Prominent short seller Jim Chanos has challenged the valuation of SpaceX (NASDAQ:SPCX) ahead of its highly anticipated stock market debut, arguing that the company’s projected $1.75 trillion valuation is difficult to justify based on underlying fundamentals.
SpaceX is scheduled to begin trading on the New York Stock Exchange on Friday following a $75 billion offering. The flotation is expected to become the largest IPO ever completed, dwarfing the size of Saudi Aramco’s 2019 market debut. The company will trade under the ticker symbol SPCX.
Chanos Sees Valuation as Excessive
Speaking at the iConnections conference in New York, Chanos said he believes the valuation being assigned to SpaceX is disconnected from realistic financial assumptions.
“The company is not worth, in my view, $1.75 trillion based on any reasonable assumption over the next five years,” Chanos said.
The founder of Kynikos Associates argued that both valuation concerns and governance considerations make the company a potential candidate for short sellers, although he acknowledged that many investors remain hesitant to bet against high-profile growth stocks.
Market Optimism Driving Premium Pricing
Chanos suggested that the enthusiasm surrounding SpaceX reflects broader market behaviour in strong bull markets, where investors often focus more on future possibilities than present-day fundamentals.
“We can really construct any narrative we want—colonies on Mars, tunnel factories, data centers in space—to justify the valuation. In bull markets, you pay a premium for promises; in bear markets, you discount reality,” Chanos said when asked about the possibility of shorting the company.
His comments highlight concerns among some market participants that investor expectations may be running ahead of the company’s current earnings potential.
Comparison With Tesla
Chanos also contrasted SpaceX with Tesla, Elon Musk’s electric vehicle manufacturer, noting a significant difference in valuation metrics between the two companies.
According to Chanos, SpaceX is currently valued at approximately 90 times revenue, compared with around 14 times revenue for Tesla.
The comparison comes as Tesla has become one of the most painful short positions on Wall Street. Data from S3 Partners shows that investors betting against Tesla have accumulated paper losses of approximately $27 billion since June 2021, while the stock has gained more than 2,500% over the past decade.
Bearish View on Data Centres
Beyond SpaceX, Chanos reiterated his sceptical stance on the data centre sector, describing it as a “bad business” that typically generates only low-single-digit returns on invested capital.
He said he continues to hold a negative outlook on data centre operators, arguing that many of these businesses resemble real estate investment trusts or equipment leasing companies more than traditional high-growth technology firms.
Chanos also warned that companies purchasing advanced chips from suppliers such as Nvidia and leasing that capacity to hyperscale customers may face substantial asset depreciation risks and possess limited pricing power, potentially creating challenges for long-term profitability.
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