Small investors heard the word "overvalued" and started filling out brokerage applications. They read "stupid valuation" and began liquidating their savings accounts. This is called pattern recognition.
SpaceX plans to go public. The company launches rockets that land backward and catch themselves with chopsticks. Retail traders believe this technology will translate directly into stock price appreciation because it looks cool on their phones.
Some analysts called the valuation stupid. The retail investors nodded along while simultaneously setting limit orders at market open. They agree the price is insane. They're buying anyway. This is the same cognitive process that leads people to order the Cheesecake Factory appetizer sampler for one.
The scramble began immediately. Robinhood servers prepared for their quarterly meltdown. Discord channels filled with rocket emojis, which carries a certain irony given the underlying asset actually makes rockets. The metaphor and the reality merged into one beautiful disaster of capital allocation.
These investors will explain their thesis at parties. They'll say Elon. They'll say Mars. They'll say disruption. What they mean is they saw a line go up on a chart next to a picture of a space shuttle and experienced the financial equivalent of a Pavlovian response.
The valuation concerns them. They read the articles. They understand the numbers don't work at current prices. Then they buy anyway because their cousin who works at Enterprise Rent-A-Car told them SpaceX is "the next Tesla" and he seems pretty confident about it.
They know it's overvalued. They're calling it overvalued themselves. They're using the word "stupid" in their own group chats. Then they're wiring money they don't have into accounts that will restrict selling at exactly the wrong moment. It's not gambling if there's a rocket involved.
Photo by Sven Piper on Unsplash
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