Short seller Jim Chanos on Wednesday criticized the upcoming SpaceX IPO, stating the company’s $1.75 trillion valuation relies on unrealistic expectations rather than robust fundamentals.
SpaceX intends to go public in New York on Friday with an offering aimed at raising $75 billion. This IPO is slated to be the largest ever, nearly tripling Saudi Aramco’s 2019 placement. The firm plans to list under the ticker SPCX.
“In my view, the company isn’t worth $1.75 trillion based on any reasonable assumptions for the next five years,” Chanos stated at the iConnections conference in New York.
The founder of Kynikos Associates noted that concerns about valuation and management issues make SpaceX a potential candidate for short selling. Some short sellers are hesitant to bet against the company, especially after the recent surge in major tech stocks led to losses in bearish positions.
“We can really concoct any stories – Mars colonies, factory tunnels, data centers in space – to justify this valuation. In bull markets, promises get a premium, and in bear markets, reality gets devalued,” Chanos said, responding to a question about shorting the company’s stock.
Chanos distinguished SpaceX from Musk’s electric vehicle company, Tesla. He noted that SpaceX trades at a 90x sales multiple, whereas Tesla trades at a 14x sales multiple. Short sellers who bet against Tesla have lost $27 billion in paper gains since June 2021, according to S3 Partners. Tesla’s shares have climbed over 2,500% in the last decade.
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