Grantham Warns SpaceX Could Become the Craziest IPO in History, Valuation Faces Collapse Risk
GMO co-founder Jeremy Grantham stated that SpaceX will be the craziest IPO in history, and its grand vision may become a market joke in the future. Even if realized, it requires a disruptive breakthrough in AI; otherwise, the valuation is prone to collapse.
Wall Street's recommendation to buy is puzzling, but after being included in the Nasdaq 100 index, it will attract passive allocation from index funds, potentially pushing up stock prices due to short-term supply-demand imbalance.
Source: Public Information
ABAB AI Insight
As a long-term value investor, Jeremy Grantham accurately warned of the bubble before the 2008 financial crisis and has previously criticized high valuations in technology. His comments on SpaceX continue his cautious stance on the narrative bubbles surrounding space and AI.
In terms of capital flow, index inclusion drives passive fund inflows rather than being supported by fundamentals. Grantham believes this exacerbates supply-demand imbalances, aiming to remind investors to distinguish between short-term liquidity boosts and long-term realization risks.
Similar to the early valuation controversies of Tesla and the collapse of WeWork after its IPO, SpaceX is currently in the later-stage bubble of transitioning space technology from private financing to the public market.
Essentially, this reflects a concentration of capital and a transfer of pricing power: passive index funds and narrative-driven valuations detach from fundamentals, stemming from the amplification of speculative effects due to index inclusion in the A-share market, which can lead to a shift in pricing power from long-term fundamental assessors to short-term liquidity providers, ultimately triggering a correction.
ABAB News · Cognitive Law
Passive funds inflate valuations; fundamentals will eventually clear the bubble.
Grand visions can easily become a joke; high valuations before AI breakthroughs are high risk.
Index inclusion is a short-term benefit; long-term pricing still returns to fundamentals and reality.