Original Title: SpaceX Could Get Dangerously Systemic
Original Author: Quoth The Raven
Original Translator: Peggy, BlockBeats
Editor’s note: After SpaceX's market capitalization surpassed $3 trillion after hours, this article raises a sharper question than "How much is it worth?": When a company can add hundreds of billions of dollars in market value in one day due to limited float, options trading, and market sentiment, are capital markets still engaged in price discovery, or have they become a self-reinforcing speculative machine?
The author’s core judgment does not deny SpaceX’s business prospects. SpaceX may still be one of the most important space infrastructure companies in the world, and it may possess significant long-term potential. However, what this article truly concerns is something else: If the stock price is primarily driven by bullish option buying, market maker hedging, momentum fund chasing, and passive fund allocation, then valuation is no longer just "reflecting value," but begins to "create value." The increase in price itself becomes a new reason to be bullish, while fundamentals are pushed to a secondary position.
The concept of gamma squeeze (a feedback loop where options market makers are forced to buy stock to hedge, further pushing up the stock price) mentioned repeatedly in the text is key to understanding this article. In recent years, similar mechanisms have repeatedly appeared in Tesla, some meme stocks, and high-momentum tech stocks. The author is concerned that if SpaceX replicates this path and continues to rise due to its narrative intensity, circulation constraints, and Elon Musk's personal influence, it could transform from an overvalued stock into a systemic variable of the entire market.
The more dangerous part lies in indexing and passive investing. When a company is large enough, it will be included in major indices, passively held by ETFs, pension funds, retirement accounts, sovereign funds, and institutional portfolios. At this point, the bubble is no longer just a gamble for a few traders, but enters the long-term asset allocation of ordinary investors. The higher it rises, the more the market cannot avoid it; and the less it can be avoided, the more funds are likely to continue flowing into it.
Thus, what this article truly discusses is not whether SpaceX will become a $5 trillion or $10 trillion company, but a structural paradox of modern capital markets: When the market mechanism itself can amplify narrative, leverage, and liquidity to the point of overwhelming fundamentals, can the so-called "price discovery" still hold? SpaceX is merely an extreme case, but the problems it exposes may be more universal—in today’s U.S. stock market, systemic risk sometimes does not start with bad companies, but with the most popular, most unignorable companies.
The following is the original text:
"Things will only get weirder, weirder, and weirder, and eventually, it will get to a degree where people have to start discussing: How weird can it actually get?"
—Terence McKenna
For the past few years, I have been asking: How absurd do things have to get before we acknowledge that the stock market is fundamentally broken? After seeing SpaceX soar after hours today, I think the answer has become quite clear: The market has long been broken. The real question is just how absurd it needs to become before anyone else takes notice.
SpaceX’s market capitalization surpassed $3 trillion in after-hours trading. This means its valuation has exceeded that of Amazon and Microsoft. Microsoft generates hundreds of billions in revenue annually, with annual profits exceeding $100 billion. Amazon's annual revenue exceeds $700 billion, with profits also in the tens of billions. And now, SpaceX has been assigned a higher valuation than either of them.
SpaceX’s relatively limited float makes it an ideal target for manipulated short squeeze scenarios. As trading in the after-hours session neared its end, its stock price briefly approached $230 per share. In just one day, a company that is still losing billions of dollars annually added approximately $650 billion in market value out of thin air.
$650 billion. Not in a year. Not in ten years. Just in one day. And tomorrow, SpaceX's options will begin trading. As I previously predicted, I bet it could be further squeezed.
This is the truly unsettling part. Because I have been writing for years about what happens when options activity starts to become the main driving force behind price movements.
We have seen this script before: bullish options buyers rush in, market makers are forced to hedge, stock prices rise, momentum traders chase higher prices, more bullish options are bought, and then this cycle continues to reinforce itself.
As of 10:30 AM Eastern Time on the first day of SpaceX options trading, over 500,000 contracts have traded, corresponding to a nominal size of about 50 million shares.
Call options expiring in two days with a strike price of $380—currently the deepest out-of-the-money contracts available—are the second most popular strike price among this week’s expiring call options, and were briefly the hottest strike price in early trading.
At a certain point, prices no longer measure value but begin to create it. Valuation itself turns into bullish logic. The company's industry attributes and fundamentals become utterly irrelevant. At this point, the market officially begins to do what it shouldn't be doing.
This is why tomorrow is significant. Because a company that has already exhibited strong short squeeze characteristics will begin trading options. And its "sister company" has also experienced similar situations.
