It's really concerning given how the indexes are changing rules to fast-track SpaceX being forced into index funds. S&P is also working on updates to S&P 500 to force it down everyone's throats quickly and algorithmically.
In addition to covering the IPO in general last week, Matt Levine also wrote about this specific question Tuesday[1]:
> Historically index providers were in the business of making these sorts of quality decisions, so that index funds were not forced to buy stocks they didn’t like.
> These rules create some tension between the idea that an index is a list of all the stocks and the idea that an index is a list of all the good stocks. Historically, it didn’t matter all that much: The point of the stock market is to tell you which stocks are good, so a company with a high stock valuation should be a very good company, so it should get a high weighting in both the Index of Good Companies and the Index of All the Companies.
> But SpaceX — and also maybe OpenAI and Anthropic in their coming IPOs — will probably break that link. SpaceX will probably (1) do all sorts of stuff that index funds hate and that index providers have specifically tried to exclude and also (2) be gigantic, because the market loves it.
I'm usually a Boglehead, with some exceptions, and one exception I'd love is some sort of trade that would eliminate my exposure to SpaceX for the next few years. I'm sure there's some combo of options that would do it.
Probably finding an ESG-focused ETF would do it. ESG basically meant "good governance, we follow laws" which translated into better governed public companies that therefore had better returns, as one would expect. Really weird how it was politicized into something entirely different...
> I'd love is some sort of trade that would eliminate my exposure to SpaceX
You can just short SpaceX of an amount equivalent to its share of your SP500 holdings. You will have to pay borrowing costs though, but on something that liquid it will be very small.
Yeah. For comparison, SpaceX will be maybe half the size of MSFT. MSFT is 7.4% of the SP500 index, so for a $1,000,000 portfolio if you were to short MSFT you'd pay 0.25% on the value of that 7.4%, or $185/year.
So eliminating SpaceX exposure will cost you $100 per million of your SP500 ETF per year, or so.
Short term gains are hype and fomo, but if you're holding index funds long like I am, then returns have a lot more to do with performance. And given the lack of hype around ESG, it seems like an exceptional time to buy in to it.
Interestingly, these are the exact rules they're working to overturn: currently, no matter how many stupid accounting tricks you pull off, you need to actually be profitable to be included in the S&P 500.
You can sidestep this entirely with a total-market fund like VTSAX/VTI, which hold the entire market and should be more resistant to being gamed.
They’re free-float adjusted so entities like SpaceX are valued only by what’s available on public markets. And Vanguard (and its funds) are owned by its investors, which makes it seem implausible that the rules would be rewritten in a way that would damage investors.
It may list fast, but it covers many more securities from what I understand so it’s insulated. I think the fact is that any broad market ETF is gonna own at least some piece of a $1 trillion company.
well that's the problem, right? There is no justification for a trillion dollar Elon Musk valuation. And he and his investors know this. That's why they're trying to change the rules to dump the stock while it's irrational on every investor in the world. If they really believed in the value of the company, would they be bribing people to scam the index funds?
Any of the direct indexing providers will let you blacklist individual stocks from the index. The intended use is to exclude stocks you hold elsewhere (or receive as stock grants) to avoid causing wash sales, but it can also be easily used to make a custom "S&P 499".
Almost all of the YoY growth in the S&P500 is in a very small number of tech companies. If one of those fast-growing tech companies isn't in the S&P500, the index as a whole becomes obsolete.
The same rules are now affecting other big IPOs. I think Cerebras was confirmed as getting fast listing too even though they’re much smaller. It’s one big act of dumping on retail markets
It’s based on the total market and not artificially limited to a small number of large companies. Plus it’s free-float adjusted so only the publicly-tradable portion of SpaceX is considered when weighting its inclusion so it will constitute only a small portion of the fund. There is also a (small) mandatory delay period which I don’t recall between it going public and it becoming included in the index which should give time for the SpaceX valuation to stabilize on something notionally realistic.
Thankfully, Vanguard and its member funds are investor-owned so are likely more resilient against someone like Elon trying to change the rules.
