Einhorn Calls Spacex's $1.75 Trillion IPO A 'Major Speculative Top' Marker [Greenlight Capital's Q2 2026 Letter]

(MENAFN- ValueWalk) David Einhorn's Q2 2026 letter to Greenlight Capital investors. See the full letter in PDF format at the bottom of this post. First, brief highlights:

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Performance: Partnerships returned -4.3% in Q2 and 1.9% year to date, compared to 15.2% (Q2) and 10.2% (YTD) for the S&P 500 New longs: Comcast (CMCSA), Fortune Brands Innovations (FBIN), Primo Brands (PRMB), PayPal (PYPL), Versigent (VGNT) Exits: Public Power Corp (PPC, 30% IRR), Victoria's Secret (VSXY, 157% IRR), Weatherford International (WFRD, 45% IRR) SpaceX's (SPCX) $1.75 trillion IPO: Einhorn says it may mark“a major speculative top” New Fed Chairman Kevin Warsh, his 2.0% inflation stance, and Greenlight's rate-cut bet Greenlight Capital closed to new investment on July 1 SEC concluded a routine examination with no deficiencies identified Largest long positions at quarter-end: Acadia Healthcare, Brighthouse Financial, Core Natural Resources, Fluor, Green Brick Partners Greenlight's 30th anniversary and David Einhorn's engagement to Nathalie Kaplan

See the full letter below.

Dear Partner:

The Greenlight Capital funds (the“Partnerships”) returned -4.3% in the second quarter of 2026, and 1.9% year to date, each net of fees and expenses, compared to 15.2% for the S&P 500 index for the quarter and 10.2% year to date.1

We normally wait until the end of our quarterly letter to provide business and personal milestones. This quarter, however, we had one of each that are worthy of flipping things around. On May 9, we celebrated Greenlight's 30th anniversary with employees of Greenlight Capital, Greenlight Masters and the Einhorn Collaborative, their families, as well as most former employees and some friends.

While some would argue that the highlight of the evening was David's rap performance of“The Greenlight Story” set to Eminem's“Lose Yourself”, the overwhelming consensus was that his PowerPoint presentation, The Big Surprise, was even more memorable.2 That big surprise was David proposing to his longtime girlfriend, Nathalie Kaplan. Yes, everyone was surprised. The happy couple are planning a small wedding next spring. Congratulations, David and Nathalie!

Unfortunately, these milestones occurred during a challenging quarter for the Partnerships. We began the period positioned conservatively, focusing on capital preservation. While we expected to trail the S&P 500 in such a strong market, we did not expect to lose money. Overall, longs added about 9% net to the return, while shorts detracted a similar amount, with neither side generating significant alpha. Our losses were due to some costly trading decisions and the drag from macro, which detracted almost 4% net, primarily from significant losses on gold and U.S. interest rates.

While we had nice gains in Acadia Healthcare, Centene, Green Brick Partners and TD SYNNEX, we attribute these mostly to the market lifting the stocks rather than to specific company developments, though Centene did have surprisingly strong results. Similarly, we had losses on several shorts in areas exposed to the most hyped parts of the market as well as a loss in Core Natural Resources, which reversed its gain from the first quarter.

Speaking of the most hyped parts of the market, let's discuss Space Exploration Technologies, or SpaceX (SPCX), which had a successful IPO in June. First, congratulations to the many who invested in the private rounds and now have huge gains on their hands. Figuring out how to realize those gains is a high-class problem. As for the $1.75 trillion valuation at the IPO, we don't know if it is best described as the meme-ification of the market at scale, the latest proof that the markets are“broken,” a remarkable manipulation of the IPO process (including floating less than 5% of the company while persuading several index providers to grant early inclusion), or just another insult to value investing.

