In 50 years, they’ll be ‘laughing’: Investor Jeremy Grantham says SpaceX is the ‘craziest IPO in the history of man.'

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<pre><code> For Jeremy Grantham, SpaceX's IPO will go down in history for all the wrong reasons. He claims it's "the craziest IPO in the history of man (1)." In a recent interview with Morningstar, the founder of Grantham, Mayo, Van Otterloo & Company (GMO), blasted the valuation for Elon Musk's rocket company. ## Must Read Grantham is known as a "permabear" because of his perennially gloomy outlook on the market and stayed consistent with his recent analysis: "In 50 years, they'll be telling and writing stories about SpaceX and they'll be quoting you paragraphs from the prospectus and you will be laughing at it," he said (1). The prospectus Grantham is referring to is SpaceX's S-1 filing, which featured multiple page-long rocket ship pictures and lofty business ambitions such as space tourism and asteroid mining (2). But it isn't so much these sci-fi-sounding revenue sources that have Jeremy Grantham giggling. Grantham focused much of his criticism on SpaceX's artificial intelligence division, including xAI and X (formerly Twitter), which he considers "third-rate" compared to behemoths like Anthropic and OpenAI. Interestingly, a massive collapse in SpaceX's stock isn't the scariest scenario in Grantham's mind. He admitted that he's quite fearful of a future in which he's proven wrong and AI becomes so powerful that it creates a high-tech dystopia. Grantham told Morningstar, "If AI is actually going to be so good that the $1.7 trillion is cheap and the AI will be so powerful that our lives will be clearly at very severe risk, I wouldn't wish it on our species at all." On June 12, SpaceX shares initially rose from the starting price of $135 to about $160 per share (3). Although the stock briefly broke $200 a few days after IPO, it's currently trading around the $150 mark. **Nasdaq fast-track brings in fast cash** Even though Grantham said he's "90%" certain of a crash for SpaceX shares, he didn't rule out the possibility of price appreciation in the near-term. In Grantham's view, new indexing rules rather than intergalactic revenue sources could propel SpaceX higher. On July 7, SpaceX joined the tech-heavy Nasdaq-100 index thanks to recent preferential "fast-track" rule changes. According to Reuters (4), JPMorgan said this official status alone could bring in $4.3 billion as massive funds become forced buyers. Grantham said that putting SpaceX in the Nasdaq-100 means "There'll be a lot of people who have to buy it for any index that is Nasdaq-y. So there'll be much more demand than there are sellers (1)." He even conceded that "It's hard to imagine the price won't go up and perhaps it will go up a lot" due to this market dynamic. But that still doesn't mean Grantham believes SpaceX is a smart long-term investment. Even though he sees potential for short-term price pumps, he ultimately believes it will come down hard when the realities of its negative earnings and massive AI spend become too much to bear. **Read More: ****Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going** **Some banks say SpaceX is a "buy" — for now** Grantham may be doom and gloom on SpaceX's prospects, but not all Wall Street firms are so pessimistic. Adam Jonas, the head of Morgan Stanley's Global Auto & Shared Mobility Research, recently became one of the most bullish analysts on record, initiating SpaceX as an "overweight" position with a $300 target price (5). Although other firms don't see SpaceX flying that high, many see potential for profits. Goldman Sachs, JPMorgan and Bernstein (6) have buy ratings with targets of $205, $225 and $239, respectively, according to Yahoo Finance reporting. And there has been some positive news to support this bullishness. For instance, CNBC reported on a deal between SpaceX and Google's parent Alphabet. Alphabet will pay nearly $1 billion (7) per month to rent computing power from SpaceX. Elon Musk also appears confident he'll reach $1 trillion in revenue by 2030, according to Reuters (8). But even with all of these positive ratings, analysts are quick to caution that a lot has to go right for SpaceX to reach its milestones. In fact, as MarketWatch reported (9), Morgan Stanley's own analysis suggests SpaceX probably won't be cash flow positive until 2035. As Adam Jonas cautioned in his CNBC interview (5), "For folks that are used to Tesla, it's going to be a volatile ride. And it's up to investors to decide whether the juice is worth the squeeze." ## SpaceX's losing streak SpaceX made one of the most anticipated public market debuts in years, but the excitement surrounding its IPO has quickly given way to a reality check. After soaring more than 20% during its first full trading day, the rocket maker has since surrendered those gains. Just a little over a month later, the stock has fallen below its $135 IPO price (10), underscoring just how quickly sentiment can shift once the initial euphoria fades. The decline isn't a surprise to everyone. Analysts at Morningstar have cautioned that the stock appears "significantly overvalued" (11). Much of that skepticism centers on the company's AI ambitions. Morningstar said the long-term profitability of SpaceX's xAI business remains highly uncertain, as analysts find its "economic moat intermediate." Companies tied to disruptive technologies can deliver eye-popping gains — but they can also experience dramatic swings as investors constantly reassess future growth prospects. Investors in companies like SpaceX need both a strong stomach and a long-term mindset to weather the inevitable volatility. ## Get advice from Wall Street veterans Rather than chasing whichever stock dominates headlines, many of Wall Street's most successful investors have built their fortunes by patiently buying businesses trading below their intrinsic value. Legendary investor Warren Buffett has long advocated for this approach. