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.

“The stock is called SpaceX, but it might as well be called Elon Musk,” the “Mad Money” host said.

SpaceX has quickly become one of the world’s most valuable companies following its blockbuster IPO on Friday. Shares surged almost 5% Tuesday, pushing the rocket company’s valuation above several technology heavyweights, including Amazon, and briefly surpassing Microsoft. The rally has intensified questions about whether SpaceX’s roughly $2.5 trillion market value is justified.

Cramer argued, however, that conventional valuation methods miss what many investors are buying.

“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. Instead, he thinks investors are assigning value to Musk’s track record of building category-defining businesses and his ability to turn ambitious ideas into commercial opportunities.

“When you buy SpaceX here, you’re really buying Elon Musk’s brain,” Cramer said. “I think the cult of Musk is for real.”

To support that view, 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. Adding to that opportunity set, 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. 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.

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.

Michael Burry of “The Big Short” fame said Tuesday he has no position in SpaceX, arguing that options used to wager against the stock remain too expensive even as he questioned the company’s nearly $3 trillion market value.

The investor, best known for predicting the U.S. housing collapse before the financial crisis, said he had reviewed several bearish options trades tied to SpaceX but ultimately passed on all of them.

“I am not involved with SpaceX now. Neither short nor, ahem, long,” he said in a SubStack post Tuesday.

A put option with a $100 strike price expiring in December 2028 was priced at about $25 per contract with the stock trading around $212, Burry said. A similar contract expiring in June 2027 cost roughly $13, while a December 2026 put traded around $6.75.

“Tempted by that one. But no thank you,” Burry said of the shorter-dated option. “With any luck SPCX will settle up here in the mid $200s and vol will drain out of put option chain.”

Still, Burry questioned the scale of the company’s valuation, describing SpaceX as “fundamentally a small space company, a niche telecom, a bedeviled social media company, and a Coreweave-light” generating less than $20 billion in annual revenue.

He argued the company’s market capitalization had reached levels that dwarf many established businesses and fortunes, noting that SpaceX is now worth more than Warren Buffett’s Berkshire Hathaway and exceeds the market value of many industries and national economies.

“Berkshire Hathaway has been eclipsed 2 1/2 times over in just three days. Berkshire Hathaway, painstakingly assembled over two century-old lives. The two greatest investors of our time,” Burry said.

The comments add to a growing debate over whether investors are assigning too much value to SpaceX’s businesses, which span launch services, satellite internet and social media, following one of the most closely watched public offerings in recent years.

Shares of SpaceX jumped 20% in their first full day of trading after a blockbuster debut, and they have since popped more than 25% week to date. The historic IPO minted Elon Musk as the world’s first trillionaire.

Last month, Burry urged investors to scale back exposure to surging technology stocks, saying investors should “reject greed” as enthusiasm around artificial intelligence and momentum-driven trades pushes valuations sharply higher. He has been warning for months that the stock market’s AI fixation increasingly resembles the final stages of the dot-com bubble. 

Retail investors who clamored for shares in SpaceX‘s blockbuster initial public offering received only a fraction of what many had requested, and are already split on what to do with the stock.

Across online investing forums, users complained of allocations as small as a single share despite requesting far larger amounts. Those who did receive stock are taking different approaches, with some selling into the company’s market debut while others holding for the long haul.

Marvin Jung, a 51-year-old investor who requested 1,000 shares through Robinhood and received just 17, opted to quickly sell his stake after trading began.

“I have exited my position of SpaceX stock at $160,” Jung said. “It’s struggling too much and can’t find its footing. I’ll continue to watch and return in about six months when the lockup period is over.”

SpaceX shares rose another 6% on Monday, extending gains after the company’s record-breaking Nasdaq debut. The stock surged 19% on Friday to close around $161, up from its IPO price of $135 a share, lifting the company’s market value above $2 trillion.

Ross Cameron, 41, founder of trading education platform Warrior Trading, also came away with far fewer shares than he sought. He initially requested 2,500 shares through Schwab before increasing the order to 4,250 shares ahead of the deadline. He ultimately received 147 shares at the IPO price of $135.

