Nobel Prize-winning economist turned liberal political commentator Paul Krugman broke down for MS NOW’s Ari Melber on Friday evening why the SpaceX IPO valuation that just made tech tycoon Elon Musk the world’s first trillionaire stinks to high heaven.
‘You make several critiques,” said Melber. “I wonder if you could start with kind of what I’ve read to be your most conservative kind of math critique, which is you basically lay out why you don’t think this thing is worth what it claims to be worth.”
First of all, Krugman said, “Imagine that … Musk had a spiritual awakening and went to a monastery somewhere. What’s left? What is SpaceX? It’s a medium-sized satellite launch company? That’s an okay business, but it’s not a huge business, attached to a really bad AI model. Grok is, by all accounts, terrible … and that in turn is bolted to what’s left of Twitter, which has been turned into a, you know, a right-wing, Nazi-infested wasteland.”
It defies belief, Krugman continued, to imagine that company is “worth almost as much as Microsoft, you know, which is are supplying the software that, you know, like it or not, the world runs on. So this is crazy, the valuation. There’s no conceivable way.”
Musk has a track record of making lofty promises on everything from self-driving cars to Mars colonies.
Ultimately, he said, “this is all it really is a Ponzi scheme,” but unlike most Ponzi schemes where all the suckers have to choose to opt into it, “People are being forced effectively to buy into SpaceX because the indexes are including it, even though by the normal rules they should not,” and there are now even “universities that have 10 or 15 percent of their endowment invested in SpaceX.”
The bottom line, Krugman concluded, is that “this is a rigged system … this is genuine rigging. Clearly the the system has all been tilted into producing this absurd valuation that makes the world’s first trillionaire.”
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