The index they use is altering the rules. I complained to my account rep, he agreed it was not great and is asking the fund mgmt what the plan is. I doubt there is a lot they can do.
Morningstar said its CRSP Market Indexes will "undergo enhancements to introduce an alternative liquidity screen", making it possible to add SpaceX and other giant IPOs to these benchmarks more rapidly. The funds that use the CRSP indexes as a portfolio benchmark include Vanguard's $607 billion Total Stock Market ETF.
It’s obviously a scam. First xai acquires failing Twitter and then SpaceX acquires xai? At a made up valuation number that’s too high? The voting structure of SpaceX prevents Elon from ever being held accountable. Not to mention that the revenue and profits are simply not enough to justify the desired value.
Merging the failling companies into the other ones is the usual Elon thing, Solar City didn't get acqui-merged into Tesla for its great result.
It's not a "scam" in the traditionnal sense, it's riding the bubble while it's there, stock value is "supposed" to be about the company performance and potential but technically it doesn't have to be, it's about what some people are willing to pay for it (the stock, not the product the company sells) and that's all. That's also why tesla has such a valuation.
You can see it in the comments even here and other thread about this IPO, some people read the numbers, and some have just religious sounding comments about it being the biggest revolution ever or making the history book etc ...
And that's also why they need to keep elon as CEO because in the scenario where they remove it and get the best car company CEO and become a great regular car company that works and ships lots of great car ... Their valuation would be reduced a factor of ten
Yeah, for all the technical excellence by Shotwell and the team ... I don't want my ETF's and pensions buying into that piece of shit CEO and his corrupt 'at a whim' entity manipulation.
Now are we going to bomb Denmark? Or Venezuela style? Greenland of course is part of Miami anyway so that needs to be regaineed ASAP which is another top priority.
the piece explains how modern finance is de facto built on the shoulders of the privatization of the welfare state. i find it particularly relevant here: the finance class - in this case musk - wants pensioners money via mutual funds, even modifying the rules of indexing...
Why is it a good thing to buy something that is financially not well run up front, and usually things don’t get better as time goes on however, if you’re in first, you can just sell it down the road and let someone else hold the bag in time.
Tesla was a great ride if you got in early but long-term from this point on if you had any significant amount of money, why would you buy them now? Unless you like sleepless nights…
Yeah, I also don't want to eat a tasty morsel if you roll it around in the dirt and serve it up covered in bugs and hair.
And that's basically what SpaceX is right now after you account for xAI and twitter in the mix.
So I'd love to own a piece of the SpaceX from a decade ago - but the current offering smells pretty bad.
Combined with the fact that at this point, Musk clearly isn't opposed to running a business with dramatically inflated valuations based on vaporware, lies, & hype (cough - Tesla - cough) it just makes me far more skeptical than I might otherwise be.
I think caution is warranted here.
Essentially - I want to own the SpaceX that could have been if we didn't end up with the shoddy k-hole version of musk in charge of things.
The current SpaceX is in a far better financial and operational position than 10 years ago. By an order of magnitude. 90% of all payload to orbit right now is SpaceX alone. Starlink is profitable all on it's own. Right now. And they are just now picking up steam. American Airlines just signed onto Starlink just last week. This company is most likely gonna be the Coca-Cola of transportation between celestial bodies in solar system for the next 500 years but people on here are arguing over peanuts. On HN of all places.
SpaceX is completely dependent upon the government. If said government decides to move on then what long-term and they will move on because of China, Russia and the EU but mostly because of China.
This brief dalliance in private enterprise in space will not last long-term.
I guess I don't consider leadership integrity and honesty to be "peanuts".
If anything - as an investor I'd call those core concerns about how I'll make my money back.
Further... this company isn't actually making ANY DAMN MONEY. Of the bundled orgs, only Starlink is profitable, and not profitable enough to offset the losses on spaceX and xAI/Grok. (starlink +4b, spacex -700mm, xAI -6b = -2.7b..., with 30b in debt).
