The SpaceX IPO filing is full of so many red flags that it would have scuttled other launches.
But the laws of gravity don’t apply here, in part because of years of work by Elon Musk to build his business empire with the eager assistance of everyday investors. He’s tapped into a collective social-media psyche that runs on vibes and enthusiasm and hope for a better future that he has become so masterful at selling.
His sales pitch has gained credibility with the success of Tesla, where he is also CEO, and SpaceX, which has reinvented the space industry and became the top launcher of satellites in the world. Its Starlink business, which is a big driver of revenue, has extended internet connectivity globally and helped to extend Musk’s geopolitical clout while also helping make him the world’s richest man.
And in launching what is likely to be the biggest IPO ever, Musk is yet again leaning in to a message of hope.
“Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars,” the company wrote in filings made public this past week.
That phrase—“light of consciousness”—was mentioned almost a dozen times throughout the prospectus. There was also an artist’s rendering of life on Mars that could easily have been a scene from the current season of Apple TV’s sci-fi drama “For All Mankind.” And the dense paperwork included an out-of-this-world projected total addressable market for SpaceX at $28.5 trillion, just a few trillion dollars shy of the entire U.S. gross domestic product.
If it wasn’t clear enough, the filing noted: “We believe that space represents the largest economic frontier in human history.”
Then there were troublesome bits. More than $1 billion in related transactions between Musk companies, including $131 million of Cybertrucks purchased by SpaceX. The amount of red ink surprised some—a situation made worse by Musk’s decision to buy another one of his startups, xAI. The merged companies—a rocket maker/satellite company/AI lab—had a loss of almost $5 billion last year on $19 billion of revenue.
The IPO is expected to raise $80 billion or more. That money is definitely needed to get the company’s giant spaceships working and build out expensive data centers needed for artificial intelligence.
Musk investors are accustomed to burning cash in pursuit of his lofty ideas. Tesla was an incinerator for years, nearly on the verge of bankruptcy multiple times, as Musk chased the idea of making EVs mainstream.
Yet investors with patience were rewarded handsomely. Tesla is now not just the world’s most valuable automaker but also one of the most valuable companies. Stories of small-time investors becoming Teslanaires fuel many dreams of those eager to make their own millions by being tied to Musk’s sci-fi ambitions.
They hope that history doesn’t just repeat itself with SpaceX but exceeds itself.
Clearly, Musk is betting that FOMO will allow him to get from the SpaceX public offering what he never got from the Tesla IPO almost 16 years earlier: total control.
Thanks to supervoting shares, Musk will control 85% of the voting power over SpaceX, giving him an unrivaled say, which he lacks at Tesla.
Back in 2010 when the car company went public, Musk didn’t have the same kind of cachet as he has now. The idea of a special class of shares for Musk to keep control like the founders of Google and Facebook wasn’t in the cards.
Wall Street was skeptical that a startup carmaker—let alone one offering electric vehicles—could ever really make enough cars to become sustainable. The situation wasn’t helped by some perceived corporate-governance issues, I was told when working on my book about Tesla’s history, “Power Play.” The company’s board included Musk’s brother and other close business partners.
This time around, Kimbal Musk isn’t on the SpaceX board as it goes public. But many of Musk’s longtime associates are, including some who have faced criticism in the past for lacking true independence.
Such complaints won’t matter. Musk’s voting power will make SpaceX a so-called controlled company, exempt from certain Nasdaq corporate-governance requirements. That includes ones around the makeup of the committees dealing with compensation and nominating board members.
“Shareholders will not have the same protections afforded to shareholders of companies that are subject to all of the corporate-governance requirements of Nasdaq,” the company told prospective shareholders.
The sorts of corporate-governance organizations that are likely to object are the exact institutions Musk has helped weaken in recent years with a barrage of public attacks. In early 2024, for example, he compared influential proxy adviser Institutional Shareholder Services with the militant group known as Islamic State.
It seems Musk would rather take advice from everyday investors on his social-media platform, X, now part of SpaceX. They tend to celebrate the idea of Musk being in total control. For them, it’s a feature, not a bug.
A few years ago, as fans urged him to take SpaceX public, Musk assured he was thinking about them. “I’m a huge fan of small retail investors,” he replied then. “Will make sure they get top priority. You can hold me to it.”
Musk stayed true to his word.
Unlike most IPOs, SpaceX is setting aside a large slug of shares—expected at around 30%—for retail investors, meaning it won’t be just institutional investors receiving most of the allocations of stock.
Similarly, but on a smaller scale, Tesla’s IPO was unique for setting aside shares for customers who had taken delivery of the automaker’s first car, the Roadster.
Such wooing has paid off at Tesla, which has developed a large mix of retail investors. Some of the loudest voices on social media supporting Musk during difficult times are often Tesla shareholders. His demands for record-setting pay packages at Tesla have been aided by their support as well.
While it has drawn guffaws, Musk has said part of the reason he didn’t follow through with plans to take Tesla private in 2018 was because of limitations on the number of investors allowed in a private company. Going private would have hurt those retail investors eager to stay on their journey with him.
Now, Musk devotees can join him in aiming for Mars.
Write to Tim Higgins at tim.higgins@wsj.com