Peter Diamandis tells CNBC he and his kids have 100% of investment capital in SpaceX. Smart move or doomed to crash?

“SpaceX has stopped being just a rocket company,” Diamandis said. But he got in years before SpaceX was talking about going public. Anyone following suit would be betting everything on a $2 trillion company that Morningstar thinks is overpriced.

Diamandis isn’t the only one putting SpaceX in kids’ hands. On Oct. 19, SpaceX CEO Elon Musk posted on X that he’ll give every child living in the U.S. one share from his own stake next year.

Why Diamandis is all in on SpaceX

Last quarter’s results gave Diamandis plenty of confidence. SpaceX’s AI unit brought in $7.56 billion, topping the $5.25 billion from its connectivity business, Starlink, among others. It also swung to a $431 million operating profit after losing $1.26 billion the quarter before[b].

When host David Faber asked whether SpaceX’s yearly sales could top $1 trillion in 2028 or 2029, Diamandis didn’t hesitate. He said he was 100% sure they could[c]. He also said he thinks it’ll be the first $10 trillion company.

In a newsletter post later that day, Diamandis urged other parents to get their kids investing in shares of said companies[d].

Why going all in is riskier for most families

Chicago-based investment research firm Morningstar said it still thinks SpaceX shares are priced far above value and gives them one star out of five.

That’s even after it raised its fair value estimate — its view of what a share is really worth — to $70 from $62 because SpaceX has had more success scaling up its data centers.

SpaceX spent $19.6 billion building out its business last quarter, $16.4 billion of it on AI, and Morningstar is not convinced that spending will pay off.

Since pricing its IPO at $135 a share in June, SpaceX has traded as high as $225.64 and as low as $104.83.

When Faber brought up next month’s midterms and the 2028 presidential race, even Diamandis acknowledged the political risk.

History isn’t kind to one-stock bets. Arizona State University finance professor Hendrik Bessembinder tracked nearly 26,000 U.S. stocks from 1926 through 2016. More than half did worse over the time they traded than one-month Treasury bills, a short-term U.S. government debt instrument. Just 4% of companies produced the market’s entire gain over those bills.[e]

Bessembinder sees that as part of why investors who bet on a handful of stocks usually trail the market.

How to own SpaceX without betting everything on it

You don’t have to skip SpaceX altogether. Gina Martin Adams, chief market strategist at Atlanta-based wealth management firm HB Wealth, suggested picturing a 20% drop after you buy.

Then, she told WealthManagement.com in a July 21 story, ask yourself, “Am I still going to be a happy owner of SpaceX?”

If the answer is yes, she said, you probably believe in the company enough to own it. SpaceX shareholders have already lived through a drop that size. And if you own a Nasdaq-100 index fund, you already hold a little SpaceX, which joined on July 7.

Beyond that, keep to a modest slice of a bigger, more diverse portfolio. Leave your emergency fund and retirement savings alone. A financial advisor can help you size it.

As for Musk’s giveaway, think of any shares your kids get as a bonus on top of what you’re already saving for them. Going all in now means betting your savings on a company that still has to show its AI spending will pay off. For most families, a small position makes a lot more sense.

[a]SpaceX Q3 release, page 1, second set of bullets: $14.6 billion in revenue up 161%, and $4.4 billion in net income vs. a $1.1 billion net loss a year earlier.