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James Chanos, one of Wall Street’s most famous short sellers, is throwing cold water on what’s shaping up to be one of the most hyped IPOs in history. SpaceX, Elon Musk’s rocket and satellite company, is targeting a $1.75 trillion valuation for its public debut scheduled for June 12 under the ticker SPCX. Chanos thinks that number is, to put it mildly, disconnected from reality.
The company aims to raise $75 billion in the offering, with indicated investor demand reportedly reaching $250 billion. That kind of appetite would make SpaceX potentially the first US company to list with a market value exceeding $1 trillion.
The Amazon comparison doesn’t hold up, Chanos says
One of Chanos’s sharpest critiques targets a comparison that SpaceX bulls love to make. Supporters of the IPO have drawn parallels between SpaceX and the early public offerings of tech giants like Amazon, Google, and Meta, suggesting that today’s seemingly outrageous valuation will look cheap in hindsight.
Chanos isn’t buying it. He points out that when Amazon went public in 1997, it was valued at $450 million, roughly 3x its revenues at the time. That’s a fundamentally different proposition than a company seeking to debut at $1.75 trillion.
Chanos argues that SpaceX’s projected valuation cannot be supported by reasonable assumptions over the next five years.
Reusable rockets, unprofitable launches
SpaceX has undeniably achieved remarkable things since Elon Musk founded the company in 2002. It pioneered reusable rocket technology, built the Starlink satellite internet network, and secured major contracts with NASA.
But Chanos draws a sharp line between technological achievement and financial viability. He notes that SpaceX’s core launch business remains unprofitable despite the cost savings from reusable rockets.
Chanos’s broader argument is that the valuation is being propped up by enthusiasm around artificial intelligence rather than SpaceX’s actual financial performance.
What this means for investors
Chanos has a complicated track record when it comes to betting against Elon Musk. He’s among the most accomplished short sellers in history, famously calling out Enron before its collapse. But shorting Musk-linked companies has historically been a painful trade, and bullish market conditions have consistently punished those who bet against Musk’s ventures.
For retail investors eyeing the SPCX ticker, the $250 billion in indicated demand signals enormous competition for shares. SpaceX dominates commercial launch services and has a growing revenue stream from Starlink subscriptions, and no other private company comes close to matching its capabilities in either domain.
But dominance in a market doesn’t automatically justify any valuation. Chanos is essentially arguing that investors are paying for a decade of perfect execution that may never materialize, while ignoring the fact that the company’s core business still loses money. The investors who got rich on Amazon bought at $450 million, not $1.75 trillion.
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