# SpaceX IPO Scandal

An episode of [Patrick Boyle On Finance](https://invisiblenetwork.ai/podcast/1547740313), 15 Mar 2026, 29 min.

Audio: https://traffic.megaphone.fm/APO3057181853.mp3

SpaceX is targeting a $1.75 trillion valuation for what could be the largest IPO in history. In this video, we examine how Elon Musk is folding a money-burning AI startup and a struggling social media platform into a rocket company to justify a price tag that defies financial gravity. From the engineering absurdity of "orbital data centers" and lunar railguns to the structural manipulation of the Nasdaq 100, we explore how low-float strategies and "fast-track" index inclusion rules are being used to turn passive 401(k) investors into exit liquidity for insiders. We look at the gap between EBITDA "vibes" and GAAP reality and the pivot from Mars to the Moon. Patrick's Books: Statistics For The Trading Floor: https://amzn.to/3eerLA0 Derivatives For The Trading Floor: https://amzn.to/3cjsyPF Corporate Finance: https://amzn.to/3fn3rvC Ways To Support The Channel: Patreon: https://www.patreon.com/PatrickBoyleOnFinance Buy Me a Coffee: https://www.buymeacoffee.com/patrickboyle

## Transcript

[0:00] SpaceX is currently preparing for what's expected to be the
[0:03] largest IPO in history, with a target valuation as high as
[0:08] $1.75 trillion. To put that in perspective,
[0:12] that's larger than Meta or Tesla, and it would comfortably
[0:15] unseat Saudi Aramco for the title of the biggest stock
[0:19] market debut of all time. The offering is expected to see
[0:23] massive demand from retail investors who have up until now
[0:27] been unable to invest as the company's private.
[0:31] Now, in the aerospace world, there's a very important
[0:34] distinction between astronomy and astrology.
[0:38] Astronomy is the branch of science that uses math to
[0:40] calculate orbital mechanics so your multibillion dollar rocket
[0:44] doesn't turn into a very expensive firework.
[0:47] Astrology, on the other hand, is the belief that you should stay
[0:51] home from work next week because Jupiter's feeling a bit spicy.
[0:55] Usually, the people building rockets and the people casting
[0:58] horoscopes don't have very much in common.
[1:02] Elon Musk obviously cares about astronomy, the science.
[1:06] He has, after all, spent decades talking about the importance of
[1:10] going to Mars and building rockets.
[1:12] We know that he also loves a bit of numerology, too.
[1:16] No one finds the numbers for 20 and 69 funnier than Elon Musk
[1:20] does with the IPO enhancement. We've learned that he loves a
[1:25] bit of astrology, too, as SpaceX has reportedly set its sights on
[1:30] IPO in this June because Jupiter, Venus, and Mercury will
[1:34] be forming a rare conjunction in the sky.
[1:37] And I suppose that's auspicious. On top of that, June also
[1:42] happens to be the month of Mosque's 55th birthday.
[1:46] And to top it all off, there are rumors that the date being
[1:49] targeted is June the 9th. Yep, that's right, June the 9th
[1:54] or 69. If Musk was a bit younger it
[1:58] would be on 6-7, but he's not. He's a 55 year old man, so 69 it
[2:04] is. Well, the planetary alignment
[2:07] makes for a great headline. The timing is possibly driven by
[2:12] a much more terrestrial concern, the race for limited capital.
[2:16] As of early 2026, the private markets are starting to look
[2:20] tapped out. Venture capital funds that have
[2:23] spent the last few years aggressively funding the AI boom
[2:27] are now facing a liquidity plateau and are under pressure
[2:31] to finally return some cash to their own investors.
[2:35] At the same time, Musk is in a high stakes race to reach the
[2:39] public markets before his rivals Open AI and Anthropic soak up
[2:44] all of the available demand. Bankers are quietly warning that
[2:48] there might not be enough spare change in the public markets to
[2:52] support three massive capital intensive AI listings at the
[2:56] same time. And the first mover might get
[2:59] the biggest slice of the pie, with XAI burning through a
[3:02] billion dollars a month and massive data center projects
[3:06] requiring billions more in infrastructure.
