SpaceX Is Now Worth $2. 4 Trillion, Making It Twice as Valuable as Bitcoin. But Here's Why I'm Still Buying Bitcoin. | The Motley Fool
Elon Musk's rocketry business is off to a great start on the public stock market. One holiday-shortened week after its initial public offering,Space Exploration Technologies(SPCX3. 55%)is up 14. 9% from last. . .
Elon Musk's rocketry business is off to a great start on the public stock market. One holiday-shortened week after its initial public offering,Space Exploration Technologies(SPCX3. 55%)is up 14. 9% from last Friday's closing price. With a market cap of $2. 43 trillion,it's nearly equal to"Magnificent Seven" memberAmazonand about twice as valuable asBitcoin(BTC+0. 98%), which is currently sitting at $1. 24 trillion. So, Wall Street is excited about SpaceX while Bitcoin is taking a beating. As of June 19, the largest cryptocurrency is down 28% year to date and just 6% above early June's multiyear lows. But I'm not giving up on Bitcoin. Trading at 130 times trailingsales, I'm not interested in the speculative SpaceX stock today. I'd much rather invest in a financial tool for the future at this unsustainably low price. In fact, I bought into another Bitcoin-based exchange-traded fund (ETF) on June 5, just days before the SpaceX IPO. Here's why I'm putting real money in cryptocurrencies whilestaying away from the SpaceX hype. Today's Change(-3. 55%) $-6. 82Current Price$185. 00Why I skipped the SpaceX IPO and bought more Bitcoin in JuneI boosted my Bitcoin-based holdings by 23% in early June. I wanted some exposure to the recently launchedMorgan Stanley Bitcoin Trust, an ETF with annual fees of just 0. 14%. That's the lowest cost margin in the Bitcoin business, ahead of 0. 19% in theFranklin Templeton Digital Holdings Trustand 0. 2% for theBitwise Bitcoin ETF. But I wasn't just optimizing my ETF fees. The crypto market looked radically undervalued that week, and it still does today. The Bitcoin portion of my total investment portfolio (actual Bitcoin plus three spot-price ETFs) was just 3. 8%. That's comfortably within the 1% to 5% Bitcoin exposure recommended by financial powerhouseMorgan Stanleyin 2024. After the Morgan Stanley ETF purchase, I'm near the top of the professionally recommended range with 4. 7% Bitcoin exposure. I'm not betting the proverbial farm, but my portfolio takes Bitcoin seriously. Image source: Getty Images. Rockets are cool, but. . . I already talked about SpaceX's frothy valuation. Early investors are building a trillion-dollar castle in the financial clouds, based onskyrocketing revenue growthand a heavy cash burn. The xAI segment's data centers areexpensive to buildand to operate, with limited financial returns for this asset-heavy effort. Look, SpaceX is cool. Rockets are awesome. Musk's engineers landing boosters on drone ships like it's a video game? I nerd out about this stuff. But "cool" isn't an investment thesis, andneither is a 130 price-to-sales ratio. Meanwhile, Bitcoin is having a rough year, ringing bells in my opportunistic lobes. The big banks apparently agree with me now. JPMorgan Chase,Citi, Morgan Stanley, andBank of Americaare all recommending Bitcoin exposure to wealthy clients. When the suits in Manhattan start telling their richest customers to buy something that used to be toxic in the traditional banking world, things are changing. Today's Change(0. 98%) $624. 97Current Price$64261. 00Mining economics also put a floor under Bitcoin's downside. Bitcoin's market price is currently below production costs. Miners operate at a loss. This creates two possible outcomes: Prices recover to restore profitability, or miners exit the market to spend their electricity supply on AI computing for a while. Fewer miners will reduce the new supply. One way or the other, Bitcoin prices should bounce back over time. So I'm not chasing rockets with SpaceX stock. At these prices, Bitcoin looks like the better long-term bet. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Anders Bylundhas positions in Amazon, Bitcoin, Bitwise Bitcoin ETF Trust, and Morgan Stanley Bitcoin Trust. The Motley Fool has positions in and recommends Amazon, Bitcoin, and JPMorgan Chase. The Motley Fool has adisclosure policy.