Investor Michael Burry, celebrated for his foresight in predicting the 2008 housing crisis, recently shared his perspective on SpaceX's market performance. While acknowledging the temptation to short Elon Musk's venture, he ultimately refrained due to the high cost of put options. His analysis emerged as SpaceX experienced a notable rally following its initial public offering, with shares reaching an intraday high of $225.64.
Burry delved into the specifics of SpaceX's options market, noting a December 2028 put option with a strike price of $100 trading at approximately $25, while the company's stock was valued around $212. He also considered a December 2026 put option priced at $6.75 but opted against the trade, anticipating the stock would stabilize in the mid-$200s, leading to a decrease in the volume of put options.
Despite its impressive market capitalization of $2.8 trillion, Burry questioned SpaceX's underlying value, describing it as fundamentally a "small space company, a niche telecom, a bedeviled social media company, and a Coreweave-light." He emphasized the enormity of this valuation by illustrating that it could theoretically purchase some of the world's wealthiest individuals, including Page, Brin, Bezos, Zuckerberg, Ellison, Arnault, Huang, Buffett, and Ortega, with a trillion dollars still remaining.
SpaceX's public debut was marked by a record-breaking $75 billion IPO. The stock commenced trading at $150 and climbed to an intraday peak of $176.52 on its inaugural day. On a recent Tuesday, the shares concluded trading 4.83% higher at $201.80, with an additional 2.06% gain in after-hours trading, underscoring a positive price trend across short, medium, and long-term horizons.
The intricate landscape of financial markets demands meticulous assessment and a discerning eye for value. Burry's insights remind us that even the most innovative and rapidly expanding enterprises require scrutiny of their intrinsic worth. His cautionary stance highlights the importance of prudent decision-making and the recognition that even significant market enthusiasm should be tempered with a realistic evaluation of fundamentals. The journey of every company, regardless of its perceived potential, is ultimately shaped by sustainable growth and robust financial health.
