothing short of spectacular.
Superlatives continue to accumulate. SpaceX completed the largest initial public offering ever, propelling Elon Musk to become the world’s first trillionaire. By Thursday, the company’s market value had reached around $2.4 trillion. It was trailing only Nvidia, Alphabet (Google), and Apple in market capitalization. Despite two challenging days, the stock remains in the top 10, a select and esteemed group.
Questioning SpaceX’s Valuation
The question arises whether SpaceX deserves its lofty status. Are its shares genuinely worth their current valuation?
There are doubts. Elon Musk is indeed a visionary, with significant accomplishments at both Tesla and SpaceX. His unique talents persuade many to support high share prices. Still, the current valuation seems hard to justify by conventional standards. The company currently operates at a loss, although that may not be the primary concern.
The Risk of a Sci-Fi Vision
A significant concern is that investing in SpaceX reflects a substantial wager on a science fiction vision. The prospectus clearly states that SpaceX aims to establish a permanent human colony on Mars hosting at least one million people.
This is not mere fantasy. Musk has, in detail, committed to the goal of turning humans into an interplanetary species.
Such ambitions could divert any profits SpaceX might generate. Even if the company achieves great success in all other areas, the Mars project might still prove financially ruinous.