Elon Musk's Path to Trillionaire Status: SpaceX IPO and Market Manipulation
In a recent episode of Decoder, Nilay Patel interviewed Ryan Mac, a technology reporter at The New York Times and coauthor of the book Character Limit: How Elon Musk Destroyed Twitter. The discussion centered on the upcoming SpaceX IPO, which promises to be one of the most consequential public offerings in history, with a valuation of nearly $2 trillion. However, the IPO has raised significant concerns about market fairness, corporate governance, and accountability.
The State of X (Formerly Twitter)
Since Elon Musk acquired Twitter in 2022 and renamed it X, the platform has seen a decline in key metrics. Revenue, user growth, and overall business performance have stagnated. X is now buried within Musk's other companies, first xAI and then SpaceX, making it an afterthought in his empire. Despite Musk's initial promises of turning X into an "everything app" with integrated payments, ride-hailing, and more, none of these have materialized. The platform remains a distribution channel for Musk's own tweets, with the algorithm favoring his content.
SpaceX IPO: A Corporate Governance Disaster
The SpaceX IPO is structured in a way that grants Musk unprecedented control. He holds super-voting shares that give him about 85% voting control, allowing him to appoint board members, determine his own compensation, and make decisions without independent oversight. This level of control is even greater than that of Mark Zuckerberg at Meta. Additionally, Musk has been awarded 1.3 billion restricted stock shares that he can vote immediately, despite not yet meeting the milestones tied to them, such as establishing a colony on Mars with a million people.
Market Rules Relaxed for SpaceX
The IPO is set to enter major index funds like the NASDAQ-100 after just 15 days, bypassing the typical 90-day cooling period. This will force index funds to buy SpaceX shares, providing access to billions of dollars in capital. The relaxation of rules has been driven by fear of missing out (FOMO) among investors, with many fund managers feeling compelled to participate to avoid being left out. This herd mentality, combined with Musk's celebrity status, has created a meme stock-like frenzy around the IPO.
Financial Fundamentals vs. Promises
While Starlink remains the only profitable part of SpaceX, generating $11.4 billion in revenue last year, other segments like AI and NASA contracts are losing money. The AI division alone had a deficit of $6.4 billion. The total addressable market (TAM) claimed in the S-1 is $28 trillion, including $22.7 trillion from enterprise AI, but these figures are based on optimistic projections rather than solid fundamentals. Investors are essentially betting on Musk's promises of future achievements, such as data centers in space and a Mars colony.
Accountability and the Future
Musk has effectively removed mechanisms for shareholder accountability. SpaceX shareholders must agree to arbitration for any disputes, preventing class-action lawsuits. This stacks the deck in Musk's favor, allowing him to operate without the checks that typically constrain public company CEOs. As Ryan Mac noted, the normal levers of accountability have gone out the window, and society is along for the ride.
The SpaceX IPO represents a culmination of Musk's ability to bend rules and leverage his influence to achieve unprecedented financial gains. Whether this will lead to long-term success or eventual collapse remains to be seen, but it is clear that the traditional rules of the market are being rewritten for Musk's benefit.
