CNBC's Jim Cramer said Tuesday that investors flocking to SpaceX are betting on Elon Musk's ability to create transformative businesses, not the company's current earnings power. Cramer made the comments as SpaceX shares rose almost 5% Tuesday following the company's IPO on Friday, pushing the rocket company's valuation above $2.5 trillion and briefly surpassing Microsoft. The rally has intensified questions about whether SpaceX's market value is justified, with Cramer arguing that conventional valuation methods miss what many investors are actually buying.
Cramer Argues Investors Are Buying Musk's Track Record
"The stock is called SpaceX, but it might as well be called Elon Musk," the "Mad Money" host said. Cramer argued that SpaceX's roughly $2.5 trillion market value cannot be justified by the company's fundamentals alone. "There is no way this company, which could see losses for many years, deserves such a high valuation on its own. It only gets there because it's run by Musk," he said.
While Musk recently projected that SpaceX could generate $1 trillion in annual revenue by 2030, Cramer argued that the stock's appeal extends far beyond any single forecast. "When you buy SpaceX here, you're really buying Elon Musk's brain," Cramer said. "I think the cult of Musk is for real."
Cramer pointed to the breadth of SpaceX's businesses and growth initiatives, including its Starlink satellite internet network, reusable rocket operations, and long-term data center ambitions. While the company currently operates at a loss and many of these opportunities have yet to fully materialize, Cramer said they could ultimately become significant drivers of future growth.
SpaceX Announces $60 Billion Cursor Acquisition
SpaceX announced Tuesday that it will acquire AI coding startup Cursor for $60 billion in stock, deepening its push into artificial intelligence and software development tools.
Cramer Compares SpaceX Appeal to Berkshire Hathaway
Cramer suggested that some investors view SpaceX similarly to how previous generations viewed Berkshire Hathaway under Warren Buffett — a way to gain exposure to a business leader they believe can continue creating value for decades.
While skeptics continue to question the stock's valuation, Cramer noted that betting against the rally has been costly so far. "While you're sitting here trying to justify SpaceX's valuation, the buyers are relentlessly pushing it up, and I bet they keep going," he said.
FAQ
Why does Jim Cramer think SpaceX's valuation is justified despite the company operating at a loss?
Cramer argues that investors are not valuing SpaceX based on current earnings but on Elon Musk's track record of building transformative businesses. He states that the stock's appeal comes from Musk's ability to turn ambitious ideas into commercial opportunities, comparing the investment to how previous generations viewed Berkshire Hathaway under Warren Buffett.
What did SpaceX announce on Tuesday regarding acquisitions?
SpaceX announced Tuesday that it will acquire AI coding startup Cursor for $60 billion in stock, expanding the company's push into artificial intelligence and software development tools.
