SpaceX gets brutal verdict from legendary Wall Street investor
The bearish case for SpaceX is no longer coming from just one corner of Wall Street. I've now heard concerns from traders, investors, and market veterans. Previously, I have covered the former Nasdaq CEO's lockup warning, Jim Cramer's verdict that it "couldn't sustain the walk-up," and Doug Kass's ...
Overview
The bearish case for SpaceX is no longer coming from just one corner of Wall Street. I've now heard concerns from traders, investors, and market veterans.
Previously, I have covered the former Nasdaq CEO's lockup warning, Jim Cramer's verdict that it "couldn't sustain the walk-up," and Doug Kass's short thesis. Michael Burry also studied the trade and walking away.
The weekend starting June 27, I came across an argument that reaches much deeper. Jeremy Grantham is 87 years old. He co-founded GMO, one of the most respected institutional investment firms in Boston, and has spent decades studying market bubbles.
Jeremy has predicted the dot-com crash, the 2008 housing collapse, and warned about the current Artificial Intelligence (AI) bubble as the biggest in American history. Yes, there are plenty of market commentators. But few have earned the credibility he has when calling market peaks.
His verdict on SpaceX (NASDAQ: SPCX), delivered on Steven Bartlett's "The Diary of a CEO" podcast, was not subtle.
SpaceX is such a fabulous BS story. Mining asteroids. Huge, incredible success of AI.
Jeremy continued to say, "It's the classic description of a market peak. It's what you look for at the top of a terrific bubble."
SPCX closed June 26 at $153.23, down 32% from its all-time high of $225.64 reached June 16. June 29, it extends its bear run in early trading, according to Yahoo Finance.
Also Read: SpaceX Latest News and Stories
The specific promise Grantham expects SpaceX to break
Bartlett asked directly: "Do you think SpaceX will fail?" Grantham's answer was precise.
"I think it will fail to deliver anything like its promises in the prospectus," he said. "Yes, absolutely."
That is a meaningful distinction. Grantham is not predicting that SpaceX ceases to exist or that Starlink shuts down.
He is making the narrower but consequential claim that the business described in the IPO prospectus — the $28.5 trillion total addressable market that New York University valuation professor Aswath Damodaran called a "hallucination," in a CNBC interview.
The AI revenue projections and the asteroid mining ambitions will not materialize in any form that justifies the current market cap.
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Grantham acknowledged Starlink's real value. When Bartlett mentioned he was an early SpaceX investor at a $100 billion valuation, Grantham responded:
"Great idea, by the way. Makes money. But this is not Starlink. Maybe I'd be an investor too, if it were Starlink."
Details
The profitable business embedded inside SpaceX is real. The surrounding narrative? It’s not, in Grantham's view.
Why Grantham doesn't believe the Tesla blueprint will work twice
The most analytically interesting part of Grantham's commentary was not the SpaceX critique itself. It was his explanation of how Musk succeeded with Tesla and why replicating that model with SpaceX faces a fundamentally different market backdrop.
"He's so good at BS — and that's a technical term — that he took the stock up to four or five times what it was worth on paper. Then he sold lots of stock at five times what it was worth and used the money to build a Gigafactory. The stock hung in, then went up again five times. He cashed in another big slug. Built more factories. And there we were — it went up 10 times," Grantham said, according to "The Diary of a CEO" podcast.
Related: The SpaceX $17 billion spectrum buy finally makes sense
Grantham argues that the Tesla outcome was a function of a specific market environment. A "wonderful bull market" spanning the last six years, which allowed the self-fulfilling prophecy to work. The stock went up because Musk persuaded investors it would. He sold into that conviction, built real infrastructure with the proceeds, and the cycle repeated.
"The scale of SpaceX requires him to do the same again. And the timing of the market cycle, the timing of confidence, would have to be the same."
My read of that argument is that it is both the most credible bear case and the hardest to disprove. Grantham is not saying Musk is incompetent. He is saying the conditions that allowed Tesla to work through repeated capital raises into an enthusiastic market may not exist at SpaceX's scale.
The financial reality that gives Grantham's case its teeth
The underlying numbers support Grantham's bubble framework in ways that are hard to dismiss.
TheStreet reports that SpaceX reported $18.7 billion in revenue for 2025 and a net loss of $4.9 billion, with accumulated total losses since its founding of $41.3 billion. In Q1 2026, net losses deepened to $4.3 billion as AI data center buildout costs intensified.
The only profitable division is Starlink, generating approximately $4.4 billion in earnings before interest and taxes (EBIT) in 2025. The AI business lost $6.4 billion. The rocket business also runs at a loss.
Even after the 32% decline from peak, SPCX trades at more than 94 times 2025 revenue on an unprofitable business. That is a valuation Morningstar analyst Nicolas Owens has called unjustifiable, maintaining his fair value estimate at $62 per share.
SpaceX does carry genuine contracted revenue: Google's $30 billion cloud services agreement through mid-2029 and Anthropic's roughly $45 billion deal are real. But they are already priced in at a $2 trillion-plus market cap.
The Nasdaq-100 inclusion on July 7 will bring mandatory index fund buying — a genuine near-term catalyst. But as the former Nasdaq CEO Bob Greifeld noted in my previous coverage, $800 billion in lockup shares expiring by October is the dominant mechanical force, and those early investors are price-insensitive. They want liquidity.
Grantham's own stated interest level: "Yeah, of course I'd invest, if it came down to 10 cents on the dollar. Maybe 15 cents."
At $153, that implies he would get interested somewhere around $15 to $22 per share. That is not a prediction. But it tells you where the legendary bear thinks fair value actually lives.
Related: SpaceX volatility just entered ordinary 401(k)s
Source
Originally published at www.thestreet.com.
