Elon Musk commented in a podcast on June 11th that he believes money will cease to be a relevant factor at some point in the future. During a conversation with investor Peter Diamandis, Musk was questioned about the future of humanity, to which he responded that Artificial Intelligence and robots will generate so much production and service that eventually there will be nothing left for them to do.
However, while the expected hyperabundance does not materialize, money remains relevant, even for Musk. The next day, June 12th, he conducted the Initial Public Offering (IPO) of another one of his companies, SpaceX, making him the first trillionaire billionaire in history.
His fortune is determined by the market value of SpaceX, in which he still holds 46% of the shares, causing his net worth to fluctuate; at the time of writing this text, Musk held $726.9 billion. He maintains the position of the richest person on the planet, surpassing the runner-up, Google co-founder Larry Page, by more than double, who has $292.7 billion. The media and social networks reacted with praise to Musk.
A less visible aspect, and possibly unknown to the public, is that the SpaceX IPO involved highly questionable tactics, which could be subject to historical study as one of the biggest financial schemes in history.
SpaceX made 5% of its shares available to the public, totaling 638.8 million units at $135 each. This lot represents $86 billion, implying that the total value of the company would be $1.72 trillion. Although SpaceX is recognized for innovating and revolutionizing space launches and satellite internet, the attributed value is considered excessive for several reasons.
Firstly, this valuation corresponds to 95 times SpaceX's annual revenue. No other venture, not even those most discussed in the current financial bubble, reaches such a proportion. For comparison, Nvidia is worth 29.8 times its annual revenue, Google 27 times, Meta 24.4 times, Apple 40 times, and Amazon 31 times. The question arises as to how SpaceX can be valued so much higher than these giants, especially considering that the company recorded a loss of $4.9 billion in the previous year.
To try to validate this valuation, Musk used a second argument: the Total Addressable Market (TAM), which he estimates at $28.5 trillion. This figure is comparable to almost the entire Gross Domestic Product of the United States, or the sum of the global construction market ($15.7 trillion annually), oil/gas ($6.2 trillion), and technology ($6.1 trillion).
Additionally, 90% of this hypothetical market is not linked to SpaceX's main activity, as it derives from Artificial Intelligence (AI) revenues. Musk integrated his AI-focused company, xAI, with SpaceX, claiming that the profit will come from AI data centers installed in Earth orbit. According to him, these space centers will be more economical to operate than terrestrial ones starting in 2029, due to the absence of atmospheric interference and clouds, allowing for up to eight times more solar energy capture.
However, even with this projection, the math does not hold up. The panels of the International Space Station (ISS), for example, have 2,500 m² and generate approximately 100 kilowatts, which is a thousand times less than the energy required to power a large hyperscale terrestrial data center. With current technologies, it is not feasible to build large data centers, with over a million computers, in orbit.
What is viable is developing a smaller project, with a few thousand servers distributed in a satellite network. This technology has utility, such as serving as off-planet backup for extremely valuable data, but it cannot compete in processing capacity with terrestrial data centers. xAI, which incurred a loss of $6.4 billion last year, is aware of this, operating two large conventional data centers in Memphis, USA. While relevant, it does not compare to AI leaders (OpenAI and Anthropic) or data center leaders (Microsoft, Amazon, Google).
Given this, the question arises: who would buy SpaceX shares at the exorbitant price proposed? Apparently, Musk was counting on market naivety. In normal offerings, only 5% to 10% of shares are allocated to individual investors; the majority goes to institutional investors, such as banks and brokerage firms.
The SpaceX IPO deviated from this pattern because 20% of the offering was directed to individual, novice investors. The most worrying element lies in the fact that 150 million Americans invest their savings in stock markets, and more than half of this capital is in Index Funds, which replicate indicators such as the S&P 500, Nasdaq 100, or Dow Jones, buying small fractions of each index stock.
To prevent manipulation or large fluctuations, there is the seasoning period, where new shares only enter the indices after a specified time; in the S&P 500, this period is one year. Elon Musk requested that Standard & Poor's, responsible for calculating this American index, change this rule, but they refused. Thus, Musk sought out the Nasdaq exchange and proposed that SpaceX be listed there in exchange for a relaxation of this quarantine. Nasdaq accepted because it earns profits from transaction fees.
On July 7th, SpaceX shares were included in the Nasdaq 100 index. Consequently, all investment funds that replicate this index were forced to acquire SpaceX shares, using the money of millions of Americans at a very high cost, without most realizing it. This was the great trick. SpaceX shares should fall (they are already 28.6% below the peak), leading millions of people to lose money by having paid an unreal price for the shares. Musk, on the other hand, will maintain his status as the richest man in the world, with hundreds of billions of dollars additional to his previous wealth, constituting a transfer of wealth and a maneuver of unprecedented scale.