[3:08] Musk may not be just watching the stars, he might be watching
[3:12] the exits too. The planetary alignment might be
[3:16] a nice bit of branding, but it's possibly the fear of being
[3:19] second in line at the ATM that's really fueling the countdown.
[3:24] This rush to the public markets represents a significant change
[3:28] of heart for Musk. For over a decade, he's insisted
[3:32] that SpaceX would not go public until his Mars transport system
[3:37] was fully in place. He argued that the short term
[3:40] pressures of being a public company where investors obsess
[3:43] over quarterly performance and short sellers hit you with large
[3:47] stakes would be a distraction from the long term goal of
[3:51] making life multiplanetary. But as we head towards the June
[3:55] 2026 listing, the Mars transport system is still very much a work
[4:01] in progress, and Musk has recently started sweeping those
[4:05] Red Planet ambitions under the rug like an embarrassing teenage
[4:09] phase. The new mission and the core of
[4:12] the IPO pitch is focused on the Moon, a destination that Musk
[4:17] once dismissed as a waste of time.
[4:19] He now describes the Moon as a stepping stone and the
[4:23] overriding priority for securing the future of civilization.
[4:27] It turns out that the shift of focus is a lot easier when
[4:31] you've been foreshadowing it for years, even if accidentally.
[4:35] Elon Musk has been wearing his famous Occupy Mars T-shirts
[4:38] since 2019, which a number of people have pointed out actually
[4:43] features a red tinted picture of the Moon during the lunar
[4:47] eclipse. It's possible that he hasn't
[4:49] abandoned his Mars mission. Maybe he just took a close look
[4:53] at his own chest and realize that he's been accidentally
[4:56] advertising for the moon all along.
[4:59] The transition from a high flying rocketry and satellite
[5:03] firm into what we might now call the Triple X conglomerate,
[5:07] SpaceX XAI&X has been described by supporters as an act of
[5:13] genius and by critics as a massive bailout.
[5:16] This is because just as the SpaceX IPO was being finalized,
[5:20] Musk decided to fold XAI into SpaceX at a $250 billion price
[5:27] tag. Merging a rocket company with an
[5:30] AI start up is strange enough, but XAI comes with some
[5:34] particularly heavy social media baggage.
[5:37] Last year, XAI, the AI company, used it's shares to buy Elon
[5:42] Musk's Everything Up X, the platform formerly and in truth
[5:46] still known as Twitter. This means SpaceX investors are
[5:51] now, by extension, the proud owners of the number 17 ranked
[5:55] social media website, a business that's been struggling with a
[5:59] persistent exodus of both users and advertisers since Musk
[6:03] bought it for $44 billion in 2022.
[6:07] To justify the $250 billion price tag, you have to believe
[6:12] that XAI is a top tier player in AI.
[6:15] Currently, ChatGPT and Google's Gemini dominate the field,
[6:20] holding over 85% of the market between them.
[6:24] Grok, by comparison, sits at a distant 3.4% market share.
[6:29] One problem is that Grok is effectively an island.
[6:33] While xai recently launched a stand alone Grok app, the vast
[6:38] majority of its usage remains trapped inside Twitter.
[6:41] Most of Grok's use is just fact checking tweets or generating
[6:46] the kind of unfiltered memes that have landed the company in
[6:49] regulatory hot water in Spain, France and the UK.
[6:54] Well, SpaceX is said to be profitable, generating about $8
[6:58] billion in Ebeta last year. XAI is a money furnace, burning
[7:03] through a billion dollars in cash every single month.
[7:07] In a world where AI could be a winner take all market, much
[7:10] like Internet search was, being a lower ranked player like XAI
[7:15] is possibly a dangerous place to be.
[7:18] That danger is exacerbated by a growing talent drain.