We have spoken to investors who own SPCX, some of whom say they simply want to“invest in the future,” while others express extraordinary confidence in the company's long-term prospects. One high-profile holder of many billions of dollars of SPCX told us that the company will generate $1 trillion of high-margin revenue. When we observed that $1 trillion would exceed the annual revenue of either Amazon or Walmart and asked him to support his claim, he offered no explanation and instead pivoted to a rant about short sellers.3

Perhaps demonstrating even more questionable behavior than the equity holders, the rating agencies have assigned SPCX an investment-grade credit rating. According to Moody's, SPCX has the capacity to become one of the largest non-financial investment-grade borrowers, even though it isn't expected to be cash flow positive for years. We can't find any other examples of investment-grade ratings being awarded to a company with a multi-year forecast of negative free cash flow and no history of generating free cash flow.

While we don't have a view as to whether data centers in space will replace all the data centers on Earth, whether asteroids can be mined for minerals, whether people will someday travel to Mars, or whether the moon will be an important manufacturing hub, we doubt that the discounted value of those possibilities, using an appropriate risk-adjusted discount rate, would lead to a number that approaches SPCX's market capitalization. Of course, that doesn't mean the stock won't go up. After all, twice a silly price isn't twice as silly. Our sense is that this IPO is something we might look back on as a marker that a major speculative top is near.

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On a more positive note, the Fed has a new Chairman. Kevin Warsh has long been a critic of the Fed's policy and practices, and we are optimistic that his leadership will bring substantial reform and improvement.

Seemingly, the market is having trouble with the fact that Chairman Warsh neither gives guidance about future decisions nor provides any framework for how he will evaluate policy. He says he wants the market to sort out the data for itself. Whether he sticks to this market-driven approach remains to be seen. We recall that the current Treasury Secretary just last year proclaimed that Wall Street had had its turn and now it was Main Street's turn. That lasted for about three weeks, before a tumbling market restored Wall Street's primacy. We'll see how Chairman Warsh reacts when the market sorts things out in a way he finds unfavorable.

Since Chairman Warsh hasn't explained his policy approach and is leaving everyone guessing about what he might do, we thought we'd share our assessment. Chairman Warsh repeats emphatically that he will not tolerate inflation above 2.0%.4 To us, this echoes former ECB Chairman Draghi's pledge to“do whatever it takes.” As it turned out, the markets took Chairman Draghi seriously and did the work such that“whatever it takes” turned out to be very little. Perhaps the hope is that the market will take Chairman Warsh's words seriously and cause a self-fulfilling reaction, leading inflation to fall to 2% without the need to actually adjust policy. Let's call this Plan A. There are early signs that it may be working. Since his confirmation on May 13, 1-year inflation swaps have fallen from 3.45% to 1.79% as of now.5

Of course, if merely insisting that excess inflation won't be tolerated turns out to be insufficient, Chairman Warsh can always turn to Plan B and change policy later. While the market expects this, we disagree. So far this year, our disagreement with the market has been costly. We are positioned to recover some of our losses if Plan A works and the Fed does not raise rates this year.

We added several new, small long positions during the quarter:

Comcast (CMCSA) is a diversified media and technology company with broadband, video and wireless businesses, alongside media, studios and theme parks. The stock declined about 60% over the past five years as structural and competitive pressures have weighed on its legacy broadband and video businesses. At our entry price of $23.91 per share, CMCSA traded at only 5x EBITDA, which we believe significantly undervalues its free cash flow generation and the collective value of its businesses. At the end of the quarter, CMCSA announced the spin-off of NBCUniversal, an important step that we believe should help highlight the value embedded within the company. CMCSA shares ended the quarter at $24.55.

Fortune Brands Innovations (FBIN) is a building products company whose brands include Moen, Therma-Tru and Master Lock. Over the past several years, both a challenging housing market and poor execution by prior management led to share losses and profit erosion. Despite these challenges, we believe the company's brands remain strong and its competitive position is intact. In March, an activist investor joined the board, and in June the company appointed a new CEO with an exceptional track record of value creation in the building products industry. Even without a recovery in housing, we believe new leadership can address the operational issues and grow earnings substantially. While significant share recapture (or a strong housing recovery) would provide additional upside, if FBIN simply achieves the low end of prior management's mid-cycle margin targets on current revenue, it should support approximately $5 of earnings per share. We acquired our position at an average price of $39.37, or approximately 8x those earnings, while peers trade for almost 20x. FBIN shares ended the quarter at $54.90.

