SpaceX (SPCX) Weakens Despite Nasdaq 100 Inclusion..."Bubble Collapse Warning"

▲ SpaceX (SPCX)/AI-generated image

SpaceX (SPCX) showed weakness ahead of its inclusion in the Nasdaq 100 index. While expectations for forced buying due to index inclusion grew, a billionaire value investor's warning of overvaluation shook investor sentiment.

According to the investor community StockTwits on July 7 (local time), SpaceX is expected to be included in the Nasdaq 100 index with the start of trading on Tuesday. This could lead to automatic buying demand from index-linked ETFs like Invesco's QQQ and mutual funds. However, due to the limited number of publicly traded shares, the initial index weighting is expected to be around 1-1.3%.

SpaceX sold less than 5% of its total shares in last month's IPO. Employee and insider lock-ups also restrict additional supply. Some insider lock-ups are scheduled to be gradually released between 70 and 135 days after the IPO on June 12. Restrictions on CEO Elon Musk's stake and some large holders are expected to remain for about a year.

SpaceX shares fell 1% on Monday. They continued their corrective trend with an additional 1% drop last week. In late-night trading on Monday, they slid another 2%.

Jeremy Grantham, GMO investment strategist, strongly criticized SpaceX's valuation. In an interview with Morningstar, Grantham called SpaceX "the craziest IPO in human history." He pointed out that the company is incurring huge losses and that much of its long-term investment thesis relies on aggressive artificial intelligence assumptions.

Grantham argued that 90% of SpaceX's outlook depends on "currently third-rate AI products." He also said that these AI products are "getting clobbered" by Anthropic and OpenAI. While acknowledging the possibility of short-term forced buying due to index inclusion, he stated that in the long term, he would bet "at least 90%" on a potential collapse rather than justifying the current valuation.

[Article Key Summary]

-SpaceX showed weakness ahead of its Nasdaq 100 index inclusion on Tuesday.

-The initial index weighting is expected to be around 1-1.3% due to limited publicly traded shares.

-Jeremy Grantham strongly criticized SpaceX's valuation and AI expectations.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*