[7:22] Since the start of the year, a significant number of key staff
[7:26] have left XAI, including six of the original founders who were
[7:30] poached from Google and DeepMind.
[7:33] It's hard to justify a frontier AI premium when the very people
[7:37] who have built the model have left the building.
[7:40] Musk's explanation for the merger, delivered in a press
[7:43] release that reads like the script of a low budget sci-fi
[7:46] ethic, is that we need to build orbital data centers to extend
[7:51] the light of consciousness to the stars.
[7:53] He argued argues that space based AI is the only way to
[7:57] scale because space is called space for a reason.
[8:01] It's a move that mirrors the Solar City merger from 2016,
[8:05] where Musk used Tesla's balance sheet to bail out a struggling
[8:09] solar company he also happened to own.
[8:12] As Bloomberg's Matt Levine pointed out, the innovation
[8:15] engine here isn't just about rockets, it's about a
[8:18] fundraising ability that allows Musk to negotiate with himself
[8:23] and set his own value valuations without the nuisance of
[8:26] independent board oversight. Amusingly, right before I filmed
[8:31] this video, Elon Musk tweeted that XAI was not built right the
[8:35] first time around, so it's being rebuilt from the foundations up.
[8:40] Which might lead SpaceX investors to ask, if this was
[8:43] the case, why did they just pay $250 billion for it?
[8:47] For the banks and venture capital firms who were stuck in
[8:50] the underwater Twitter deal, the merger is fantastic news.
[8:54] It effectively swaps their struggling social media equity
[8:58] for shiny new SpaceX stock right before a massive IPO.
[9:03] And while SpaceX investors might be wondering why they're
[9:06] suddenly subsidizing an anime girlfriend chatbot, most are
[9:10] unlikely to complain. In the world of investing
[9:13] alongside Elon Musk, loyalty is the primary currency.
[9:17] If you complain too loudly about the corporate governance, you
[9:21] risk being cut out of the next auspicious planetary alignment
[9:25] to justify merging a rocket company with a money furnace
[9:29] chatbot. The IPO narrative relies on a
[9:32] very specific vision of the future based around the
[9:35] importance of moving the world's AI computing power off planet.
[9:40] Musk's argument is the terrestrial data centers are
[9:44] hitting a wall because of land power and cooling constraint.
[9:48] His solution is to launch a constellation of a million
[9:52] satellites to act as orbital data centers, directly
[9:56] harnessing near constant solar power in the vacuum of space.
[10:01] At first glance, the pitch might seem to have a certain logic.
[10:04] It's always sunny in space, and there are no neighbors to
[10:07] complain about the noise. But in practice, the engineering
[10:11] hurdles are huge. Take cooling, for example.
[10:14] On Earth, we keep surface from overheating by blowing cold air
[10:18] or water over them, a process called convection.
[10:22] In the vacuum of space, there's no air to move heat away.
[10:25] The only option is to use massive radiators that eject
[10:29] heat as infrared radiation. We've already seen a test of
[10:33] this concept. A start up launched an AI
[10:36] satellite a few months ago. It was about the size of a small
[10:40] refrigerator carrying an NVIDIA H-100 chip.
[10:44] While the chip was able to successfully train a tiny AI
[10:47] model on the works of Shakespeare, it couldn't run
[10:50] around the clock because it had to shut down frequently when it
[10:54] got too hot to function. The company's next version is
[10:58] scheduled to launch later this year.
[11:00] And they say that it will carry the second largest cooling
[11:03] radiator array in space, the only larger one being the
[11:07] cooling array on the International Space Station.
[11:10] So to run just a handful of AI chips in orbit, you need
[11:14] hardware that rivals the most expensive structure ever built
[11:18] by humanity, the International Space Station.
[11:21] And then you have to scale that up to the 1,000,000 satellites
[11:25] mentioned in the SpaceX press release.
