With Elon Musk’s SpaceX now embedded in the Nasdaq 100, the prospects of the rocket company have–directly or indirectly–now slipped into the stock portfolios of millions of people around the globe. But joining the Nasdaq index has done little to convince critics, who are dubious about the lofty aims of the company. In the prospectus ahead of its offering, SpaceX said its goal is “to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.”Such statements will be laughable to investors of the future, says Jeremy Grantham, co-founder of investment giant GMO. Admittedly, the billionaire British investor is known for his skepticism: He’s a self-professed “permabear” and has warned AI’s impact will result in “blood in the streets.”
It is perhaps no surprise, then, that he is unimpressed by the (literally) out-of-this-world intentions of SpaceX. “Everyone’s lining up to tell you to buy the craziest IPO in the history of man,” Grantham told Morningstar’s The Long View podcast in an episode released this morning, “In 50 years, they’ll be telling and writing stories about SpaceX, and they’ll be quoting you paragraphs from the prospectus, and you will be laughing at it.”
Even the most bullish of investors might be feeling a reality check since SpaceX launched. At the time of writing, SpaceX is down 7% over the past month, hovering at around $150 a share—only slightly ahead of the $135 it targeted at launch.
Wall Street is split on how high SpaceX can fly, though they generally agree it will soar: Morgan Stanley, for example, has reportedly set the price target at $300, while Goldman Sachs’s Eric Sheridan and team wrote in a note seen by Fortune that they see it closer to $205.
Sentiments among analysts are, generally, positive. J.P. Morgan wrote that its target is $225 , adding it believes Elon Musk’s goal of reaching $1 trillion of revenue by 2031 is possible “but requires strong execution across an ambitious timeline.”
The note authored by Doug Anmuth, Seth Seifman, Sebastiano Petti, and Richard Choe highlighted some concerns, one of them being the fact that there’s “only one Elon.” They wrote that Musk’s “outsized influence and control (82% voting power) is central to SpaceX’s culture, vision, and operational strategy, and we believe his leadership has been a defining driver of the company’s success. At the same time, that concentration of control raises governance considerations and exposes the company to leadership-transition risk.”
Grantham said he was baffled by Wall Street banks’ recommendations to buy SpaceX for their clients. He added: “In the end, the reality will come out, and this will turn out to be, of course, one of the landmark historical events that I so value in history looking back. It will be amazing, by the way, if it doesn’t collapse, because it will need such massive developments on AI that our entire lives are totally different.”
Even if the justification for a higher price becomes a reality, the world will be a “strange one” and “we’ll be lucky not to be bossed around by our automaton friends.”
This “rather horrific” outlook is less likely than a crash, Grantham adds, “though both ways it will be historically notable.”
Fortune has contacted SpaceX for comment.
“There’ll be a lot of people who have to buy it for any index that is Nasdaq-y”
Last month, Nasdaq announced it was launching new fast-track rules for older companies to reflect the changing IPO market. “When large companies stay private for a decade or more before going public, indexes that wait months to add them have less than a full picture of the market they track,” the index said.
Fast-tracking large IPOs helps “indexes better represent all the public companies that matter to the economy and the stock market,” it said.
This has had a direct impact on SpaceX’s performance, insists Grantham: “What that means is there’ll be a lot of people who have to buy it for any index that is Nasdaq-y. So there’ll be much more demand than there are sellers.
“So supply and demand being what it is, it’s hard to imagine the price won’t go up, and perhaps it will go up a lot.”
This story was originally featured on Fortune.com
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