This Renowned Investor Sees 80% Downside in SpaceX Stock. Is He Right?
George Noble called SpaceX the most grossly overvalued stock he's ever seen.
Overview
Renowned investor George Noble didn't mince words when it came to Space Exploration Technologies (NASDAQ: SPCX), saying that its initial public offering (IPO) was "built to separate retail investors from their money." Noble, who ran Fidelity's first international fund, estimates the stock has a fair value of about $30; that would mean about 80% downside as of this writing. Although I don't think the stock will fall to those levels, I do agree that SpaceX is extremely overvalued, and I would stay away from its shares.
Noble noted that SpaceX's early gains were largely a "manufactured squeeze," made possible by the company selling less than 5% of its shares and then getting the popular Nasdaq-100 index to rewrite its rules to include it early, without meeting normal requirements. He added that the IPO was one of the largest wealth transfers ever packaged into a fanciful story, and that the impending lock-ups, letting early investors sell shares, would be a catalyst to drive down the stock price.
Details
Calling Starlink a "wonderful business" worth hundreds of billions of dollars, Noble said that it was the only part of SpaceX's story that wasn't science fiction, but that it was worth much less than $2 trillion, roughly SpaceX's current market value. He finished up by saying, "This is the most grossly overpriced stock at scale that I have ever seen."
Source
Originally published at www.fool.com.