🚀 Three Ways The SpaceX IPO Will Be Used To Exploit You

Well, the cat is out of the bag.

By the time you’re reading this, Elon Musk will have become the world’s first official trillionaire.

Not the first person to control assets worth a trillion dollars. Emperors, kings and central banks occupied that territory long before Silicon Valley existed. Musk’s fortune emerged through capital markets over the course of a single career, which makes the scale feel less like inherited power and more like a venture-capital experiment that escaped the laboratory.

Twenty years ago, SpaceX operated from a warehouse in El Segundo. Today, the company launches rockets, operates the world’s largest satellite constellation, and goes public with a valuation that would have looked like a printing error when George W. Bush was still in office.

The climb becomes easier to understand when placed beside the broader expansion of wealth over the last generation. John D. Rockefeller became America’s first billionaire when millionaires remained relatively rare. 

When Forbes published its first billionaire ranking in 1987, it counted 140 billionaires worldwide. Today, there are more than 3,400. Collectively, they control roughly $20 trillion. Nineteen people now possess fortunes exceeding $100 billion.

Rockefeller’s fortune looked impossible because few people had ever encountered a billion dollars. Musk’s fortune looks impossible because people have become accustomed to billions and are now confronting a larger unit of measurement.

The IPO determines what investors are willing to pay for each share. What happens afterward involves a different cast of characters entirely. If it feels like SpaceX has sucked all the oxygen out of the room… that’s because it has. 

💰 How Capitalists Will Exploit You

SpaceX spent 24 years raising capital before its IPO.

Musk seeded the company with approximately $100 million from the PayPal sale and maintained tight control through the early years. Institutional investors eventually arrived anyway. Fidelity arrived. Andreessen Horowitz arrived. More than 30 funding rounds later, SpaceX had raised nearly $12 billion in private capital before merging with xAI and stepping onto the public stage.

By mid-afternoon today, shares of SpaceX had risen on the open market to $173.95, giving the freshly minted public company a valuation of $2.26 trillion. (Source: Yahoo! Finance)

Retail investors generally view blockbuster IPOs as opportunities to participate in a great growth story. Early investors often view them as opportunities to convert paper wealth into cash.

The difference sounds subtle until you remember who owns most of the stock.

The institutions that financed SpaceX through private rounds acquired shares years before today’s buyers had access to them. They bought before the documentaries, before the headlines and before analysts built elaborate models projecting satellite networks, artificial intelligence platforms and Martian colonies. Public investors are arriving after the mythology has been established and after twenty-four years of execution, transforming a speculative venture into a global brand.

Wall Street has always understood that participation sells better than valuation models. The most successful IPOs rarely market themselves as securities. They market themselves as invitations. Investors are not simply buying shares of SpaceX. They are buying a place in a story involving reusable rockets, artificial intelligence, satellite communications and Elon Musk’s reputation for accomplishing projects that experts frequently describe as impossible.

The valuation reflects that enthusiasm.

SpaceX generated approximately $18.7 billion in revenue last year while reporting a consolidated loss approaching $5 billion. Starlink generated profits. The rocket business consumed capital. The newly integrated xAI division reportedly burned through billions constructing computing infrastructure.

Morningstar estimates the company’s fundamental value closer to $780 billion. Public markets are currently assigning a valuation exceeding twice that figure.

Meanwhile, the Nasdaq has assigned SpaceX an enormous index weighting, forcing passive funds and ETFs to purchase shares regardless of whether portfolio managers believe the valuation is justified. The same mechanism that spent a decade funneling capital toward the largest technology companies now turns its attention toward the newest arrival.

SpaceX may ultimately justify every penny of today’s valuation.

The investors selling stock today do not require that outcome. They only require buyers willing to believe it.

🏛️ How Populists Will Exploit You

The SpaceX IPO arrives at a particularly useful moment for politicians.

