David Trainer, CEO of research firm New Constructs, is taking a highly contrarian view of the looming SpaceX IPO that’s generating more excitement than any debut in stock market history. And that’s across the spectrum, from institutions anticipating their biggest payday ever from underwriting the shares, to the funds clamoring to get the way-underpriced allocations that should “pop” big the first day of trading, to the Elon Musk fans clamoring to pile in after the bell rings at the Nasdaq market site, probably in mid-June. Trainer’s got a different take: SpaceX is really skewering investors by raising tens of billions that instead of building profits will going to paying down debt, and “fund an increasingly costly AI race” that SpaceX claims it will totally dominate while in fact, it will encounter powerful competition, and intense pricing pressure, from the likes of Amazon, Google and Microsoft.
Put simply, Trainer brands SpaceX projected valuation of $1.75 trillion market cap, biggest by far for any post-offering number of all-time, as “truly out of this world,” and instructs folks and fund to stay away from an investment that the basic math stamps as beyond lousy.
Trainer argues that the SpaceX S-1 registration statement exposes a litany of weaknesses. Here are four of central issues he identified in a recent critique titled “Going Boldly Where No One Has Gone Before,” a surprisingly mild-sounding headline that, once you read the report, might better read “going recklessly.”
