Elon Musk’s SpaceX goes on the market tomorrow. Rather than provide a range and then price the deal based on demand, as is customary in Initial Public Offerings, Musk has set a take-it-or-leave-it price of $135 per share.
He anticipates that the resulting corporation will be valued at $1.77 trillion. That’s an extraordinary amount for a company that generated $18.7 billion in revenue last year and recorded an operating loss of $4.2 billion.
In other words, Musk is offering SpaceX stock at roughly 100 times the company’s total revenue in 2025. This is ballsy, to say the least, given SpaceX’s consistent negative profitability and its failure to meet prior goals. But it’s a great deal for Musk. He comes out of it with nearly a trillion dollars.
Granted, it’s difficult to predict the value of activities that don’t yet exist, such as SpaceX’s stated mission to “extend the light of consciousness to the stars.” Interstellar space travel and interplanetary habitation are inherently speculative endeavors. But before tomorrow’s giant I.P.O., capitalism had never before put a price tag on something nearly as speculative and as large.
Let’s be clear. SpaceX’s IPO is basically nothing more than a show of faith in Musk. After all, much of SpaceX’s value comes out of a deal Musk negotiated between Space X’s and his Artificial Intelligence startup, xAI. Musk essentially made that deal with himself, setting the relative valuations by himself, closing the deal by himself, and unilaterally deciding the value of his own transaction. A magic trick, out of thin air!
The closer you look at the SpaceX IPO, the more it looks like Musk’s ill-fated DOGE. It also bears a striking resemblance to Trump’s takeover of the U.S. government. All of it is arbitrary, based on the will of one man with a giant ego and an insatiable thirst for money and power. It’s built on self-dealing. There’s no accountability. No checks. No balances.
Musk will have total control. Shareholders won’t have any voice whatsoever. Each share held by Musk will have ten times the voting power of a share offered to the public. SpaceX’s board of directors will engage in a pantomime. They’ll have no meaningful authority. As the editorial board of the Financial Times put it, “traditional governance checks are almost entirely absent…. [Musk] will have a virtually unchallenged grip on voting rights and the board.”
None of this would be particular cause for concern if investors could decide for themselves whether the downside risks and potential upside gains from buying SpaceX stock were worth the price. That’s called a “market.” Caveat emptor.
But many of us, if not most of us, with any savings parked in major stock indices (yours truly included) won’t have any choice. We’re going to end up investing in SpaceX whether we want to or not. That’s because the major indices have been rigged.
Normally, major stock indices have a waiting period before they plow their investor’s money into a newly-formed company. in order to test whether that company is worth it. But SpaceX has lobbied index funds to change the rules.
On May 1, for example, the Nasdaq 100 implemented a new “fast entry” rule that will include companies valued among the top 40 most highly-valued companies — which will almost certainly include SpaceX.
Presto! A big chunk of American’s retirement savings and pensions will automatically be tied to SpaceX’s market value. At the same time, all that automatic infusion of investment will artificially jack up the value of SpaceX, at least in the short term.
But here’s the real kicker. SpaceX insiders — such as Musk and, reportedly, senior Trump officials — will be able to sell their shares sooner than is usually the case with an I.P.O., because that’s the way the I.P.O. has been organized. Which means they can enjoy the stocks’ upward tide as the major indices force millions of investors to buy it, and then they can exit SpaceX before the tide goes out.
If this sounds to you like a Ponzi scheme, it does to me, too. Even worse, it’s a Ponzi scheme that’s been rigged by Musk, with the acquiescence of Trump’s Securities and Exchange Commission, to require that I and probably you put some of our savings into SpaceX.
Speaking of the S.E.C, Senator Elizabeth Warren has raised many of these concerns with Paul Atkins, Trump’s S.E.C. chair. She’s even asked him to delay the I.P.O to determine whether index funds are adequately protecting investors — warning of “a disastrous scenario where retirees’ and families’ investment accounts take a hit if SpaceX’s valuation falters, with little recourse for any corporate misconduct, while the wealthiest man on earth becomes even wealthier due to a lack of oversight.”
But SpaceX’s takeoff is happening tomorrow, regardless. It’s likely to make Musk a trillionaire, but also shaft a lot of innocent people, perhaps without them even noticing. It will be a huge redistribution from most of us to Elon and his buddies.
I don’t want to sound cynical, but this is the sort of thing that brings out the cynicism in me. It’s the story of American capitalism in this Second Gilded Age.
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