The City has been buzzing with peculiar chatter this week. Not about gilt yields or the Bank of England's next move, but about a company that hasn't even bothered with an IPO. Yet here we are, with British retail investors being urged to pile into SpaceX via complex trust structures and special purpose vehicles.
Let me be blunt: this is Elon Musk's biggest gamble yet, and it has all the hallmarks of a market mania. The logic is tantalising: SpaceX is a private company valued at over $200 billion, with a monopoly on reusable rockets and a contract with NASA. Investors are salivating at the prospect of a public listing, but Musk has repeatedly ruled it out. So instead, intermediaries have created 'SpaceX-linked' products that claim to track its valuation.
This is where the red flags multiply. These instruments are illiquid, opaque, and heavily dependent on secondary market pricing. The valuations are based on occasional funding rounds, not transparent market mechanisms. In plain English, you are buying a pig in a poke.
British savers, still stung by the Woodford scandal and the crypto crash, seem eager to chase the next big thing. The narrative is compelling: space exploration, Mars colonies, Starlink's global domination. But the financial reality is far more prosaic. The 'SpaceX funds' being marketed have fees that would make a private equity baron blush. They lock up capital for years. And they rely on a single company's success. Diversification? Forget it.
Then there's the matter of Musk himself. The man is a genius, no doubt. But his leadership of Twitter (now X) has been chaotic, and his Tesla stock has been volatile. His recent comments on interest rates and the Federal Reserve suggest he is as fallible as any mortal. Betting the farm on one man's vision is not investment; it is speculation dressed up in a spacesuit.
The Bank of England and the FCA have so far remained quiet, but they are watching. If these products go viral, expect a regulatory backlash. Capital flight from sensible assets into moon-shot bets is exactly the kind of froth that precedes a nasty correction.
My advice? If you have money to burn, buy a ticket to Mars. But if you want to preserve your savings, look elsewhere. The space race is a thrilling spectacle, but the bottom line does not bend to hype. Gilt yields may be dull, but they pay your pension. SpaceX might make history, but it could also blow a hole in your portfolio.
In my 20 years on the Square Mile, I have seen many 'can't miss' opportunities. They all missed. The fundamentals remain: companies that generate cash, pay dividends, and have transparent accounting. SpaceX is a marvel of engineering, not of finance. Treat it as such.
Investors who insist on chasing this rocket should strap in for a bumpy ride. The market has a way of reminding speculators that gravity applies to valuations as well as spacecraft. Buckle up, Britain. This could get messy.