[11:28] To reach the GW scale capacity Musk is talking about, you would
[11:32] need solar arrays and radiators measuring roughly 4 kilometers
[11:36] in length. Getting something that size
[11:39] roughly the size of 40 football fields into orbit and
[11:43] maintaining it would be a logistical nightmare.
[11:46] It would be a giant, fragile sail vulnerable to every piece
[11:50] of space debris in low Earth orbit.
[11:53] Then there's the issue of Starship.
[11:55] The entire sentient Sun business model relies on SpaceX reaching
[12:01] an insane flight rate. We're talking about launches
[12:04] every hour, carrying 200 tons per flight, according to
[12:08] Spacex's own press release. Currently, Starship is still in
[12:13] the frequent explosion phase of development.
[12:16] While the engineering team has achieved the incredible feat of
[12:19] catching a 70m booster with giant robot arms, the rocket is
[12:24] yet to perform a full orbital mission or prove that it can
[12:28] reliably deploy payloads without what SpaceX calls a Rapid
[12:32] Unscheduled Disassembly. To round out the sci-fi sales
[12:37] pitch, Musk has even proposed building factories on the moon.
[12:42] I'm not making this up. According to the press release,
[12:45] the plan is to manufacture satellites taking advantage of
[12:49] lunar resources and then fire them into deep space using an
[12:54] electromagnetic mass driver. Basically a giant space railgun,
[12:59] a technology that the US Navy spent over $500 million on over
[13:04] a 16 year period with no success.
[13:08] Apparently the railgun prototypes suffered from extreme
[13:11] heat and physical stresses, the types of problems which would be
[13:15] only more of an issue in space. It's not clear to me why a
[13:20] factory on the moon would be more efficient than the factory
[13:23] in even the most remote places on Earth, or what moon resources
[13:27] Musk is planning on taking advantage of.
[13:30] I would imagine some sort of supply chain still needs to be
[13:33] developed there. It is a bold vision and it
[13:37] represents a massive U-turn for a man who spent decades calling
[13:41] lunar missions a distraction from going to Mars.
[13:45] If you remember, in 2017, he claimed that he would be sending
[13:49] at least two cargo missions to Mars in 2022 to find water
[13:53] sources and establish power, mining and life support
[13:56] infrastructure so that the first crude missions could follow in
[14:00] 2024. He later reaffirmed this target
[14:04] in 2018 and and again in 2020 before the timeline was delayed.
[14:09] Ultimately, building a data center in a desert or a
[14:13] specialized warehouse on Earth will always be cheaper and
[14:17] easier than trying to build them in space or manufacture and
[14:20] launch them from the moon. Andrew Mcalep, an engineer who
[14:24] works for a space startup, has built a web-based calculator
[14:28] that allows the cost of an orbital data center to be
[14:31] compared with the cost of an equivalent terrestrial 1.
[14:35] It estimates that building A1 GW data center and running it for
[14:40] five years on Earth costs around $16 billion, excluding chips,
[14:45] and an orbital equivalent would cost over $50 billion, some more
[14:50] than three times as much. The thing is that building a few
[14:54] data centers in Texas won't justify a $1.75 trillion
[14:58] valuation. For that, you need a sentient
[15:02] sun and a moon catapult. Now, this is possibly a
[15:05] recurring theme for Elon Musk, the idea that the hardest way of
[15:10] doing something is actually the most efficient.
[15:13] This is, after all, the same man who once claimed that digging
[15:16] miles of tunnels underground would somehow be orders of
[15:20] magnitude cheaper and faster than just building a road on the
[15:24] surface. Apparently, if you can convince
[15:27] investors that the laws of physics and basic accounting are
[15:30] just optional suggestions, you can put almost any price tag
[15:34] like on the results. If you can ignore the sentient
[15:38] Suns and the lunar catapults for a moment, you're still left with
[15:42] the daunting task of justifying a $1.75 trillion sticker price
[15:46] for SpaceX. To be clear, that doesn't mean
[15:49] that Elon Musk won't get that price.
