Elon Musk has become the world’s first trillionaire after SpaceX went public on the Nasdaq on Friday. Shares priced at $135 gave the aerospace company a valuation of approximately $1.77tn, pushing Musk’s net worth from $813bn into the trillion-dollar stratosphere. But according to Robert Reich, a former US labor secretary, the IPO is a sign that capitalism has abandoned traditional economic principles in favor of hype, connections, and arbitrary control.
What's at stake for ordinary investors
The IPO raises concerns for millions of Americans who may unknowingly invest in SpaceX through retirement savings and pensions. Reich notes that major stock indices like the Nasdaq 100 have implemented a “fast entry” rule starting 1 May, which will allow newly formed companies among the top 40 most highly valued to be included quickly. Since SpaceX almost certainly qualifies, a large chunk of retirement funds, pensions, and university endowments will automatically be tied to SpaceX’s market value. This automatic infusion could artificially inflate the stock in the short term.
Meanwhile, SpaceX insiders will be able to sell their shares sooner than typical IPOs, meaning they can profit from the upward tide driven by index fund buying and exit before any downturn. Reich warns that this could result in a redistribution of wealth from ordinary investors to Musk and his inner circle. “A lot of innocent people could be shafted by this IPO, perhaps without their even noticing,” he writes.
The mechanics behind the valuation
Reich points to three factors that underpin SpaceX’s valuation: hype, connections, and total control. On hype, Musk priced SpaceX stock at roughly 100 times the company’s 2025 revenue, despite consistent negative profitability and unmet goals. The company’s mission to “extend the light of consciousness to the stars” is inherently speculative. Much of the valuation comes from a deal Musk negotiated between SpaceX and his AI startup xAI—a “magic trick” of self-dealing.
Regarding connections, Reich highlights Brendan Carr, chair of the Federal Communications Commission, whom Musk recommended to lead the agency. Carr has approved regulatory requests for SpaceX’s Starlink satellite internet, allowing Musk to control over 10,300 satellites—two-thirds of all active satellites in low Earth orbit. Meanwhile, Carr launched an investigation into rival EchoStar after Musk’s company complained, and threatened to revoke broadcast licenses of NBC and ABC for unfavorable Trump coverage.
On control, each share held by Musk will have 10 times the voting power of a share offered to the public. The board of directors will have no meaningful authority, eliminating any checks or balances. “There’s no accountability,” Reich says.
What comes next for market regulation
Reich compares the SpaceX IPO to Musk’s ill-fated Doge and Trump’s takeover of the US government, arguing it reflects a “rot at the core of American capitalism.” Investors have no choice but to buy into SpaceX if they hold index funds, as the fast-track rule forces exposure. Whether this triggers regulatory scrutiny remains uncertain. Reich’s analysis suggests that without fundamental reforms, the trend of hype-driven, insider-favorable IPOs could continue, leaving average investors vulnerable.
Original reporting by The Guardian.
