SpaceX has done some truly amazing things. The company almost singlehandedly lowered the cost of launching things into low earth orbit by an order of magnitude.
But this is Tesla all over again. When everybody said nobody could make a profitable electric car, Tesla proved them wrong. Then investors got overly optimistic, Tesla’s share price got unreasonable, a bunch of early investors (including myself) made hefty sums, and competitors finally arose to make Tesla’s stock definitively overvalued, especially considering Elon Musk’s right-wing political antics seemingly targeted directly at alienating his core customer base.
SpaceX had a highly anticipated IPO on Friday. By any measure, SpaceX’s targeted value was wildly optimistic. It nonetheless exceeded its target. SpaceX stock went on to close at a gain on Monday. Tuesday saw another increase at closing.
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Despite this wild stock price ride, SpaceX’s signature Starship heavy launch system has never had a flawless test flight. From multiple Starship explosions to missed recoveries and damaged components, the rocket that Musk says will take human beings to Mars is far from perfected.
Now, there is a reason that people say, “It’s not rocket science.” Rocket science is hard. Multiple explosions are expected before an exquisitely engineered rocketry system performs flawlessly.
This is why private spaceflight companies make so much sense. Very few people are ever happy about anything that the government does. NASA could only blow up a few rockets before taxpayers would inevitably start to complain about all the money going to fund a bunch of spectacular pyrotechnics.
However, learning from your mistakes is an important part of taking the next steps toward interplanetary travel. Musk has acknowledged this, and while his signature brand of bravado has never fully justified the inflated prices of any of his companies, he’s not totally wrong that much can be learned from a test flight in which the vehicle is ultimately incinerated.
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So why shouldn’t private investors’ money be literally burned to advance human knowledge in this way? Right now, SpaceX stock is trading at arguably over 100 times what it should be trading at based on its revenue. The company is not profitable. Yet, I could care less about whether dipshits trading on FOMO who can afford to do so lose a great deal of money.
What I do care about is whether human beings continue to make advancements in space technology and continue to aspire to reach new worlds. Even if SpaceX never makes a dime, the technology it helps develop will prove invaluable for the future. Honestly, as well-heeled retail investors, crypto bros, evil investment bankers, and assorted other Musk fanboys plow their unneeded billions into SpaceX, can you imagine anything better that they would realistically (and voluntarily) be spending their money on?
If you asked me for investment advice, I would not recommend that you invest in SpaceX. I’m personally considering lots of other space companies — Rocket Lab, Firefly Aerospace, Intuitive Machines — for a little side investment outside of my workhorse index funds.
That being said, if you asked me if I’d rather see a bunch of rich people’s money burned up in another fraudulent crypto company or in learning something useful about rocketry at a loss, the answer is clear. Put it all on SpaceX, dopes.
Musk is a Bond villain. SpaceX is almost criminally overvalued, and the SEC under any other presidential administration would be taking a very hard look at it. Still, if you can’t resist the hype, full steam ahead, with my blessing. No one who is putting money into SpaceX after three days of gains following its IPO would be putting their money into anything better for humanity. Let it rip. Maybe you’ll prove me wrong.
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at [email protected].