The answer starts with Wall Street’s long-held distinction between “smart money” and “dumb money.” In that view, the roughly $2 trillion value that the stock market is affording SpaceX — about the same as Amazon’s value, and more than JPMorgan’s and ExxonMobil’s combined — is being set by naïve investors who think Elon Musk’s promises will all miraculously be realized. The debt, on the other hand, is being priced by seasoned investors, the ones who understand that profits actually have to be earned, and who are rightly skeptical of Mr. Musk’s grand pronouncements.

 

It’s a World-Class Investment. It’s a Junk Investment. What Is Going On With SpaceX?

By Bethany McLean

Ms. McLean is a financial journalist and co-author of “The Smartest Guys in the Room.”