I promised myself I wasn’t going to talk about SpaceX. Alas here I am.
When I found out they were going for $1,750,000,000,000 market cap on IPO, I thought that number was ludicrous. But I didn’t say it was unachievable, nor did I bet against it.
Our “sandwiches” do have some super early IPO exposure in our private equity fund. I’m quietly confident that June will be another fantastic month.
As I watched SpaceX’s market cap rocket past $1.75T, hit $2T, then $2.25T, then $2.5T, then $2.75T before stopping just shy of $3T in its third day of trading, I didn’t know whether we were witnessing a moon shot or another Challenger disaster unfolding in real time.
For those who don’t know about the Challenger disaster, it is one of the most famous rocket crashes of all time. On January 28, 1986, the Space Shuttle Challenger broke apart 73 seconds into its flight, killing all seven crew members. The spacecraft disintegrated about 46,000 feet (14 km) above the Atlantic Ocean, off the coast of Cape Canaveral, Florida. It was the first fatal accident involving an American spacecraft while in flight.
Whether this is metaphor for SpaceX’s share price is yet to be known.
The reason these stock market numbers fascinate (and terrify) me so much is not because a trillion dollars is a big number, but because we have singular companies with daily valuation fluctuations exceeding the GDP of developed nations.
How is it possible that a company with a NET LOSS of $5,000,000,000 in 2025 can be “worth more” than the entire annual economic output of 180+ countries, with daily price movements exceeding the entire GDP of Australia?
Imagine any one of these countries.
Every household. Every business. Every government.
Every paycheck, every multimillion-dollar deal, every massive infrastructure project.
The sum of every dollar exchanged between all those people. The billions of hours of labour. The skyscrapers, stadiums, and highways. All the blood, sweat and tears.
Well... a company that lost $5 billion last year is worth more than that.
Or is it?
How long will this last? How long can the coffers of share holders remain so detached from the real economy? Are these valuations arithmetically possible to sustain? At what point does the real market stop funding the stock market? Surely at some point circular financing, capital commitments, financial engineering, tokenisation, options contracts and speculation are no longer enough, and actual money from the real economy is needed? Real production, real profits, real consumption, real jobs.
When daily price movements of a singular loss-making stock can exceed the entire ASX300 market cap in its opening week, it is safe to say the NASDAQ has entered full blown mania phase.
I’m calling it now. The top is near. We are just one Black Swan away from the next major crash. Whether this happens today, tomorrow, next week, next month or next year I do not know.
There is simply not enough rationality in the bull case right now.
Disclaimer: Not financial advice! Do not make any investment decisions on my ramblings. If you bet against this market and get it wrong, you’ll be wiped out.