I have written for several years that modern markets are increasingly driven by mechanical forces, rather than fundamental analysis. Tomorrow may become one of the clearest examples of this judgment.
My expectation is that the launch of SPCX options trading will not improve price discovery but rather further distort it. If aggressive bullish options buying occurs, the market makers' hedging actions could create a sort of reflexive feedback loop, similar to the mechanisms that have propelled Tesla and other momentum stocks to spectacular yet completely illogical rallies over the past decade.
By then, price fluctuations will have no relation to business fundamentals and will depend entirely on market structure. If SpaceX indeed experiences the kind of gamma squeeze many traders openly anticipate, I believe it will further prove: modern markets have become utterly useless and extremely dangerous for ordinary people's retirement accounts.
Because markets should be responsible for allocating capital, should promote price discovery. They should connect valuations—no matter how imperfect—with economic realities. Markets should not become a self-reinforcing feedback machine that can increase the market value of a company by hundreds of billions or even trillions of dollars purely through mechanical capital flows.
The issue is not whether SpaceX is a good company. The issue is whether the market structure surrounding it is healthy.
Because if a company can become more valuable than Microsoft and Amazon while its revenue and profits are just a fraction of theirs, and tomorrow it may even surpass NVIDIA, then what are the limiting factors? What can prevent it from becoming a $5 trillion company? And what can stop it from becoming a $10 trillion company?
Image Source: Zero Hedge Twitter
If the same options-driven feedback loop that drove Tesla's surge after late 2019 appears here, then those numbers will no longer seem as unimaginable as they once did. And that is precisely the part that no one wants to discuss.
Everyone wants to discuss how high SpaceX can rise. No one wants to discuss what will happen if it actually reaches that level.
If SpaceX's market value reaches $10 trillion, it means a company's valuation is roughly equal to one-third of the U.S. GDP. It will be large enough to dominate passive indices, retirement accounts, ETFs, pensions, and institutional portfolios. Its rise and fall will increasingly determine the performance of the entire market—meanwhile, it hasn't even become profitable yet. It will become the greatest and most dangerous speculative machine in human history.
Think about what that means for Elon Musk. If SpaceX's valuation reaches $10 trillion, Musk's personal wealth would enter a range never before seen in modern history. His net worth is already equivalent to 40% of all circulating money.
Image Source: Zero Hedge
Moreover, he is not just richer than the second-wealthiest person; he may soon become around ten times wealthier than the second-wealthiest individual.
The gap between Musk and other billionaires could surpass the total wealth of some developed nations. By that time, we will no longer be discussing ordinary wealth creation.
If SpaceX's market value inadvertently rises to $28 trillion due to some gamma squeeze glitch, what happens then? That is roughly equivalent to one year's economic output of the U.S. Will people finally start to question the market, or will they continue to search for new reasons to rationalize it all?
Because every bubble in history has operated this way. Each new high is treated as evidence that the previous peak was too low. Every round of speculative frenzy is packaged as innovation—just ask so-called "innovation expert" Cathie Wood. Every short squeeze is explained as genius. Every warning becomes evidence that "skeptics don’t understand the future."
The most astonishing aspect of SpaceX surpassing $3 trillion is not the valuation itself.
But rather that if it continues to rise, it will become too big to ignore. At some point, we will have to stop discussing SpaceX itself and turn to the system that produced it: a speculative machine that has completely detached from its original function.
The danger is that once a company reaches a large enough scale, the distortion itself can transform into systemic risk. Every passive fund will have to hold it. Every major index will rely on it. Pensions, retirement accounts, sovereign wealth funds, insurance companies, and institutional portfolios will increasingly be exposed to the same trade. The higher it rises, the less avoidable it becomes.
This is the part that no one truly understands.
If SpaceX ultimately reaches $10 trillion under the influence of speculation, narratives, mechanical capital flows, and options-driven feedback loops, it will no longer be just a story about SpaceX. It will become the entire market. Its movements will increasingly determine the performance of indices, ETFs, and the retirement accounts within the entire financial system. The market will effectively become a referendum on a single stock.
This is how bubbles turn into systemic risks. Not when they are small enough to be ridiculed, but when they grow large enough that everyone is forced to participate. The same mechanisms that drive prices higher today will ultimately create unstable conditions tomorrow. When trillions of dollars in wealth are tied to a valuation that has never truly anchored to fundamentals, even a mild correction could have consequences far exceeding the stock itself.
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