Federal debt is approaching $40 trillion. Interest expense has become one of the largest line items in the federal budget. Treasury auctions arrive with increasing frequency. Entitlement obligations continue expanding while tax revenues struggle to keep pace. We cover all these facts in Swan Dive ad nauseam.

Rarely do we comment on why elected officials routinely fail to address even the most basic math under their purview. Today’s SpaceX IPO will give us plenty of opportunity to do just that.

Trillions in debt and entitlement obligations are difficult to fit inside a campaign advertisement.

A trillionaire is considerably easier.

Before throwing support behind Trump in the 2024 campaign, Elon Musk was the first host of Saturday Night Live, who, by his own admission in the monologue, was “on the spectrum” of autism. You’ll recall how quickly the public turned on him, burning Teslas and defacing dealerships, when he chaired DOGE and tried to make the Federal Government a fraction as efficient as his entrepreneurial companies. (Image source: New York Times and Getty Images)

Bernie Sanders has spent years arguing that concentrated wealth represents evidence of a political and economic system tilted toward the rich. Chuck Schumer has championed federal spending programs, industrial policy and expanded government involvement in strategic sectors of the economy. Hakeem Jeffries routinely frames economic concentration as a challenge that requires political action and institutional responses. 

The SpaceX IPO hands each of them a fresh exhibit.

A photograph of Elon Musk standing beside a trillion-dollar fortune occupies considerably less space than a chart detailing federal interest payments. One image produces an immediate emotional response. The other requires a discussion of Treasury markets, deficit financing and the mathematics of compound interest.

A candidate can spend an entire news cycle discussing Elon Musk without mentioning the pace at which Washington continues issuing debt. A fundraising email built around billionaire wealth concentration will almost certainly attract more attention than one built around the maturity schedule of Treasury securities.

The debt remains regardless. The interest expense continues accumulating regardless. The Treasury continues borrowing regardless.

A trillionaire simply provides a more useful object for public ire. 

If Trump doesn’t pull a rabbit out of his ass with a peace deal in Iran, the juxtaposition of trillionaire Elon Musk, one-time presidential buddy-in-chief, next to gas, energy and food prices will be the only slogan even the most moderate Democrats will need to gain majorities in the House and Senate and commence a series of impeachment trials. 

🎓 How Intellectuals Will Exploit You

The iconoclast journalist Matt Taibbi spent part of his week mocking Columbia professor Kim Phillips-Fein.

Taibbi’s beef centered on Phillips-Fein’s understanding (or lack thereof) of the meaning of “equality,” here on the 250th anniversary of the nation whose most fundamental tenet is “all men are created equal. 

Phillips-Fein questioned whether Americans remain committed to equality as they often claim. And advocates that citizens ought to seek equality of outcome rather than equality before the law. Her attack is meant to strike at the very root of what Americans have come to believe is unique about the nation. 

Taibbi responded by drawing distinctions that have existed since the country’s founding. John Adams rejected the notion that people are born with identical talents or abilities. Taibbi used examples such as LeBron James to illustrate the point. Few basketball players enter life possessing James’s combination of size, coordination and athletic ability. Mozart’s musical gifts arrived unusually early. Michael Jordan did not require government assistance to jump higher than everyone else in the gym.

Taibbi’s observation is not that inequality always produces good outcomes. It does. He laughs at, instead, the fact that acknowledging obvious differences in talent and ability increasingly attracts suspicion in academic circles.

Journalists and academics of all stripes have a difficult time understanding, let alone explaining, the source of wealth. “A confused mind always says ‘no’,” goes the marketer’s bible. Rather than trying to understand wealth creation, writers and professors spend an inordinate amount of time and spill a lot of ink trying to explain what’s wrong with it. They sure don’t mind exploiting it for their own gain. (Source: Globe and Mail)

The Globe and Mail’s Chris Gay approached the subject from a different angle. It’s not that Musk is a rich man. It’s that he uses his wealth to express ideas that Gray disagrees with. That’s unfair, isn’t it?