So... no... right now this company is not "Coca-Cola". And that delusional comparison is part of why I think it's correct to be wary right now. On a scale between Enron and Coke... I'd wager we're closer to Enron.
I'll pick up some shares by default given the ETFs I'm in anyways, and that's enough for me...
Have you looked at the S1? The valuation is not based on launchers, it's based on all the potential money they can make as an AI company. Given that they are probably not even in the top 10 in that business, it's just pie in the sky.
I'd love to own SpaceX - what I don't want to own is all the unprofitable, toxic dogshit its ketamine-addled CEO folded into it that has nothing to do with putting stuff into orbit or selling Starlink.
Imagine buying the most overvalued company of all time helmed by a crazy man who does Nazi salutes. Payback period? Who cares! Orbital class booster yayyyy
The part that gets me is that changing of the rules by exchanges and financial regulators to essentially force mass purchases on a small float. That's disgusting and in a just world, those people would go to jail.
The funny part of all this is that SpaceX has achieved a lot but what might break them, or at least weigh them down heavily, is the impulsive and forced purchase of Twitter. Before anyone claims it was some kind of master plan, Elon went to court to get out of it but was forced into it [1].
What happened? Mass firings, pushing his own tweets because his fragile ego couldn't handle Joe Biden getting more likes [2] and Twitter opened the floodgates for hate speech [3] and worse [4]. Advertisers fled. Fidelity (who foolishly was part of the acquisition) massively wrote down the value [5]. Elon had used Tesla shares as collateral and was possibly facing a margin call.
How did he get out of it? Well, in 2023 Elon founded xAI to challenge OpenAI. People invested in this for some reason. And by 2025, Elon merged Twitter with xAI, overvaluing Twitter at $33 billion (which is still down 25% from the purchase) [6].
Now, I imagine the xAI investors were unhappy with Elon using xAI to bail out himself so what did he do? Easy. Make SpaceX acquire xAI of course [7].
Thing is, xAI and Twitter/Grok are a massive drain on SpaceX's finances, losing more than $10 billion annually allegedly [8].
Twitter did not have to end up as part of SpaceX. SpaceX would've been a better company without it. SpaceX already faces headwinds from the incredibly expensive and behind-schedule Starship program. Part of all of this regulatory fixing is to make sure the insiders (and Elon himself) get bailed out.
> The deal, with SpaceX, is that Elon Musk runs it however he wants, and he does weird stuff, and you have to trust him, and if you don’t like it you can’t complain.
> When SpaceX acquired xAI a few months ago, did a special committee of independent directors approve the transaction? Did Musk recuse himself from negotiations? Was the price set by independent valuation experts using a rigorous process? Did outside shareholders sue to block the deal? Stop. Musk wanted SpaceX to buy xAI, so it did.
> [...] Surely SpaceX has created all that shareholder value more because Musk does what he wants than in spite of Musk doing what he wants; it is hard to accidentally create $1.75 trillion of value. SpaceX’s shareholders signed up for this deal — letting Musk cook — and have been rewarded;
Though (at least to my knowledge) Zuckerberg doesn't have a history of abusing his authority to make deals that advantage other companies he owns at the expense of Facebook.
E.g. SpaceX buying up large numbers of Cybertrucks Tesla couldn't sell at MSRP, not even negotiating a good fleet sale deal.
Facebook is still a Delaware company, with lots of established case law for what Zuckerberg can and can not do, voting majority or not. SpaceX is now some Texas corporation with a state legislature ready to enable whatever Musk wants.
It seems like a fine offer to have exist, but one that a pension fund with low risk tolerance wouldn't want to take. So everything seems reasonable with the world.
Similarly I don't understand why indicies are rushing to change their rules to allow SpaceX in. People accept a certain risk tolerance and changing the rules to ramp up the risk seems questionable at best.
It's really concerning given how the indexes are changing rules to fast-track SpaceX being forced into index funds. S&P is also working on updates to S&P 500 to force it down everyone's throats quickly and algorithmically.
