Michael Burry, renowned for his prediction of the U.S. housing collapse, stated on Tuesday that he is not taking a position in SpaceX, despite being tempted to bet against the company due to its nearly $3 trillion market value [1]. Burry revealed that he reviewed several bearish options trades tied to SpaceX but ultimately decided against them, citing the high cost of options. Specifically, he noted that a put option with a $100 strike price expiring in December 2028 was priced at about $25 per contract while the stock traded around $212. Similar contracts expiring in June 2027 and December 2026 were priced at roughly $13 and $6.75, respectively [1].
Burry described SpaceX as "fundamentally a small space company, a niche telecom, a bedeviled social media company, and a Coreweave-light" generating less than $20 billion in annual revenue [1]. He questioned the company's valuation, pointing out that SpaceX's market capitalization now surpasses that of Berkshire Hathaway by two and a half times, and exceeds the market value of many industries and national economies [1]. Burry remarked, "Berkshire Hathaway has been eclipsed 2 1/2 times over in just three days. Berkshire Hathaway, painstakingly assembled over two century-old lives. The two greatest investors of our time" [1].
The debate over SpaceX's valuation has intensified following its highly anticipated IPO. Shares of SpaceX surged 20% in their first full day of trading after the debut and have since risen more than 25% week to date, making Elon Musk the world's first trillionaire [1]. Burry's comments come amid his broader warnings about overvaluation in technology stocks, urging investors last month to "reject greed" as enthusiasm around artificial intelligence and momentum-driven trades pushes valuations higher. He has compared the current market environment to the final stages of the dot-com bubble [1].
CONCLUSION
Michael Burry's skepticism about SpaceX's valuation and his decision to avoid shorting the stock due to expensive options highlight growing concerns about overvaluation in the technology sector. The market's exuberant response to SpaceX's IPO, which propelled its shares and valuation to historic highs, underscores the ongoing debate about the sustainability of such lofty market caps.