[15:51] It just means there will be extremely difficult to explain
[15:56] based on what's being reported. This isn't just a regular IPO,
[16:00] it's a carefully managed liquidity event for a company
[16:04] that simply outgrown its capacity to source new funding
[16:07] in the private markets. For more than 20 years, SpaceX
[16:11] has existed in a private market bubble where valuations are set
[16:16] by small, isolated capital raises rather than the cold
[16:19] reality of daily public trading. But as former head of equity
[16:24] capital markets from Bank of America America Craig Cobbin
[16:27] points out in the Financial Times, the laws of financial
[16:31] gravity are a lot harder to bend than space-time.
[16:35] The primary metric for any high growth tech company is the
[16:39] enterprise value to sales ratio. It's particularly favored for
[16:44] rapidly growing firms that are either not yet profitable or
[16:48] have inconsistent earnings. This is because sales figures
[16:52] are often more stable and less susceptible to accounting
[16:56] portions. The net income, or EBITDA, the
[16:59] ratio tells you how much are you paying for every dollar of
[17:03] revenue the company brings. In Facebook, Cobbin points out
[17:07] when public at 11 times forward sales, this was considered
[17:11] extremely expensive at the time and it pushed the boundaries of
[17:15] what public markets were willing to tolerate.
[17:18] To add more context, most high growth tech companies back then
[17:22] were trading at much lower multiples.
[17:25] Google, for instance, was trading around 5 to 6 times
[17:29] sales. SpaceX is looking to list at
[17:32] roughly 94 times it's 2025 revenue.
[17:36] Even if we use the most optimistic projections for 2026,
[17:41] the ratio still sits at over 60 times sales.
[17:44] For context, that's significantly higher than
[17:47] Palantir, which currently has the highest multiple in the S&P
[17:51] 500. Not everyone thinks that that
[17:54] price is crazy, however. The analysts at Pitch Book
[17:58] recently made the case that a $1.75 trillion valuation is
[18:02] expensive but justifiable if you assume that Starlink will reach
[18:07] 1.2 billion users by 2040. The deep flaw in that math is a
[18:13] concept called the Total Addressable Market.
[18:16] Based on Hans Rosling's research in the book Factfulness, there
[18:20] are only about 1 billion people on the planet who earn more than
[18:24] $32 a day. Most of those people live in the
[18:27] United States and Western Europe, and most people in those
[18:31] parts of the world already have access to wired broadband, which
[18:35] is both faster and cheaper than Starling.
[18:38] A total addressable market of 1.2 billion users being able to
[18:43] spend over $100 a month solely on Internet connectivity is next
[18:48] to impossible. Starlink is a brilliant tool for
[18:52] people in remote areas, gold miners in Sudan or the military
[18:56] in Ukraine. But it's I'll suited for cities
[18:59] where the dish needs a clearview of the sky and because
[19:03] satellites suffer from network congestion when too many people
[19:07] connect to the same one all at once.
[19:10] Realistically, there are only about 32,000,000 households in
[19:13] the world who can afford the service and don't already have
[19:17] wired Internet access. Most of that group already have
[19:21] access to the Internet using mobile phone networks, and less
[19:25] than half of them might feel that cellular speed and
[19:29] connectivity is not good enough and are willing to pay up for
[19:32] Starlink access. Expecting Starling to jump from
[19:36] its current 10 million subscribers to 1.2 billion is
[19:40] like expecting everyone on the planet to start drinking Fiji
[19:43] bottled water even when they already have access to clean
[19:47] drinking water. We're already seeing the limits
[19:50] of this growth in the financial data.
[19:53] Elizabeth Lopato at The Verge recently pointed out that a 2024
[19:58] Morgan Stanley report projected that Starlink revenue would
[20:01] reach $19 billion the next year on the strength of 6,000,000
[20:06] subscribers. SpaceX then managed to reach 9.2
[20:10] million subscribers that year, more than 50% better than
[20:14] expected, but its revenue was only $16 billion.
