SpaceX’s $1.8 Trillion IPO Could Pose Risks for Pension Funds

SpaceX is set to debut on the U.S. stock market on Friday (June 12) in what is expected to be the largest IPO in history. The company is valued at nearly $1.8 trillion ($135 per share), surpassing the previous record set by Saudi Aramco ($1.7 trillion in 2019).

According to Reuters, SpaceX plans to allocate 20% of its shares to individual investors and has already attracted around $70 billion in orders, quadruple its initial plan.

However, many experts warn about valuation risks. Analysts at MorningStar value SpaceX at $63 per share, 53% below the IPO price. The North Carolina state treasurer said the state would not directly buy SpaceX shares for its pension fund, deeming them too expensive, though investments via index funds continue.

The biggest concern stems from a new Nasdaq rule change. The exchange now allows large-cap companies like SpaceX to be added to the Nasdaq-100 index after just 15 trading days, instead of the standard three-month waiting period. This means pension funds and index fund managers are forced to buy SpaceX shares immediately, whether they want to or not.

"They are compelled to buy shares according to the index weighting. This could be extremely undesirable," said Aleksander Tomic, associate dean for strategy, innovation, and technology at Boston University. Colin Clark, a senior advisor at Northwestern Mutual, added: "Fund managers cannot simply choose not to track SpaceX because they have contracts tied to the index."

SpaceX’s governance structure is also controversial. Under the proposal, Elon Musk would hold up to 85% of voting rights despite owning only 42% of equity. In a letter to SpaceX’s board in May, New York and California pension fund managers argued this makes Musk "effectively unfireable without his own consent," a degree of accountability that is "almost unprecedented" in the U.S.

SpaceX also has direct ties to university endowments. According to the Wall Street Journal, the University of North Carolina system allocates 10% of its endowment to SpaceX, as do Washington University in St. Louis and Stanford University.

Elon Musk has a reputation for over-promising. A New York Times analysis found that he met only 19% of roughly 600 commitments on time. In 2016, he claimed humans would reach Mars by 2025, which did not happen.

Despite concerns, SpaceX reported $18 billion in revenue last year (up from $14 billion), though it posted a $4.9 billion loss. The Starlink network, with over 10 million subscribers, is the main growth driver, accounting for 50–80% of revenue. Investment banks such as Morgan Stanley and Goldman Sachs forecast SpaceX’s revenue could reach $330–470 billion by 2030.

However, experts worry about an "AI bubble" as companies like SpaceX, OpenAI, and Anthropic (both of which have filed for IPOs with valuations around $1 trillion) are closely interlinked. Torsten Slok, chief economist at Apollo Global Management, warned: "The difference between the tech bubble of the 1990s and today’s AI bubble is that the top 10 S&P 500 companies are now more overvalued than they were back then."