Grantham warns SpaceX IPO marks 3rd major bubble in 26 years

Jeremy Grantham, the investor who called the dot-com crash and housing collapse, said the SpaceX IPO may mark the peak of the current bull market in a July 5 statement.

Jeremy Grantham, who predicted the 2000 dot-com crash and the 2008 housing collapse, said the SpaceX initial public offering may mark the peak of the current bull market, adding his voice to a chorus of veteran investors warning that valuations have stretched beyond sustainable levels.

"The SpaceX IPO marks the top of a terrific bubble," Grantham, co-founder and chief investment strategist at GMO, said. The 87-year-old built his reputation by avoiding Japanese equities in the late 1980s, sidestepping technology stocks during the dot-com mania, and limiting exposure to housing before the 2008 financial crisis.

Grantham's warning comes as SpaceX prepares for what could be the most anticipated public listing in years. The billionaire has also called Bitcoin a "useless, speculative asset" that will crash to "zero," predicting in a June 26 CNBC interview that the cryptocurrency will "dwindle away... not with a bang, but a whimper." Bitcoin was trading at $58,319 at the time, down 45 percent from its record high, while gold had surged 20 percent over the same period, he noted.

The comment from a well-known market bear could dampen enthusiasm around the SpaceX IPO and contribute to broader caution in equity markets. If the narrative gains traction, it may increase volatility for growth stocks and high-profile IPOs as investors weigh the risk of being at a market top. The warning arrives as the S&P 500 trades near record levels, with gains concentrated in a handful of technology stocks riding the artificial intelligence wave.

A Record of Calling Peaks

Grantham's track record gives his warnings weight. He avoided Japanese equities and real estate in the late 1980s during the peak of that country's asset price bubble, sidestepped technology stocks during the dot-com bubble of the 1990s, and limited his exposure to the housing bubble before the 2008 global financial crisis. Each call preceded a significant market downturn, with the Nikkei 225 losing more than 80 percent of its value from its 1989 peak and the S&P 500 falling roughly 50 percent from its 2007 high.

The GMO co-founder has been vocal about what he sees as excessive valuations across multiple asset classes. In the June 26 CNBC interview, he described crypto as having negligible real-world use, saying nobody uses it for everyday transactions and that it primarily facilitates illicit activity. He clarified that his criticism does not extend to the blockchain technology underlying cryptocurrencies.

SpaceX IPO as Market Barometer

SpaceX's public listing represents a test of investor appetite for high-growth companies in a market that has already seen substantial gains. The company, founded by Elon Musk, dominates the space launch industry with its reusable rocket technology and Starlink satellite internet business, which has grown to serve customers across more than 100 countries.

Grantham's warning adds to growing caution from investors who see parallels between current conditions and previous speculative peaks. The SpaceX IPO's reception will serve as a barometer for risk appetite across the broader market, with a strong debut potentially fueling further gains and a weak one accelerating a pullback. The company has not yet disclosed its IPO price range, share count, or expected valuation, leaving investors to gauge demand based on secondary market activity.

The timing of Grantham's call is notable. The last time a high-profile IPO drew such a stark warning from a veteran investor was during the 2021 SPAC boom, when several companies that went public through blank-check vehicles later traded below their listing prices. SpaceX, with its dominant position in launch services and satellite internet, faces different fundamentals, but the valuation question remains open.

This article is for informational purposes only and does not constitute investment advice.