[20:19] This implies that as Starlink grows it's customer base, it's
[20:23] margins are falling. Let's talk about the company's
[20:26] questionable profitability next. SpaceX recently touted $8
[20:31] billion in EBITDA, but as a number of analysts have noted,
[20:35] EBITDA, earnings before interest, taxes, depreciation
[20:39] and amortization is a very generous lens through which to
[20:43] view a company like SpaceX, which has very high research and
[20:47] development costs and very high depreciation.
[20:51] EBITDA is often used to help investors compare very similar
[20:55] businesses that have made different investment in
[20:58] accounting decisions over time, but companies that essentially
[21:02] run the same business. And you're just stripping out
[21:05] leverage choices, the jurisdictions they're taxed in
[21:08] and their accounting choices over the timelines they've
[21:11] chosen to spread out their costs.
[21:14] This can make sense. It's a great way to make a clean
[21:17] comparison of the cash flow generation power and business
[21:21] operations of two very similar widget manufacturing companies.
[21:25] In the case of high CapEx businesses with enormous cash
[21:29] burn on early stage research and development operations, EBITDA
[21:34] becomes very questionable. SpaceX satellites have a useful
[21:38] life of around 5 years. This means that when you
[21:41] capitalize the build cost of these satellites and send them
[21:44] up to space as investments on your balance sheet initially,
[21:48] you later incurred depreciation expenses where you spread out
[21:52] the cost of those satellite bills over their five year
[21:55] useful lifespans. Excluding significant expenses
[22:00] like this that are core to the business's ongoing operations
[22:03] and capacity to generate future cash flow is particularly
[22:08] distorted for a business like SpaceX.
[22:10] They simply couldn't continue to run their proposed operations
[22:14] without continuing to replace these satellites.
[22:17] Excluding the cost of the satellites and the cost of
[22:20] getting them into low Earth orbit to claim profitability is
[22:24] somewhat ridiculous if you then account for the billions in cash
[22:28] used to build Starship. In terms of research and
[22:31] development, the thing Mask is alluding to as profit starts to
[22:36] look quite difficult to ever capture.
[22:38] Very large research and development spend to go to Mars
[22:42] or to go to the Moon can only be recouped with high volume future
[22:47] deployments or high payload usage of the tools that they
[22:51] design and build. In practice, the launch market
[22:54] of delivering cargo into space has exhibited very little growth
[22:59] outside of SpaceX delivering its own Starling satellites into
[23:03] space, leading to the question of whether this is a growth
[23:07] business at all. When you move away from EBITDA
[23:11] and start analyzing the actual profitability, the picture is
[23:14] not nearly as pretty. It's essentially the picture of
[23:17] Dorian Gray of financial statements.
[23:20] The IPO pitch looks young and flawless, but the balance sheet
[23:24] in the attic is looking increasingly gnarled.
[23:27] Well, SpaceX is a $16 billion revenue business.
[23:32] Leaked documents show that XAI generated just $120 million in
[23:37] revenue during the first nine months of 2025.
[23:41] To put that in perspective, XAI is currently burning through $1
[23:45] billion a month to build it's data centres.
[23:48] That means that XAI spends it's entire annual revenue every six
[23:53] days. By merging the two businesses,
[23:56] Musk is using the Moat of the rocket business to subsidize the
[24:01] astronomical costs of the AI business, all while asking the
[24:05] public to pay a massive premium for the privilege of owning
[24:09] shares. Ultimately, SpaceX might be an
[24:12] extraordinary engineering success, but as a public
[24:16] investment, the price you pay for the expected growth will
[24:19] matter. If the valuation is based on
[24:22] comic book heroic assumptions about capturing a billion
[24:25] customers that either already have better Internet access or
[24:30] can't afford to pay for the service, the final frontier for
[24:33] investors might be a very long way down.
[24:37] This all leads us to the question of how Elon Musk
[24:40] actually expects to get that $1.75 trillion price tag.
[24:44] The answer isn't found in the physics of rockets, but instead
[24:48] in the physics of the stock market.
