It’s a World-Class Investment. It’s a Junk Investment. What Is Going on With SpaceX?

Ms. McLean is a financial journalist and the co-author of “The Smartest Guys in the Room.”

The recent initial public offering for SpaceX was the biggest stock sale the world has ever seen, with shares priced as if life on Mars were a sure thing. The company’s debt, on the other hand, is priced as if it were junk. Is this what F. Scott Fitzgerald meant when, nearly a century ago, he wrote, “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function”? How could the same company simultaneously be viewed as a top-tier investment and something that might not be able to pay its bills?

The answer starts with Wall Street’s long-held distinction between “smart money” and “dumb money.” In that view, the........

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