A veteran short-seller calls SpaceX a 'hopes-and-dreams' IPO; Here's how he justified it

Veteran short seller Jim Chanos has cast doubt on SpaceX's nearly $2 trillion valuation ahead of its highly anticipated stock market debut, arguing that investor enthusiasm for Elon Musk and artificial intelligence is overshadowing the company's financial fundamentals.

Speaking at the iConnections Global Alts conference in New York, Chanos described the offering as a key test of market sentiment, as investors continue to pour capital into high-growth companies tied to transformative technologies.

"We're going to be doing a $75 billion IPO for a valuation of close to $2 trillion for a company with revenues of $19 billion and negative free cash flow," Chanos said. "This is really a hopes-and-dreams IPO."

The SpaceX listing has attracted intense investor interest and is expected to be among the largest public offerings in history. However, Chanos argued that much of the valuation is based on ambitious future opportunities rather than existing businesses.

According to Bloomberg, Chanos said investors are increasingly assigning value to long-term projects such as space-based data centres, lunar manufacturing and other ventures linked to Musk's broader vision for the space economy.

"The total addressable market for space is infinite," Chanos said, according to Bloomberg. "You can build whatever stories you want — colonies on Mars, factories on the moon, data centres in space — to justify the valuation."

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Chanos also compared SpaceX with Tesla, another Musk-led company whose valuation has long been supported by expectations around autonomous driving, robotics and artificial intelligence.

"Tesla trades at roughly 14 times revenue based on promises of the future," Chanos said. "SpaceX is coming at roughly 90 times revenues, which is a completely different animal."

While acknowledging the strength of SpaceX's existing operations, including Starlink's satellite internet business, Chanos questioned whether the company's future ambitions warrant the premium being assigned by investors.

Existing businesses could justify a valuation of "a couple hundred billion dollars," he said, according to Bloomberg, adding that the bigger question is whether the remaining businesses are worth an additional $1.5 trillion.

The veteran investor also pushed back against the idea that space-based data centres could become a major commercial opportunity, citing high launch costs, maintenance challenges and operational risks.

He further noted that Starship, SpaceX's next-generation rocket programme that underpins many of its long-term plans, has yet to demonstrate sustained orbital success.

The comments come as investors continue to debate whether SpaceX's dominant position in satellite internet and commercial space launches can justify one of the richest valuations ever assigned to a newly listed company.

Chanos said the offering reflects a broader market trend in which investors are rewarding long-term narratives over present-day economics.

"Bull markets put a premium on promises," he said. "Bear markets put a discount on reality. Right now we're clearly in the former."

With inputs from Bloomberg.