Michael Burry Says He Is Tempted to Bet Against SpaceX, Rejects $2T Valuation Outright

SpaceX IPO minted the first trillionaire in the world, Elon Musk. However, Musk lost the title in a few days after his net worth nosedived to $943 billion on Friday, compared with $1.3 trillion when the SpaceX stock went public on Nasdaq. The stock has crashed by over 20% over the past five days, but still maintains a market cap of over $2 trillion.

Market experts attributed the stock price crash to the rocket company's inaugural bond offering and a 'sector weight' rating by KeyBanc. However, The Big Short's Michael Burry, who predicted the 2008 global financial crisis, believes SpaceX isn't worth even $1 trillion, let alone $2 trillion.

Burry had described in a recent post on Substack that SpaceX is 'fundamentally a small space company' and is still too niche to surpass established businesses and national economics, highlighting its under $20 billion annual revenue.

'With that $2.8 trillion, SpaceX's market cap could buy Page, Brin, Bezos, Zuckerberg, Ellison, Arnault, Huang, Buffett, and Ortega and still have $1 trillion left over,' Burry noted.

He even analysed several bets against SpaceX, but decided to pass for now. Burry highlighted a put option with a $100 strike price and a December 2028 expiry, which was trading at around $25. Similar contracts expiring in June 2027 and December 2026 were priced at around $13 and $6.75, respectively.

'Tempted by that one. But no thank you,' Burry said about the December 2026 option, adding that 'with any luck', SpaceX stock will settle somewhere in the mid-$200s. The stock crashed to $150 per share during Friday premarket hours, from between $190 and $200 apiece upon its listing on Nasdaq on 12th June.

Burry Avoids Betting Against SpaceX for Now

If Burry buys put options with a $100 strike price, he would be essentially betting that the stock price would fall below $100. However, Burry stressed that he is not involved with SpaceX bets as of now.

'I am not involved with SpaceX now. Neither short nor, ahem, long,' he wrote on Substack. However, experts believe that SpaceX's stock price chart and considerable short selling interest do not imply a short-squeeze setup.

'SPCX has attracted active short-selling interest, but the data suggest this is far from a supply-constrained short,' S3's Matthew Unterman had said in an interview with CNBC. 'The current setup looks more like normal price discovery than a classic short-squeeze candidate.'

Note that Burry maintains $1 billion worth of bets against AI leaders like Palantir Technologies and Nvidia due to AI bubble risks. However, he recently opened positions in companies like Adobe and PayPal, given their cheap valuations and rebound potential in the AI race.

Burry had drawn parallels between AI stocks and the dot-com bubble, highlighting that many tech stocks are being aggressively driven by investor hype, as company fundamentals become increasingly disconnected from traditional economic data, creating potential for major corrections.

Burry shuttered his hedge fund Scion Asset Management last year on AI bubble fears, highlighting how megacap US tech companies artificially inflate their earnings using accounting tricks to make their balance sheets look better than they are.

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