Summary
SpaceX shares surged following its record-breaking IPO, with the company's market cap briefly surpassing Microsoft to reach $2.7 trillion. A crypto perpetual contract short squeeze momentarily implied a $3 trillion valuation, while prominent investor Michael Burry questioned the sustainability of such valuations.
Historic IPO Ignites Market Frenzy
SpaceX officially began trading on the Nasdaq on June 12, completing the largest initial public offering in history. The company priced 555.6 million shares at $135 each, initially targeting $75 billion in proceeds but ultimately raising $85.7 billion. This figure not only shattered IPO fundraising records but also minted founder Elon Musk as the world's first trillionaire.
On its debut day, SpaceX shares opened 11% higher at $150 and closed at $160.95, representing a 19% gain. Trading volume set records, with platforms like Robinhood reporting record-breaking traffic in the hours following the listing. This market enthusiasm continued to build momentum in subsequent trading sessions, driving shares progressively higher.
Valuation Surge Overtakes Tech Giants
During the second full trading day after the IPO on June 15, SpaceX shares surged another 20%. On Tuesday, June 16, the stock climbed an additional 4%, briefly touching approximately $218 per share during intraday trading. This pushed the company's market capitalization to $2.94 trillion, momentarily surpassing Microsoft's $2.93 trillion valuation to become the fourth-largest U.S. company by market cap.
By the close of trading, SpaceX's market cap settled at $2.65 trillion, still exceeding Amazon's $2.64 trillion valuation. From the IPO price of $135, SpaceX shares had gained roughly 62% in just three trading sessions. For perspective, Amazon's shares rose about 45% over the past five years, meaning SpaceX achieved more in three days than Amazon did in five years.
This valuation level positioned SpaceX as the world's fourth-most valuable company, trailing only Nvidia at approximately $5.8 trillion, Apple at approximately $4.4 trillion, and Alphabet. To catch Apple, SpaceX would need to add roughly another $1.75 trillion in market value.
Crypto Market Short Squeeze Amplifies Implied Valuation
Perhaps more striking was activity in cryptocurrency derivatives markets, where SpaceX-related perpetual contracts experienced a violent short squeeze. According to Bloomberg reporting, this phenomenon briefly pushed SpaceX's implied valuation to $3 trillion, demonstrating extreme speculative fervor in the market.
Perpetual contracts are derivative instruments popular in cryptocurrency markets that allow traders to take leveraged positions without holding the underlying asset. When large numbers of short sellers are forced to close positions, it can create a cascading effect that drives prices sharply higher. The behavior of SpaceX-related contracts reflected how enthusiasm from traditional equity markets had spilled over into crypto derivatives.
Musk's personal wealth also ballooned due to the SpaceX listing. According to multiple media reports, his net worth surpassed Bitcoin's total market capitalization for the first time, a symbolic milestone that further intensified market attention on SpaceX and Musk-related assets.
Prominent Investor Questions Lofty Valuation
Not all market participants embraced SpaceX's elevated valuation. Michael Burry, the investor famous for predicting the 2008 financial crisis and portrayed in the film The Big Short, publicly stated he had considered shorting SpaceX but ultimately declined due to expensive put option pricing.
Burry wrote on his SubStack platform that he currently has no position in SpaceX, neither short nor long. He detailed his analysis of several put option strikes: with the stock trading around $212, a put option with a $100 strike price expiring in December 2028 cost approximately $25 per contract, a similar contract expiring in June 2027 traded around $13, and a December 2026 put cost roughly $6.75.
Regarding the shortest-dated option, Burry commented that he was tempted but ultimately declined. He suggested that if SpaceX stock could stabilize in the mid-200s range, volatility in the options chain might gradually drain away.
Burry questioned SpaceX's fundamentals, describing it as fundamentally a small space company, a niche telecom, a bedeviled social media company, and a Coreweave-light generating less than $20 billion in annual revenue. This characterization implied that a nearly $3 trillion market cap might be severely disconnected from the company's actual business scale.
Closed-End Fund Premium Trading Raises Eyebrows
Market disagreement over SpaceX's valuation also manifested in related investment vehicles. Powerlaw Capital, a closed-end fund holding stakes in both SpaceX and OpenAI, began trading on the same day as SpaceX's IPO. Notably, Powerlaw traded at a significant premium to its underlying net asset value, indicating investors were willing to pay a substantial markup for indirect exposure to SpaceX shares.
