Grantham Bets 90% on SpaceX Crash as $2 Trillion Valuation Tests Market Limits

SpaceX shares have tumbled from their post-IPO peak. The stock now trades near $160 after shedding hundreds of billions in market value in recent weeks. Yet the company still carries a valuation north of $2 trillion. Veteran investor Jeremy Grantham finds that number absurd. He calls the IPO the craziest in history and gives the stock a 90 percent chance of a steep decline.

Grantham delivered his blunt assessment during an interview on Steven Bartlett’s “The Diary of a CEO” podcast. He told listeners he thinks SpaceX will fail to deliver anything like its promises in the prospectus. Yes, absolutely. The veteran bubble-caller pointed to asteroid mining and outsized AI expectations as classic signs of excess. SpaceX is such a fabulous BS story, he said. Mining asteroids. Huge, incredible success of AI. It’s the classic description of a market peak. It’s what you look for at the top of a terrific bubble. (The Motley Fool, July 5, 2026)

Those remarks align with his deeper conversation on Morningstar’s “The Long View” podcast. There Grantham described a $1.7 trillion valuation for a company rolling in red ink. Ninety percent of the projections rest on the AI of their currently third-rate AI offering who’s getting kicked around the block by Anthropic and OpenAI. JPMorgan and others line up to recommend it strongly to clients. Nasdaq rules force index buying. Demand swamps supply by design. The price can climb further before reality sets in. (Morningstar, July 5, 2026)

And it will be amazing if it doesn’t collapse. Grantham warned that justifying today’s price would require massive AI breakthroughs. Our entire lives would become totally different. Productivity gains of 10 or 20 percent a year ignore basic physics. Energy, raw materials, food. You can’t create something out of nothing. Most space travel outlined in the prospectus strikes serious physicists as utterly inconceivable. If the valuation holds, we live in a strange world. We’ll be lucky not to be bossed around by our automaton friends.

But Grantham places the odds of that happy outcome at just 10 percent. He bets at least 90 percent on a crash. Both outcomes would prove historically notable. A collapse looks far more probable. The first scenario would prove horrific for those who paid current prices given the almost chronic lack of controls around AI. He likened the rush to deploy advanced systems to releasing untested drugs. This version carries greater danger. It could change lives in the most unpleasant ways.

SpaceX went public in mid-June in the largest IPO ever. It raised more than $75 billion at an initial price of $135. Shares surged on debut and kept climbing. The company briefly approached $3 trillion in market value. Then the air came out. The stock dropped more than 30 percent from its high near $226. It has continued sliding amid a broader technology selloff. Recent reports show SpaceX shedding more than $600 billion during one three-day stretch. (Business Insider, July 7, 2026)

The company reported $18.7 billion in revenue for 2025 yet lost nearly $6 billion. Starlink generates the only real profits. Everything else demands heavy capital spending. The S-1 filing laid out a total addressable market of $28.5 trillion. Ninety percent tied to AI. Analysts remain divided. Morningstar’s Nicolas Owens maintains a fair-value estimate of $62 per share and calls the stock overvalued even after the decline. He sees a moonshot scenario reaching $159 only if nearly every assumption breaks perfectly. Most of those outcomes look far from guaranteed. (Yahoo Finance, July 7, 2026)

Yet the inclusion in the Nasdaq-100 happened faster than almost any other new listing. Passive funds must buy. That mechanical demand helps explain why the shares held above $150 even as criticism mounted. Elon Musk has a track record of converting hype into factories and progress. Grantham acknowledges the feat. Musk talks the price to five or six times fair value, sells stock without triggering a collapse, and reinvests in giant facilities. He turns the greater-fool theory into real value. Few pull it off. Musk stands as the best at it so far.

Still Grantham sees limits. The current scale dwarfs past successes. Turning $2 trillion of AI and space promises into cash flow at today’s multiples would require perfection. Revenue would need to grow rapidly while losses narrow. Capital spending for Starship, satellite constellations, and potential space-based data centers remains enormous. Goldman Sachs projects negative free cash flow of $105 billion by 2029 in some forecasts. The numbers underscore the gap between promise and delivery.

Broader market warnings accompany Grantham’s SpaceX critique. He calls current U.S. stock valuations the most expensive in American history. The market capitalization to GDP ratio exceeds levels seen in 2000. A reversion to trend could bring a 70 percent drop from peak. Timing remains uncertain. Two weeks, two months, two years. The range is wide. But the direction looks clear to him. (ThinkAdvisor, June 29, 2026)

So far the market has shrugged off the caution. SpaceX joined the Nasdaq-100 on July 7 and promptly slid 5 percent that day. Traders rotated out of some highfliers. Yet enthusiasm for Musk’s ventures endures. Recent X posts show retail investors still debating whether the stock belongs near $150 or $100 by year-end. One prediction from The Motley Fool sees shares testing $100 if growth disappoints and multiples compress to 50 times sales.

Grantham’s history gives his words weight. He called the dot-com bubble and the 2008 crisis. GMO, the firm he co-founded, avoided much of the pain by sticking to value discipline even when clients fled. He admits the approach carried career risk. Keynes was right, he said. You can’t fight a bull market forever. But eventually reality returns.

With SpaceX the reality check may arrive through earnings. The first public report comes August 6. Investors will scan for progress on Starlink subscribers, launch cadence, and any early AI contributions. Losses remain large. Cash burn continues. The prospectus painted ambitious pictures. Delivering them at today’s price leaves little room for error.

But. Musk has beaten skeptics before. Factories rose. Rockets landed. Satellites multiplied. The question now is whether that pattern scales to a multi-trillion-dollar enterprise with third-rate AI ambitions and physics-defying timelines. Grantham thinks the odds say no. Ninety percent chance of a crash, he repeats. The coming quarters will test that conviction. And the wider market may take its cue from how this landmark IPO resolves.

Analysts at firms beyond Morningstar have grown more cautious too. Some highlight that even optimistic revenue ramps leave the stock trading at triple-digit multiples of sales. Others point to execution risks on Starship regulatory approval and constellation costs. The debate no longer centers on whether SpaceX will succeed as a business. It centers on whether its current price reflects any plausible path to those successes. Grantham’s answer is clear. It does not.