In addition to covering the IPO in general last week, Matt Levine also wrote about this specific question Tuesday[1]:
> Historically index providers were in the business of making these sorts of quality decisions, so that index funds were not forced to buy stocks they didn’t like.
> These rules create some tension between the idea that an index is a list of all the stocks and the idea that an index is a list of all the good stocks. Historically, it didn’t matter all that much: The point of the stock market is to tell you which stocks are good, so a company with a high stock valuation should be a very good company, so it should get a high weighting in both the Index of Good Companies and the Index of All the Companies.
> But SpaceX — and also maybe OpenAI and Anthropic in their coming IPOs — will probably break that link. SpaceX will probably (1) do all sorts of stuff that index funds hate and that index providers have specifically tried to exclude and also (2) be gigantic, because the market loves it.
[1]: https://www.bloomberg.com/opinion/newsletters/2026-05-26/ind...
I'm usually a Boglehead, with some exceptions, and one exception I'd love is some sort of trade that would eliminate my exposure to SpaceX for the next few years. I'm sure there's some combo of options that would do it.
Probably finding an ESG-focused ETF would do it. ESG basically meant "good governance, we follow laws" which translated into better governed public companies that therefore had better returns, as one would expect. Really weird how it was politicized into something entirely different...
> I'd love is some sort of trade that would eliminate my exposure to SpaceX
You can just short SpaceX of an amount equivalent to its share of your SP500 holdings. You will have to pay borrowing costs though, but on something that liquid it will be very small.
Yeah. For comparison, SpaceX will be maybe half the size of MSFT. MSFT is 7.4% of the SP500 index, so for a $1,000,000 portfolio if you were to short MSFT you'd pay 0.25% on the value of that 7.4%, or $185/year.
So eliminating SpaceX exposure will cost you $100 per million of your SP500 ETF per year, or so.
Shorts have unlimited risk. Buying a put is risk-defined and probably a better strategy.
No, because the unlimited risk of shorting is balanced (hedged) by the unlimited upside of holding the same number of shares via the ETF.
> some sort of trade that would eliminate my exposure to SpaceX
I think it's less complicated than you'd think.. just buy LEAPS puts proportional to your exposure.
One annoying thing is that those "non-standard" ETF variants have much higher management costs than basic S&P500 / All World ETFs.
Dimension funds aren’t bad
Stock markets are ruled by hype and fomo. Good corporate governance has little to do with returns, unfortunately.
Short term gains are hype and fomo, but if you're holding index funds long like I am, then returns have a lot more to do with performance. And given the lack of hype around ESG, it seems like an exceptional time to buy in to it.
Bro the index is about riding the hype and fomo and when the phenomenon progressively loses track it gets less and less quota
Add Anthropic and OpenAI to the list. Companies that are bleeding money.
Personally, a company should be making money before adding it to the index.
Interestingly, these are the exact rules they're working to overturn: currently, no matter how many stupid accounting tricks you pull off, you need to actually be profitable to be included in the S&P 500.
There is a market for an S&P 500 ETF without those companies. I'll immediately switch over
You probably want an ETF that follows something like the MSCI USA Ex Mega Cap index then: <https://www.msci.com/indexes/index/758086>
Let me know if you find one! I'm at a loss. (And even then, if I switch I have to pay $$$ taxes on capital gains)
You can sidestep this entirely with a total-market fund like VTSAX/VTI, which hold the entire market and should be more resistant to being gamed.
They’re free-float adjusted so entities like SpaceX are valued only by what’s available on public markets. And Vanguard (and its funds) are owned by its investors, which makes it seem implausible that the rules would be rewritten in a way that would damage investors.
VTI lists fast even before these recent changes as I recall. So it’s more vulnerable, not less.
It may list fast, but it covers many more securities from what I understand so it’s insulated. I think the fact is that any broad market ETF is gonna own at least some piece of a $1 trillion company.
well that's the problem, right? There is no justification for a trillion dollar Elon Musk valuation. And he and his investors know this. That's why they're trying to change the rules to dump the stock while it's irrational on every investor in the world. If they really believed in the value of the company, would they be bribing people to scam the index funds?
