Burry flags structural risks in SpaceX as valuation concerns mount

Investor Michael Burry has issued a stark warning regarding the valuation of SpaceX, citing a potential $3 trillion problem and describing the stock as structurally hazardous to trade. Although Burry confirmed he holds no long or short positions in the company, his comments underscore the complexities facing investors in one of the most controversial new listings in market history. The spaceflight and artificial intelligence firm completed a record-breaking initial public offering on the Nasdaq on 11 June 2026, priced at $135 per share, which raised $75 billion and valued the enterprise at approximately $1.77 trillion.

The stock opened trading at $150 per share, surging 27% to $172 in early sessions, but has since retreated 16% over the past three trading days, wiping out much of the post-IPO rally momentum. Despite this pullback, Burry noted that the stock remains difficult to evaluate, as the valuation incorporates not only rocket launches but also Starlink, government contracts, satellite broadband, defence work, and artificial intelligence infrastructure. This broad portfolio of ambitions makes it challenging to apply traditional valuation metrics, especially before the company has released public earnings reports or established segment margins.

Burry revealed that he was “tempted” to trade SpaceX put options but ultimately declined, warning that the bearish trade is structurally dangerous. Put options, which allow investors to bet against a stock, can be prohibitively expensive when the underlying asset is volatile and heavily contested. He highlighted that shorting the shares is particularly risky due to expensive put options and a tight public float, with only around 4.3% of shares initially available for public trading. This scarcity, combined with retail demand driven by Elon Musk’s brand, can sustain a heavily priced stock far longer than valuation models might predict.

The market structure of SpaceX presents unique risks for both bulls and bears. While the tight float supports the stock in the short term, it also stifles true price discovery. As of December, the available equity excluding Elon Musk’s locked-up stake may rise to as high as 58%, suggesting a potential surge in share supply in the coming months. Musk’s approximately 42% stake is locked until June 2027, but the impending unlock of other shares could significantly alter the supply-demand dynamic. If enthusiasm cools, this added supply could pressure the stock and force a re-evaluation of its fundamentals.

For retail investors, the key takeaway from Burry’s analysis is not a simple buy or sell signal, but a caution regarding timing and risk control. The company is transitioning from a private market legend to a public corporate operator, and investors must now assess revenue quality, cash burn, and the economic viability of its diverse business units. The next major catalysts will be lockup expirations and the first public earnings reports, which will determine whether SpaceX can justify its massive valuation with tangible financial performance.