With just two days until SpaceX begins trading on the Nasdaq, Senator Elizabeth Warren is asking the SEC to delay its IPO.
in a letter To SEC Chairman Paul Atkins, Senator Warren expressed concern about possible inaccuracies in the company’s valuation and the unusual governance structure, in which founder Elon Musk serves as CEO, CTO and chairman of the board of directors, while also owning the majority of voting shares, making him virtually unimpeachable.
“This IPO appears to present significant risks for everyday investors and their retirement savings, while carrying huge upsides for SpaceX insiders, including senior Trump administration officials,” Senator Warren wrote. “The net result could be disastrous: a scenario in which retirees’ and families’ investment accounts take a hit if SpaceX’s valuation falters, with little recourse for any corporate misconduct, while the world’s richest man becomes even richer due to a lack of oversight.”
With an expected valuation of $1.75 trillion and Investor demand exceeds expectations.The IPO is expected to be the largest in history, which will more than 4,000 of its millionaire employees and Musk the first billionaire in the world. According to a recent Bloomberg In a report citing financial disclosures from last year, several Trump administration officials also owned shares of SpaceX or xAI worth up to $43.8 million.
But that record valuation is considered largely speculative. Last week, a group of analysts valued the company at less than half its target valuation, in part because the current valuation is largely based on a leap of faith that Musk’s idea of building a colony of space data centers will not only work but will be hugely profitable. The company wrote in its IPO filing that it has “a history of net losses and may not achieve profitability in the future.”
Earlier this year, Musk’s space giant SpaceX merged in a record M&A deal with xAI, Musk’s artificial intelligence company that also owns and operates social media platform X. The merged entity was valued at $1.25 trillion, a figure that has informed the target market valuation of $1.75 trillion. The space business and its crown jewel, Starlink, are doing well, but the AI business posted a $2.5 billion operating loss in the first quarter of this year, according to IPO filings, and is considering even bigger spending to build AI data centers in space.
“The company’s accounting and financial reports contain concerning gaps and are clouded by the massive and opaque xAI merger that occurred earlier this year,” Warren writes.
On top of that, Musk has been under pressure last month after making comments on social media that contradicted financial details SpaceX disclosed in the IPO filing. Musk said SpaceX could early exit a $15 billion-a-year leasing deal with Anthropic that investors expected to last three years, further muddying valuation efforts.
Last month, Akademikerpension, a major Danish pension fund, blacklisted SpaceX, saying that with all the uncertainty, the company’s real value “cannot reasonably exceed one billion dollars” even under the most optimistic assumptions, making the stock at least 80% overvalued according to analyst calculations.
Warren is also concerned about “the complicity of major stock indexes in waiving old rules or creating new ones to allow SpaceX’s inclusion.”
Earlier this year, major index providers Nasdaq and FTSE Russell relaxed their rules to allow mega-valuation companies like SpaceX to join their indices sooner rather than later. These indexes form a major part of the 401(k), pension funds, and retirement accounts of everyday Americans. The most often, the S&P 500was also debating changes but ultimately rejected them earlier this month.
This means that with SpaceX’s entry into these indices, Americans will be forced to buy billions of dollars of SpaceX stock through their pension funds or retirement accounts, and any drop in market capitalization that may occur if the valuation is inaccurate would have an impact on their savings.
“If that valuation cannot be sustained, investors who have chosen to buy at elevated valuations – or who will be forced to do so because of their investments in index funds, which in turn are based on indices that have changed their rules to include SpaceX – will pay the price,” Warren wrote. “In short, these changes may enable a financial engineering plan that manipulates the US capital markets in favor of Mr. Musk and his allies.”