Gay has little interest in condemning wealth merely because it exists. He dismisses complaints about yachts and mansions as largely subjective. His concern begins when wealth translates into political influence. 

He points to Musk’s campaign spending, his proximity to government decision-making and his ability to shape policy discussions without standing for election.

James Madison worried about concentrated property. Louis Brandeis worried about concentrated wealth. Gay worries about concentrated political influence emerging from concentrated economic power.

The Musk fortune provides raw material for both camps.

For academics interested in inequality, a trillion-dollar fortune becomes a case study. For academics interested in political influence, the same fortune becomes a different case study. Universities respond to unusual events by publishing papers, books, organizing conferences and providing explanations. Extraordinary fortunes generate demand for interpretation in the same way extraordinary market bubbles generate demand for forecasts.

The public then receives competing narratives explaining what the trillion dollars means. One explanation emphasizes unequal outcomes. Another emphasizes political influence. A third emphasizes innovation, entrepreneurship and risk-taking.

SpaceX launches rockets. The surrounding institutions manufacture their own uses for the fortunes, won and lost, that will come from it. Thus far, there’s only one trillionaire. If you care to read his view, he routinely posts them on X, which he also “owns”, and that drives the political class bat shit crazy. 

📚 Mr. Gorbachev, Open This Gate

June 12 carries its own anniversary.

Thirty-nine years ago today, Ronald Reagan stood before the Brandenburg Gate with the Berlin Wall rising behind him and challenged Mikhail Gorbachev to do something most observers considered impossible.

“Mr. Gorbachev, open this gate.”

“Mr. Gorbachev, tear down this wall.”

At the time, many listeners treated the line as political theater. The Cold War was still very much alive. East Germany remained under Soviet influence. The Berlin Wall had stood for more than a quarter of a century. Since its construction in 1961, it had prevented millions of East Germans from doing something remarkably simple: leaving.

The wall itself was a confession.

East Germany’s leaders spent decades insisting they had built a workers’ paradise. More than 2.5 million East Germans responded by moving west before the border closed. The government eventually concluded that if enough citizens insisted on escaping, the solution was not to improve conditions inside the country but to build a barrier around it.

Politicians often speak of prosperity.

People reveal their preferences by moving.

For most of the 20th century, millions of people voted with their feet. They left centrally planned economies for market economies. They left command systems for price systems. They left governments that allocated resources for societies where individuals could allocate resources themselves.

Two years after Reagan’s speech, Berliners began dismantling the wall with hammers, chisels and bare hands. Three years after that, the Soviet Union ceased to exist.

History rarely arrives when experts expect it. Or with any real clarity. 

When our daughter was just nine, we took her to Berlin. Among the sites we found, on the opposite side of the Brandenburg Gate from the plaque commemorating Reagan’s historic plea to not let economic philosophy divide the German state any longer, the ruins of the Third Reich, the underground bunker where Adolph Hitler and Eva Braun shed their mortal coil. (Source: History.com)

The economists studying East Germany’s production quotas largely missed the moment. So did many intelligence agencies. So did most journalists. The people crossing the checkpoints understood the situation better than anyone writing reports about it.

Which brings us back to SpaceX.

The debates surrounding Musk’s fortune are ultimately debates about capitalism itself. Some observers see a trillion dollars and conclude the system has failed. Others see reusable rockets, global satellite networks and a company that did not exist twenty-five years ago.

The argument is unlikely to end anytime soon. But it is worth remembering that no one got shot in the no man’s land in the middle of the Berlin Wall trying to flee into East Germany. 

~ Addison

P.S. If you missed this week’s Grey Swan Live!, we took a more practical look at how to invest now that SpaceX is public. You can listen to the replay with Adam O’Dell: What Comes After SpaceX? 

While Wall Street debates today’s IPO, Adam follows the capital flowing toward energy infrastructure, hard assets, industrial buildouts and the next phase of The Great Race.