Primo Brands (PRMB) provides bottled water through the retail channel as well as water delivery to homes and businesses. Its brands include Poland Spring, Pure Life, Mountain Valley and Saratoga. Following its merger with competitor BlueTriton Brands, integration challenges weighed on results and contributed to a material decline in the stock price. We believe these issues are temporary and that the merger will create synergies over time. We acquired our shares at an average price of $20.20, implying a 12% free cash flow yield on our expectation for 2027 results, which compares to peer free cash flow yields of 3-5%. PRMB ended the quarter at $24.44.

PayPal Holdings (PYPL) is a consumer-facing payments platform with over 400 million active customers around the world. PYPL has long been viewed as being on the wrong side of the shift toward newer payment methods like Apple Pay, Shop Pay and Buy-Now-Pay-Later. After disappointing fourth-quarter results and a CEO transition, the stock sold off, creating an opportunity for us to acquire our position at an average price of $43.53. We believe PYPL's collection of payment assets is worth substantially more than the 8x earnings we paid. PYPL ended the quarter at $43.18. Subsequent to quarter-end, Stripe and Advent International reportedly made a joint offer to buy PYPL for $60.50 per share.

Versigent (VGNT) is a leading supplier of automotive wire harnesses that recently spun out of Aptiv (APTV). Although the business was viewed as a lower-growth, lower-margin part of APTV's portfolio, we believe VGNT is a high-quality supplier. Its business should benefit from the shift toward hybrid and battery-electric vehicles, which require significantly more of the company's products than internal combustion engine (ICE) vehicles. VGNT also has a durable customer base, as its products are deeply embedded in customers' platform design and engineering. Post-spin, management has opportunities to improve margins through automation while further diversifying the business in commercial vehicles and non-automotive applications. By the end of 2028, VGNT is targeting $1 billion of cumulative free cash flow, or approximately one-third of its current market capitalization, with the majority expected to be returned to shareholders through buybacks. We acquired our shares at an average price of $29.20, or approximately 4x this year's expected earnings. VGNT ended the quarter at $42.01.

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During the quarter, we also exited a few positions:

Public Power Corp (Greece: PPC) with a 30% IRR during a 3-year holding period. From 2022 to 2025, the integrated utility company more than doubled its recurring EBITDA by investing in low-cost renewable generation and regulated distribution networks, while shutting down loss-making coal-fired power plants. Victoria's Secret (VSXY) with a 157% IRR over a 1-year holding period. Under new management, the company refreshed the brand, returned the company to“sexy” (in its marketing and in its new ticker), generated renewed customer interest and improved financial performance. Weatherford International (WFRD) with a 45% IRR over a 4-year holding period. After the company emerged from bankruptcy and relisted on NASDAQ, the shares appreciated significantly as the company further de-levered, reclaimed lost market share and improved its margins while its end markets in energy services generally strengthened.

Greenlight Capital closed to new investment on July 1. Prior to closing, we continued our recent fundraising success and further strengthened our capital base by welcoming a large and diverse group of investors.

The Securities and Exchange Commission (SEC) concluded a periodic routine examination of our business with no deficiencies identified. The SEC noted that its decision to provide no written comments is“not a finding or conclusion” and“does not mean that all activities of [Greenlight] comply with the federal securities laws; rather only that no deficiencies came to the Staff's attention during the course of its examination.” We are pleased with the result.

At quarter-end, the largest disclosed long positions in the Partnerships were Acadia Healthcare, Brighthouse Financial, Core Natural Resources, Fluor and Green Brick Partners. The Partnerships had an average exposure of 105% long and 63% short.

Best Regards,

Greenlight Capital

Download the source PDF: Greenlight Capital Falls 4.3% in Q2 as S&P 500 Gains 15.2%; Einhorn Calls SpaceX's $1.75 Trillion IPO a 'Major Speculative Top' Marker [Q2 2026 Letter]

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