[24:50] The most important thing to understand about this IPO is
[24:54] that SpaceX isn't selling the whole company to the public.
[24:58] They're likely only releasing a tiny float.
[25:01] The financial press is suggesting that just five to 10%
[25:05] of the total shares might be issued by keeping the supply of
[25:09] stock artificially low while marketing it to every retail
[25:13] investor on the planet. This could create a supply
[25:16] squeeze before the opening bell even rings.
[25:19] When everyone wants a piece of the future but there are only a
[25:23] few shares to go around, the price has only one way to go,
[25:27] and that's up. Craig Cobburn wrote about this
[25:30] low float strategy a few years ago in the Financial Times,
[25:34] where he pointed out that a lot of recent tech IPOs had floated
[25:38] only a tiny number of shares, often between 7 and 10%,
[25:43] compared to the historical average of 20%.
[25:46] He used the example of Instacart, where only 8 percent
[25:50] of the shares were floated, and of those, 60% went to
[25:53] cornerstone investors and 5% to friends and family.
[25:57] This left a tiny supply of shares to be traded, presumably
[26:01] to cultivate a sense of scarcity.
[26:04] The real magic for SpaceX might happen with the index inclusion
[26:08] trap. This isn't just a lucky break
[26:11] for Elon Musk, it's reported to be driven by a specific demand
[26:15] from him. According to Reuters, SpaceX
[26:19] made early inclusion in the NASDAQ 100 index a necessary
[26:23] condition for agreeing to list on the exchange.
[26:27] In response, the exchange is consulting on a new rule that
[26:31] would allow SpaceX to join the NASDAQ 100 after just 15 trading
[26:36] days, bypassing the year of price discovery required for
[26:40] every other company. And it isn't just the NASDAQ,
[26:43] either. Bloomberg reports that S&P Dow
[26:46] Jones Indices is also considering historic rule
[26:50] changes to fast track SpaceX into the S&P 500.
[26:54] This is significant because there are roughly $24 trillion
[26:59] tied to that index. Maybe Elon can get on the phone
[27:02] to the people at Russell to see if he can get SpaceX classified
[27:06] as a value stock too. If SpaceX is added to the S&P
[27:10] 500 and the NASDAQ 100, every passive investor will find
[27:15] themselves buying the stock at whatever price the supply
[27:18] squeeze has manufactured. As veteran fund manager George
[27:22] Noble points out, the proposed five times float multiplier used
[27:27] to determine it's NASDAQ index weighting is shameless
[27:30] structural manipulation. It effectively turns every
[27:34] pension fund into exit liquidity for SpaceX inside, where your
[27:39] retirement account is being forced to buy into a bubble
[27:42] designed by the seller. As Noble argues, the rules are
[27:46] being rewritten to benefit IPO issuers and early stage
[27:50] insiders, and your capital is the tool being used to enrich
[27:54] them. We've seen this movie before.
[27:57] In December 2020, Tesla was added to the S&P 500 after a
[28:02] massive run up in price. Since the day of inclusion,
[28:06] Tesla has underperformed the broader index by more than 20%.
[28:10] The passive investors who were forced to buy in at a huge
[28:13] valuation right before sales started drying up became the bag
[28:18] holders while the early insiders took their victory laps.
[28:22] SpaceX may be an extraordinary engineering company, but it's
[28:27] been sold to the public as a financial miracle at a price
[28:30] that is, to me, very difficult to explain.
[28:33] That doesn't mean that the IPO will fail or the stock price
[28:36] will fall, but a lot of things will have to go right for SpaceX
[28:41] for it to be a good long term investment.
[28:44] Thanks for tuning into this week's podcast.
[28:46] The podcast is entirely supported by viewers like you on
[28:49] Patreon, where you can contribute as little as you feel
[28:53] like to keep the podcast going. If you'd like to support it,
[28:57] I'll give a link in the show notes.
[28:59] Have a great week and talk to you again soon.
[29:01] Bye.

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