“I would’ve liked to have gotten more shares filled because it would’ve increased my total profit, but I understand the demand was very high,” Cameron said. “My plan is to hold the shares unless they break $150, and take profit if they get closer to $200 a share.”

Cameron is also cautious about the months ahead, expecting a wave of selling pressure once lockup restrictions expire and additional shares become available for trading.

“I still think that the next six months will create a wave of selling due to the lockup expiration period,” Cameron said. “I don’t think there will be enough buying to support the current prices when those shares come onto the market.”

Most subscribed offering

Demand was intense across brokerage platforms. SoFi Technologies said SpaceX was the largest and most subscribed offering in its history, while Charles Schwab described client interest as “unprecedented.” SoFi, Fidelity, Robinhood and Schwab all allocated shares to every eligible customer who sought to participate. However, many investors appeared to receive only a fraction of their requested orders as demand far exceeded available supply.

Others investors are taking a longer-term view. Helaine Markham, co-owner of Markham Trading, received all two shares she requested in the IPO and intends to hold the stock.

Markham said she has not added to her position because she views SpaceX’s valuation as “aggressive” and expects additional volatility as lockup restrictions expire and more shares become available for trading. She plans to wait for further price discovery before potentially increasing her stake.

The mixed reactions highlight the challenge facing investors trying to value one of the market’s most closely watched companies. While some see SpaceX as a rare long-term opportunity tied to the growth of Starlink and commercial space exploration, others are wary of the company’s now $2 trillion valuation and are choosing to take profits early.

Symbolic one-share allocations

Justin Sacco, founder of Sacco Financial, received 11 shares through Charles Schwab after requesting 75. Rather than sell, Sacco added to his position after the stock started trading, purchasing four additional shares in the open market and bringing his total holdings to 15 shares.

“I was certainly hoping to receive more than 11 shares after requesting 75,” Sacco said. “At the same time, considering the unprecedented demand for the IPO, I wasn’t shocked by the outcome. The fact that I received a meaningful allocation at all felt like a win.”

Sacco said he plans to hold these shares long term even though he has grown concerned about the lofty valuation.

Sacco’s experience was relatively fortunate compared with some retail investors. On Reddit’s WallStreetBets forum, users posted screenshots showing allocations of just a single share despite requesting hundreds or even thousands. Others joked that the tiny allocations amounted to little more than a souvenir from one of the most anticipated IPOs in recent memory.

Gold fell to a fresh six-month low on Thursday as investors dump the once-hot trade on growing concern that higher inflation will force the Federal Reserve into possibly raising rates later this year, or at least keep them steady.

But there are also other factors at play.

August gold futures touched $4,046.20 an ounce on Thursday, their lowest level since November. Gold is down 6.3% this week alone, putting it on pace for a second straight weekly loss and its worst week since mid-March, when gold fell 9.62%.

It was last down 0.5% to $4,111.10 an ounce.

Fed reversal

As a safe-haven asset, investors gravitate toward the yellow metal during times of market uncertainty and in hopes that it will act as a hedge against inflation. But because gold doesn’t yield anything, the metal is also especially sensitive to expectations for long-term, real interest rates.

The Iran war, now in its fourth month, has fueled inflation by pushing energy and other prices higher.

U.S. consumer inflation in May increased at its fastest pace in three years, mainly from the surging prices of energy-related products. Together with a stronger-than-expected May jobs reports, expectations have grown that the Fed may need to raise interest rates by the end of the year to slow down price increases. 

Next week, the Federal Reserve is expected to hold its benchmark lending rate steady at 3.50% to 3.75% during Kevin Warsh’s first meeting as Fed chair. A majority of ⁠economists in a Reuters poll expect interest rates to remain unchanged ⁠this year after many were penciling in multiple rate cuts to start the year.

Traders are less sanguine, and are currently pricing in a 67% chance of a Fed rate hike by December, according to the CME Group’s FedWatch tool.

Higher rates, if they help stamp out inflation, can make dollar-denominated assets such as Treasury securities more attractive. 