Such premium phenomena are not uncommon during periods of market euphoria but often signal valuation bubble risks. Closed-end funds typically should trade at or slightly below their net asset values, and significant premiums are generally viewed as signs of excessive market optimism.
Major Acquisition Launched Immediately Post-IPO
Just days after going public, SpaceX announced a major acquisition: purchasing Anysphere, the parent company of AI coding assistant Cursor, for $60 billion in stock. This transaction demonstrated SpaceX's expansion ambitions following access to public market financing but also raised questions about the company's strategic direction.
Cursor is an AI-powered code editing tool popular within the developer community. SpaceX's acquisition of such an AI tooling company suggests expansion into software and artificial intelligence domains, rather than focusing exclusively on its core aerospace and satellite businesses. Whether this strategic pivot will create shareholder value remains a matter of market debate.
Risk Considerations Behind Market Euphoria
SpaceX's rapid valuation appreciation has sparked discussions about market rationality. From a fundamental perspective, SpaceX's primary businesses include reusable rocket launches, Starlink satellite internet service, and social media operations acquired through its purchase of X, formerly Twitter. While these businesses are innovative and possess growth potential, whether they can support a nearly $3 trillion market cap remains an open question.
Aswath Damodaran, a professor at NYU's Stern School of Business, told Bloomberg that the winner controlling AI could be worth $5 trillion, but this requires emerging victorious from intense competition and maintaining long-term dominance. While SpaceX holds technical advantages in aerospace, it faces formidable competitors like Google, Microsoft, and OpenAI in AI and software domains.
Judging from trading volume and price volatility, SpaceX stock currently exhibits typical momentum trading characteristics, where investors buy and sell based more on price trends than fundamentals. This pattern can drive sharp short-term price appreciation but also increases the risk of severe corrections.
Implications for Institutional Investors
For institutional investors and digital asset custody service providers, the SpaceX case offers a textbook example for observing market sentiment, valuation bubbles, and risk management dynamics. During periods of market euphoria, maintaining rational valuation analysis and risk assessment becomes especially critical. Whether in traditional equities or digital assets, excessive speculation can lead to severe disconnects between asset prices and intrinsic value, ultimately resulting in investor losses.
The regulatory landscape also warrants attention. While SpaceX operates as a publicly traded company subject to securities regulations, the spillover of speculative activity into cryptocurrency derivatives markets highlights the interconnected nature of modern financial systems. Market participants should be aware that derivative instruments, particularly those with high leverage, can amplify both gains and losses significantly.
From a custody and institutional infrastructure perspective, the SpaceX phenomenon underscores the importance of robust risk management frameworks. Whether managing traditional securities or digital assets, institutions must implement appropriate controls around position sizing, leverage limits, and exposure monitoring. The rapid price movements seen in SpaceX shares and related derivatives demonstrate how quickly market conditions can change, requiring real-time risk assessment capabilities.
Market Outlook and Sustainability Questions
The SpaceX story continues to unfold, and whether its valuation can be sustained at current levels will depend on the company's ability to meet the market's lofty expectations. This requires demonstrating sustained business growth and profitability improvements across multiple domains including aerospace, satellite communications, and AI.
Several factors will likely influence SpaceX's trajectory in coming months. First, the company's quarterly earnings reports will provide crucial data points for assessing whether revenue and profit growth can justify current valuations. Second, execution on major initiatives like Starlink expansion and the Cursor acquisition will be closely watched. Third, broader market conditions, including interest rate trends and overall equity market sentiment, will play important roles.
Historically, companies that debut with massive valuations face heightened scrutiny and often experience significant volatility as initial euphoria gives way to more sober fundamental analysis. The experiences of other high-profile tech IPOs suggest that post-listing performance can vary widely depending on execution, market conditions, and whether companies can deliver on growth promises.
For now, SpaceX represents a fascinating case study in market dynamics, valuation methodologies, and the intersection of innovation, speculation, and investor psychology. As the company navigates its new life as a public entity, market participants across traditional finance and digital assets will be watching closely to see whether this valuation can be sustained or whether a correction lies ahead.
The debate between bulls and bears on SpaceX's valuation ultimately reflects broader questions about how to value companies operating at the frontiers of technology and innovation. As financial markets continue to evolve and new asset classes emerge, these questions will remain central to investment decision-making and risk management practices.
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