Michael Burry, the contrarian investor famous for shorting subprime mortgages before the 2008 financial crisis, disclosed he considered betting against SpaceX but ultimately rejected the trade due to prohibitively expensive options prices.
Burry flagged SpaceX's valuation as the core issue. The private rocket company's market capitalization has reached levels that eclipse many publicly traded Fortune 500 firms, according to his analysis. That valuation disconnect troubled him enough to consider a bearish position. However, the cost of purchasing put options on SpaceX proved too steep to justify the wager.
The dynamic reveals a structural problem in how markets price tail-risk hedges. SpaceX commands a massive private valuation built on its dominance in commercial space launch and ambitions in Mars colonization through Starship development. Recent funding rounds have valued the company at roughly $180 billion, making it one of the world's most valuable private enterprises. Yet that lofty price tag translates directly into expensive insurance for investors betting on a decline.
Burry's hesitation highlights the tension between conviction and execution in modern markets. Even when a prominent short-seller identifies what he perceives as overvaluation, the mechanics of trading can block his thesis. Out-of-the-money puts on private companies face additional friction because SpaceX does not trade publicly. Any options market for SpaceX shares would exist only in secondary markets or through private transactions, where pricing lacks the transparency and liquidity of exchange-traded securities.
The comment also reflects Burry's track record of selectivity. He does not short everything he dislikes. He shorts only when the risk-reward calculation works. In this case, option premiums consumed too much of the expected return to justify the position size he wanted. This discipline separates him from permabears who maintain permanent hedges regardless of cost.
SpaceX's private status means limited transparency into its financials. Investors cannot pore over quarterly earnings or cash flow statements. Burry must evaluate the company largely on publicly available statements from CEO Elon Musk and occasional regulatory filings related to Starship launches. That opacity likely compounds the expense of any bearish bet, as option sellers demand compensation for information risk.
Burry's reluctance to act does not invalidate his skepticism about SpaceX's valuation. Rather, it underscores how private markets function differently from public equity markets, where short-sellers can easily execute conviction trades at reasonable costs.