The technical breakdown

Based on price chart analysis, the overall technical picture for gold remains weak.

Gold recently broke below its 200-day moving average for the first time since September 2023, which Citigroup flagged as a major negative signal. The bank has been cautious near term on gold ever since the war escalated in March, partly due to higher energy costs springing from the closure of the Strait of Hormuz.

In the long term, Citi remains bullish.

“While market participants struggle with the short-term outlook, which relies heavily on the Strait of Hormuz outcome, the consensus view remains constructive over the medium to long term on robust non-cyclical demand from increasing global geopolitical fragmentation, lingering sovereign debt and debasement concerns and sustaining central bank reserve diversification trend,” Citi analysts said.

Retreat from the ‘debasement trade’

JPMorgan sees a broad-based retreat of the “debasement trade” by retail and institutional investors.

The withdrawal from that trade that started to emerge a couple of weeks ago has continued in recent weeks.

The bank cited outflows from gold exchange-traded funds and weaker futures positioning due to growing concerns around the size of the government deficit, longer-term inflation backdrop, higher geopolitical uncertainty since 2022.

“Our momentum signal framework also points to a continued retreat from the debasement trade. The pattern since the start of the Iran conflict has been similar to ETF flows and the futures positioning proxy,” the bank noted.

JPMorgan’s analysis shows gold ETF outflows of around $20 billion in the week to June 5 after modest inflows in the prior week while bitcoin ETFs recorded gradual increasing outflows over the previous four weeks.

In the futures space, investors continued to unwind exposures to the debasement trade. The bank noted that reduction to gold had started from end-February and has remained steady since mid-April

CNBC’s Jim Cramer on Friday said SpaceX’s blockbuster debut could pave the way for a new wave of AI-related equity offerings and help create a more constructive backdrop for stocks.

“Never has one initial public offering captivated the minds of Wall Street and perhaps Main Street as much as Elon Musk’s SpaceX,” the “Mad Money” host said.

Elon Musk’s rocket company debuted Friday and finished the session at $161 per share, giving SpaceX a market value of roughly $2.1 trillion. Cramer said the success of the offering could encourage other companies to tap the market soon, particularly AI players such as Anthropic. The startup behind the Claude models confidentially filed for an IPO earlier this month. Additionally, he said companies including Microsoft, Meta and Amazon may decide it’s a good time to sell stock to help fund their AI buildouts — similar to what Google parent Alphabet is doing.

“Bankers work fast these days,” Cramer said, explaining the idea would be to “strike while the iron is hot.”

“I don’t know if they can resist selling stock after seeing how SpaceX played out,” he added.

Cramer also said investors should keep a close eye on developments in the Middle East. While he remains skeptical that peace is fully at hand, a lasting resolution could send oil prices lower and help ease inflation pressures.

“If we get peace, the first thing you have to realize is the process toward lowering inflation will begin with a collapse in the price of oil,” he said.

Cramer said he initially worried the SpaceX offering could overwhelm the market, but now believes its successful debut could help support sentiment and set the stage for a constructive week ahead.

“The success of today’s placement of SpaceX is something to be studied for years,” he said. “It’s a win for the market, and if we get peace, it won’t be stopped.”

With that backdrop, Cramer turned to the shortened trading week ahead.

SpaceX is allocating a smaller-than-expected portion of its blockbuster initial public offering to retail investors, according to a person familiar with the matter.

The Elon Musk-led company plans to direct a percentage in the low 20s of the offering to retail buyers, including international individual investors, online brokerages and private-bank clients, the person said.

The allocation is below earlier expectations that roughly 30% of the deal would be reserved for retail investors.

The allocation decisions are almost finalized and could still change, the person said.

SpaceX is set to begin trading Friday, in what is poised to become one of the largest public offerings in history. The company is expected to be valued at about $1.8 trillion.

The reduced allocation suggests institutional demand for the shares has been strong as investors compete for access to the hottest IPO in recent years. Even with a smaller allocation, the retail tranche would still rank among the largest ever for a U.S. IPO of this size.