Mercury, Venus and Jupiter aligned in the second week of June and, for a moment almost as fleeting, Elon Musk became the world’s first trillionaire. The United States tech entrepreneur had reportedly targeted this celestial configuration to launch the biggest initial public offering (IPO) in history – US$75 billion of shares in SpaceX, a company that promises to “build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars”.
After their float at US$135 apiece, the shares traced a grand arc: soaring to an early peak of $225, which brought the company valuation above $2.6 trillion, before swooping to $120. By last weekend, two aborted rocket launches had helped to wipe $1 trillion from the company’s market value.
A resurgence is possible – few market prices are as volatile as those of today’s US tech stocks – but there’s no shortage of analysts who see Musk’s latest venture as further evidence of a dangerously inflated sector. Much of it can’t hope to turn a profit in the next five to 10 years and is vulnerable to interest rate hikes driving up the cost of borrowing. The AI universe in particular appears sustained by overweening ambition, undeliverable promises, political cronyism and a lack of apparent competition.
Meanwhile, investors around the world are increasingly pulled into the orbit of these giants weighing into major sharemarket indexes. There is more to come, too – AI behemoths Anthropic and OpenAI are reportedly preparing their first public offerings, and SpaceX, on its wild course, has beaten a path to the Australian market.
Months ago, Musk’s company secured the blessing of the Australian Securities and Investments Commission to give buyers here direct access for the first time to a big-ticket US listing at its launch. The claims in the
279-page US prospectus – somewhat tempered in the ASIC-approved and image-free Australian version – were so grandiose as to be beyond meaning. Speaking of its theoretical maximum revenue, SpaceX claimed to have “identified the largest actionable total addressable market in human history”, at $28.5 trillion.
On his Pivot podcast with tech journalist Kara Swisher this month, New York University’s Stern School of Business academic Scott Galloway described the launch as the “greatest transfer of wealth from retail investors since crypto”.
Super industry peak body the Association of Superannuation Funds of Australia estimates that every Australian now has about $50 of exposure to SpaceX. That’s likely to grow as more of the company’s privately held shares are unlocked.
Macquarie Capital underwrote the offer in Australia and, as the hype surrounding the IPO built, CommSec, the investing arm of Commonwealth Bank, was also contacted with an offer of direct purchases for retail investors – as distinct from professional or high-net-worth buyers. “We had the ability to email 10 per cent of Australians to let them know,” managing director James Fowle told The Australian Financial Review at the start of this month. That led to 37,000 new international accounts for CommSec, more than 28,000 applications – and about $1 billion for SpaceX.
In an earlier interview, Fowle told the AFR that CommSec was “keen to play a greater role connecting customers with listings from around the world, especially the US”. The executive was on leave this week and could not be reached for comment, but a spokesperson confirmed the broker received “record levels of interest” from customers.
Other Australians may be less aware of SpaceX’s role in their personal finances. In the lead-up to the launch, Macquarie Capital reportedly met extensively with superannuation funds to pitch the offering. (Australian Super, Australian Retirement Trust, UniSuper, Aware Super and Hesta declined to comment for this story.) Though their receptiveness is unclear, the Association of Superannuation Funds of Australia estimates that all savers now have about $50 of exposure to SpaceX. That’s because recent rule changes meant the new stock could be fast-tracked into many of the leading indexes tracked by superannuation funds and popular exchange-traded funds. That exposure is likely to grow, too, as more of the company’s privately held shares are unlocked, over increments starting next month, and when the company joins America’s flagship S&P 500 index. The widely tracked benchmark stuck to its eligibility requirements, meaning SpaceX can’t enter for at least a year and must meet a profitability threshold.
SpaceX isn’t expected to make money for about another decade, though, mainly because the bulk of it is losing vast sums of money. The actual space part of SpaceX – founded in 2002 and focused on low-cost, reusable rockets – is only a fraction of the company. There’s also the satellites and communications system known as Starlink, and the AI venture formerly known as xAI – acquired by SpaceX in February – which includes the social media platform formerly known as Twitter. In the first three months of this year alone, the space division lost US$662 million, the AI unit lost almost US$2.5 billion and the connectivity division made a profit of almost $1.2 billion.
Aside from massive losses, there’s Musk’s “move fast and break things” approach to innovation – his thrill for what he calls “rapid unscheduled disassembly” isn’t conducive to a stable market pricing. Then there’s the company’s shocking environmental, social and governance score, which makes it off limits for most ethical and sustainability-focused funds. While the data centres of the AI unit guzzle water and power, and Grok churns out sexualised images of children, Musk controls more than half the company’s votes, can appoint most of the board and can only be fired by himself. The day before the IPO, index provider MSCI assigned SpaceX its lowest Environmental, Social and Governance rating, on a par with Russia’s after the invasion of Ukraine.
These governance concerns are sharpened by reports that Musk is speaking openly within the company about a merger with Tesla. Given SpaceX’s habit of absorbing Musk’s other ventures, some analysts anticipate a move next year, which would allow him to assume control of one of the world’s largest companies, with a gravitational pull for the world’s investment capital. The arrangement will benefit the entrepreneur far more than his investors.
One investor who is benefiting perhaps more than others is mining magnate Gina Rinehart. A Sky News item featured on the Hancock Prospecting website reports that the company bought a US$1 billion stake in SpaceX, as a gesture of support for industries led by “sensible, hard working, patriotic and exceptional people”. The article quotes Hancock Prospecting chief executive Garry Korte saying, “we also see the possibility of mutually beneficial arrangements between SpaceX and Hancock Prospecting’s significant critical minerals investments, as demand grows for the materials and infrastructure needed to support advanced technology”.
At the National Bush Summit in Townsville last month, Rinehart suggested Queensland offer “sparsely or non-populated islands … where there aren’t high-end tourist facilities” to Musk “at no cost for his SpaceX satellite construction and launches”.
Tony Sycamore, a market analyst at IG Australia, told Guardian Australia Rinehart was unlikely to be bothered by the slide in her investment. “You’re looking to invest in SpaceX for the long term; you’re backing the man,” he said. “She knows Elon personally.”
So there’s mutual appreciation between the richest woman in Australia and the richest man in the world, seeking to make themselves still richer. Meanwhile, the superannuation industry estimates about $400 billion in Australian retirement savings – climbing to $1 trillion by 2035 – is invested in Wall Street, which is up to its eyeballs in tech investment. And the fortunes of much of that hinge, for now, on Donald Trump.
The US president is lining his pockets with proceeds from his crypto ventures and refuses to keep his wealth in a blind trust, as others have in the past. Billions of dollars’ worth of government contracts have gone to SpaceX and environmental regulations have been scrapped to enable more rocket launches. For this IPO, market regulators bent the rules to make it possible for Musk to float just 5 per cent, instead of the mandated 10 per cent of the company, in what Kara Swisher and Scott Galloway called “manufactured scarcity” intended to support the prices.
Musk has “Trump on his shoulder”, Galloway says: “That’s what people are buying.” That’s supposedly a positive for all who have bought into Musk’s brilliant and wild adventure. But those with no taste, or balance sheet, for rapid unscheduled disassembly should beware. The only person possibly more mercurial than the richest man in the world is the self-interested leader of its largest economy.