In 50 years, they'll be 'laughing': Investor Jeremy Grantham says SpaceX is the 'craziest IPO in the history of man.'

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For Jeremy Grantham, SpaceX's IPO will go down in history for all the wrong reasons. He claims it's "the craziest IPO in the history of man (1)."

In a recent interview with Morningstar, the founder of Grantham, Mayo, Van Otterloo & Company (GMO), blasted the valuation for Elon Musk's rocket company.

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Grantham is known as a "permabear" because of his perennially gloomy outlook on the market and stayed consistent with his recent analysis: "In 50 years, they'll be telling and writing stories about SpaceX and they'll be quoting you paragraphs from the prospectus and you will be laughing at it," he said (1).

The prospectus Grantham is referring to is SpaceX's S-1 filing, which featured multiple page-long rocket ship pictures and lofty business ambitions such as space tourism and asteroid mining (2).

But it isn't so much these sci-fi-sounding revenue sources that have Jeremy Grantham giggling. Grantham focused much of his criticism on SpaceX's artificial intelligence division, including xAI and X (formerly Twitter), which he considers "third-rate" compared to behemoths like Anthropic and OpenAI.

Interestingly, a massive collapse in SpaceX's stock isn't the scariest scenario in Grantham's mind. He admitted that he's quite fearful of a future in which he's proven wrong and AI becomes so powerful that it creates a high-tech dystopia.

Grantham told Morningstar, "If AI is actually going to be so good that the $1.7 trillion is cheap and the AI will be so powerful that our lives will be clearly at very severe risk, I wouldn't wish it on our species at all."

On June 12, SpaceX shares initially rose from the starting price of $135 to about $160 per share (3). Although the stock briefly broke $200 a few days after IPO, it's currently trading around the $150 mark.

Even though Grantham said he's "90%" certain of a crash for SpaceX shares, he didn't rule out the possibility of price appreciation in the near-term. In Grantham's view, new indexing rules rather than intergalactic revenue sources could propel SpaceX higher.

On July 7, SpaceX joined the tech-heavy Nasdaq-100 index thanks to recent preferential "fast-track" rule changes. According to Reuters (4), JPMorgan said this official status alone could bring in $4.3 billion as massive funds become forced buyers.

Grantham said that putting SpaceX in the Nasdaq-100 means "There'll be a lot of people who have to buy it for any index that is Nasdaq-y. So there'll be much more demand than there are sellers (1)." He even conceded that "It's hard to imagine the price won't go up and perhaps it will go up a lot" due to this market dynamic.

But that still doesn't mean Grantham believes SpaceX is a smart long-term investment.

Even though he sees potential for short-term price pumps, he ultimately believes it will come down hard when the realities of its negative earnings and massive AI spend become too much to bear.