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price," wrote Buffett in his 1989 annual shareholder letter (12). Of course, that's easier said than done. Buffett has access to research teams, sophisticated financial models and decades of market experience that most retail investors don't. That's where platforms like Moby can help bridge the gap. Moby offers expert research and recommendations to help you identify strong, long-term investments backed by advice from former hedge fund analysts. In four years, and across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12% on average. They also offer a 30-day money-back guarantee. Moby's team spends hundreds of hours sifting through financial news and data to provide you with stock and crypto reports delivered straight to you. Their research keeps you up-to-the-minute on market shifts, and can help you reduce the guesswork behind choosing stocks and ETFs. Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes. ### Stick to an index fund Even companies with disruptive technology can experience painful pullbacks once the excitement surrounding an IPO fades. If you've built your portfolio around just one or two high-growth names, those swings can have an outsized impact on both your finances and your peace of mind. Instead of putting all your eggs in one basket, many experts recommend making diversified index funds the foundation of your portfolio. By owning hundreds of companies across multiple industries, investors reduce their dependence on any single stock. Platforms like Acorns make that process simple by automatically investing your spare change into diversified ETF portfolios, helping you steadily build wealth. All you have to do is link your cards and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock. With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and, if you sign up today and set up a recurring investment, Acorns will add a $20 bonus to help you begin your investment journey. ### Diversify with a safe haven asset Whether you prefer owning individual stocks or mostly stick with index funds, SpaceX's recent stumble highlights an important lesson — equities can be unpredictable. Investors are still grappling with lofty AI valuations, stubborn inflation, elevated interest rates and ongoing geopolitical tensions. Those factors can trigger sharp swings across the market, especially for fast-growing companies whose valuations depend heavily on future expectations. That's exactly why diversification matters. Holding assets that don't always move in lockstep with stocks can help smooth out your portfolio when volatility picks up. Gold has long earned its reputation as a safe-haven asset. Unlike equities, which often rise and fall with earnings expectations and investor sentiment, gold tends to attract buyers during periods of economic uncertainty. If you're curious about adding precious metals to your broader inflation-hedging strategy, a gold IRA from Goldco lets you hold physical gold and other metals while still getting the tax advantages of an IRA. They also offer a guaranteed buyback program, meaning they'll repurchase your metals at the highest price according to market value if you ever decide to sell. If you're curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today. You can also get up to 10% in free gold or silver on qualifying purchases. ### Create a source of passive income with real estate Real estate can offer another way to diversify your portfolio. Property values are driven by local market conditions rather than the daily swings of Wall Street. There's another benefit as well — income. While high-growth stocks depend largely on future appreciation, rental real estate can generate ongoing cash flow that helps support your portfolio through different market environments. The downside? Owning property comes with plenty of responsibilities — from managing tenants to covering repairs and unexpected expenses. But with crowdfunding platforms like Arrived, you can invest in real estate without the burden of mortgages or managing tenants. And you can get started with as little as $100. Backed by world-class investors like Jeff Bezos, Arrived lets you purchase shares of vacation and rental properties across the country. Arrived distributes any rental income generated by properties to investors monthly, allowing you to potentially set up a passive income stream without the extra work that comes with being a landlord of your own rental property. The best part? For a limited time, when you open an account and add $1,000 or more, Arrived will credit your account with a 1% match. *- With files from Eric Esposito.* ## You May Also Like Join 250,000+ readers and get Moneywise's best stories and exclusive interviews first — clear insights curated and delivered weekly. **Subscribe now**. **Article Sources** *We rely only on vetted sources and credible third-party reporting. For details, see our* *ethics and guidelines**.* Morningstar (1); U.S. Securities and Exchange Commission (2); Google (3); Reuters (4), (8); CNBC (5), (7), (10), (11); Yahoo Finance (6); MarketWatch (9); Berkshire Hathaway (12) *This article provides information only and should not be construed as advice. It is provided without warranty of any kind.* </code></pre>