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New Delhi: After being rocked by its all-encompassing public offering on the stock exchange, Indian banker and businessman Uday Kotak has smartly questioned the valuations of SpaceX, Elon Musk’s big-ticket rocket firm. After the runaway stock market debut, there is a thought-provoking question on the monumental valuation of Elon Musk’s big ticket rocket SpaceX after it was put forward by Uday Kotak, the Indian businessman and banker. All that can be said at this stage is that only time will reveal whether these investors are witnessing future of the human race, or a big bubble which is waiting to be burst, said Kotak.
Recently, SpaceX made history with its largest public listing ever. The enterprise’s Initial Public Offering (IPO) brought in in close to $75 Billion, valuing the enterprise at nearly $1.8 trillion. With trading activity now underway, SpaceX stock surged even further boosting the market value of the business to one of the world’s top publicly traded companies.
Responding the listing, Kotak termed it as “true test for capitalism. But, he says, SpaceX’s value “isn’t in the traditional company-evaluating mode. Rather, he thinks investors are betting heavily on technology’s future, space’s future, artificial intelligence and the future of humankind as a whole.
Kotak claimed the quality of the company cannot be pegged on his current revenues or profit alone. SpaceX stocks look like they’re pricing in a future scenario in which they’ll be a big part of the transformation of life on Earth and off, he said. It might be too soon though, as he added that there were risks to that optimism. Whether we have reached the fairy tale world we dreamed of as children, or whether we live in a mega bubble “only time will tell”, he said.
The comments have led to a debate with investors and market experts. One group argues that SpaceX is being worth customers’ high price tag with its reusable rocket growth and satellite web (Starlink) communications and its AI and space-based ventures. Some still feel that the price may have increased to exorbitant levels and future growth will have to correspond to the size of the market.
Interestingly, valuation gurus Aswath Damodaran have not been as convinced, and suggested that SpaceX be valued at roughly $1.3 trillion, well lower than current market estimates. This points to the difficulty of valuing firms that are developing technology that may have, say, a massive impact on the future.
So for the time being, the market’s not too bullish about SpaceX’s prospects. But it is unclear whether the company actually meets these expectations or if it becomes an overvalued stock. Whether and how that will eventually become clear is an answer that can only be found in the next few years, as Kotak pointed out.
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