I was thinking that out of the three big upcoming IPOs: Anthropic, OpenAI and SpaceX that SpaceX would be the most promising one, since it does real things without a lot of competition. Their customers don’t have good alternatives, and their biggest customer is the U.S. government. Sounds reasonable.
But no, it’s not even close to reasonable: Musk gets to vote with 1.3 billion RESTRICTED shares. This is insane. His pay package says he earns the shares when he has put terawatts of data centers in space and has a million person Mars colony up and running (never going to happen in his lifetime.) Interesting how that works.
Until Musk formally receives those shares as part of his pay package, he doesn’t have to pay taxes on them. He already controls 80% of the votes and the total will go to 85% after the IPO. Later, if he needs money, he can sell some of his current actually fully vested shares. Since he gets to vote with his UNEARNED shares, he can’t lose control. OH, except he may never need to sell because he can take out loans against those restricted shares.
There’s a bunch of other sketchy stuff but the core ownership structure is just crazy.
Now you might object that just because I don’t like how the company is structured in terms of control or fairness, that doesn’t mean it’s not a good investment. Except the only profitable business is StarLink in this whole pile of stuff. They would need to 20x their customer base to get to a decent level of profitability overall. 80 billion on 2T valuation wouldn’t be terrible. I’m skeptical they can find 19x more customers able and willing to pay more than $80 a month. Most high-income areas have good land based internet already. India has much cheaper mobile internet already. I could see getting 10 million customers in India, 20 million in South America and another 10 million from around the world. Getting to 200 million seems tough. At that point competitors may have emerged anyhow. Still it’s not like there aren’t billions of internet users, so you never know.
Investing in SpaceX looks less like a typical public company investment and more like signing up for Elon’s private Starlink + Starship + X/XAI business at a really steep price. I actually think Starship will end up succeeding and that Starlink will grow. But how much? And it’s weighed down with the X/XAI stuff and other debt. Aside from looking like a poor investment, the governance structure is just insulting to the public. There’s no safeguard, no way to change leadership no matter what happens, no accountability of any kind except selling shares.
It’s kind of pointless to go on about this like we have a choice though. The IPO will have the indexes adding SpaceX rapidly and anyone with retirement accounts or pensions will end up owning a piece. At currently estimated valuations SpaceX + Anthropic + OpenAI will total about 6% of an SP500 based index fund. The normal one-year waiting period doesn’t apply. SpaceX will join the NASDAQ in 15 days!
ETA This has been reversed for the most part. The SpaceX IPO is still bad though. I don’t know about OpenAI and Anthropic, I haven’t learned too much about them.