On June 11, Reuters reported that James Chanos, president of Knicks United Fund and Wall Street’s “short guru”, questioned the highly anticipated SpaceX IPO on Wednesday.He warned that the company's high valuation was based primarily on "hopes and dreams" rather than a realistic basis to support it.
Chanos
SpaceX will go public in New York on Friday with plans to raise $75 billion at a valuation of $1.75 trillion. It would be the largest IPO ever, nearly three times the size of Saudi Aramco’s 2019 IPO.
But Chanos said SpaceX's market-shaking IPO was driven more by investors' enthusiasm for Elon Musk and the AI craze than based on financial fundamentals. He thinks,No reasonable business assumption can support SpaceX's valuation.
"We're about to see a $75 billion IPO with a valuation of close to $2 trillion, and this is a company with $19 billion in revenue and negative free cash flow," Chanos said at the iConnections Global Alts conference in New York. The conference brought together more than 2,500 institutional investors and fund managers.
"In my opinion, based on any reasonable assumption over the next five years, this company is not worth $1.75 trillion," Chanos said.
However, many short-selling institutions are cautious about shorting SpaceX and adopt a wait-and-see stance, especially after the recent sharp rise in the stock prices of many trillion-dollar technology giants has caused serious losses to short-selling investors.
When asked if he would short SpaceX, Chanos gave a similar answer. “We can make up absolutely any story to justify that valuation, whether it’s a Mars colony, a factory tunnel, or a data center in space,” he said. “In a bull market, people pay a premium for the promise. In a bear market, people discount reality.”