Elon Musk made history again this month with the largest public offering of a company in the history of the known universe. Space Exploration Technologies, better known as SpaceX, began trading June 12 on the Nasdaq exchange under the ticker symbol SPCX. In the first three days, the stock soared by 50%, blasting the rocketeer past Amazon into fifth place among America’s largest companies.
While the public liftoff was impressive for its size and the hype surrounding it, what truly set this transaction apart was how Musk used his leverage to succeed in changing the rules during the final countdown and advance his own interest at the expense of shareholders.
Space Exploration Technologies is a truly intriguing collection of assets with a history of big accomplishments and even bigger ambitions. At its core is Starlink, a profitable satellite internet and data transmission operation. In the offering document, Musk imagines a network of massive orbiting data centers, which is not entirely crazy and is likely to face less political opposition from nearby residents.
SpaceX also includes the familiar rocket launch enterprise and an artificial intelligence startup called xAI with its Grok AI assistant. While private investors and Starlink have provided operating cash flows to fund the space operations, SpaceX needs substantial additional funding to support its galactic expansion plans. That requires selling shares of this privately held company to the public in an initial public offering.
The process involves a syndicate of investment banks that facilitates the sale of shares held by the company’s founders or private investors at a specific price, the proceeds of which allow early investors to cash out and provide a large injection of capital. Once the shares are sold to public buyers, they change hands on a market exchange at a price determined by supply and demand.
The prospect of the largest initial offering ever ignited a frenzy of interest. It also allowed Elon Musk to leverage the buzz of a monster IPO to convince Wall Street to bend the rules.
To win the listing, the Nasdaq stock exchange agreed to substantial waivers of its own listing rules. While new companies must typically wait at least three months before they become eligible for inclusion in the popular Nasdaq 100 index, Nasdaq jettisoned this “seasoning” period and allowed SpaceX to enter the index after only 15 days. This tech-heavy index serves as the benchmark for over $1.4 trillion in fund assets that will now be required to sell other holdings to make room for SpaceX in their portfolios. Estimates range from $8 to $15 billion in forced purchases that will create artificial demand for the stock. It also means that many passive investors in retirement funds will end up owning the stock, like it or not.
Nasdaq also waived its own liquidity rules. Ordinarily, at least 10% of the company’s shares must be offered to the public, called the “float,” or percentage, of the total stock value that trades publicly. SpaceX floated only 4.3% of its stock, with private shareholders retaining 95.7%. Using some arithmetic legerdemain, Nasdaq created a “multiplier,” triple-counting the float for companies in the top 40 by total market value. Presumably for firms whose founders’ initials are E.M.
To its credit, S&P Global Inc. considered but ultimately refused to loosen its own standards for joining the S&P 500 index, concerned about the potential reputational damage. The S&P 500 is the benchmark for $20 trillion in assets and opted to retain its 12-month seasoning period as well as a four-quarter profitability hurdle. SpaceX may one day dock with the S&P 500, but the countdown has not started.
Aside from eliciting waivers and exceptions for index inclusion, SpaceX massively advantages its visionary but mercurial founder. In its surprisingly entertaining prospectus, the company boosted Musk’s control far beyond his ownership stake. The shares issued to the public are called Class A shares, and each carries one vote on matters of corporate governance. However, Musk’s stake resides in so-called Class B shares, each with 10 votes, giving Musk 84% voting control.
There are a few other little gems. The prospectus requires that any disputes between shareholders and the company must be settled privately through arbitration. Lawsuits, including the type of class action suits that tend to hold management’s feet to the fire, are expressly prohibited. And speaking of fire, Musk may only be fired by himself.
Some of these more restrictive provisions have been used before. For instance, in its initial offering, Google essentially pioneered the idea of multiple share classes that vested voting control with the founders. SpaceX propels contempt for shareholder rights into a higher orbit.
Separate from the structural disadvantage to public shareholders is the question of valuation. SpaceX lost nearly $5 billion in 2025 and another $4 billion just last quarter. The initial offering of loss-making companies is hardly new, especially in technologically emerging fields. SpaceX has reached the stratosphere.
With no profits to measure, a useful metric is the ratio of the total value of all the company’s stock divided by last year’s revenues, called the price to sales ratio. When the unprofitable Amazon went public in 1996, its total market value was three times its 1995 sales. Google’s 2004 offering priced at 15 times sales, Facebook at a hefty 28 times, and even Musk’s own Tesla launched at a multiple of 15 times sales. SpaceX cleared the tower at an otherworldly 95 times sales, soaring to 130 by the end of day two as the frenzy intensified. During the first full trading day, it comprised 75% of all stock purchases by individual investors. In the prospectus, Musk expatiates on his plan to colonize Mars. He’s halfway there.
There is no precedent for a public offering of this size, with such a long and speculative arc toward profitability and so few shareholder protections. SpaceX is a pure play wager on a precocious space cadet with interstellar aspirations astride a solid rocket booster. Enjoy the ride.
Christopher A. Hopkins, CFA, is a co-founder of Apogee Wealth Partners in Chattanooga.