Any of the direct indexing providers will let you blacklist individual stocks from the index. The intended use is to exclude stocks you hold elsewhere (or receive as stock grants) to avoid causing wash sales, but it can also be easily used to make a custom "S&P 499".
I'm looking at Schwab (and saw a few others) and couldn't find anything: https://www.schwab.com/learn/story/primer-on-wash-sales
I would assume this is not an ETF but sth else?
https://www.schwab.com/direct-indexing
We're going to witness bigger blast than the great depression, dot com bust and 2008 crisis combined.
These greedy capitalists are after the pension funds + retail investor (ETFs in particular) through IPOs but there's no profitability in sight.
And accelerating the schedules for insiders to dump shares.
Almost all of the YoY growth in the S&P500 is in a very small number of tech companies. If one of those fast-growing tech companies isn't in the S&P500, the index as a whole becomes obsolete.
Waiving profitability requirements to join the S&P 500 and trigger auto-buys from index funds is DEI for corporations.
The same rules are now affecting other big IPOs. I think Cerebras was confirmed as getting fast listing too even though they’re much smaller. It’s one big act of dumping on retail markets
is anyone surprised? the IPO documents are a disaster, and the finance-tube talking heads are all tearing it to shreds
How can I transfer my shares of VTI for an interest in this pension fund, before it’s too late?
VTI won’t really be affected by this.
It’s based on the total market and not artificially limited to a small number of large companies. Plus it’s free-float adjusted so only the publicly-tradable portion of SpaceX is considered when weighting its inclusion so it will constitute only a small portion of the fund. There is also a (small) mandatory delay period which I don’t recall between it going public and it becoming included in the index which should give time for the SpaceX valuation to stabilize on something notionally realistic.
Thankfully, Vanguard and its member funds are investor-owned so are likely more resilient against someone like Elon trying to change the rules.
The index they use is altering the rules. I complained to my account rep, he agreed it was not great and is asking the fund mgmt what the plan is. I doubt there is a lot they can do.
VTI
> Seeks to track the performance of the CRSP US Total Market Index.
The index that is changing its rules is the NASDAQ100, commonly referred to as the NASDAQ, although NASDAQ is also the name of the exchange.
https://www.reuters.com/legal/government/morningstar-conside...
Morningstar said its CRSP Market Indexes will "undergo enhancements to introduce an alternative liquidity screen", making it possible to add SpaceX and other giant IPOs to these benchmarks more rapidly. The funds that use the CRSP indexes as a portfolio benchmark include Vanguard's $607 billion Total Stock Market ETF.
Well shit.
BY getting a job in Denmark in the sector that this pension fund covers. It's a "member-owned pension fund for academics."
Should have renamed the company xGoodwill.
Wouldn't the same argument apply against Tesla?
https://akademikerpension.dk/nyheder/vi-ekskluderer-tesla/
Any chance of bypassing the paywall? Does someone have a archive link perhaps?
Just prepend url with archive.is/ if you want to check
Pay perhaps?
Or do you work for free?
prediction: SpaceX will not escape Earth's gravity. Meaning... what goes up will come down.
It’s obviously a scam. First xai acquires failing Twitter and then SpaceX acquires xai? At a made up valuation number that’s too high? The voting structure of SpaceX prevents Elon from ever being held accountable. Not to mention that the revenue and profits are simply not enough to justify the desired value.
Merging the failling companies into the other ones is the usual Elon thing, Solar City didn't get acqui-merged into Tesla for its great result.
It's not a "scam" in the traditionnal sense, it's riding the bubble while it's there, stock value is "supposed" to be about the company performance and potential but technically it doesn't have to be, it's about what some people are willing to pay for it (the stock, not the product the company sells) and that's all. That's also why tesla has such a valuation.
You can see it in the comments even here and other thread about this IPO, some people read the numbers, and some have just religious sounding comments about it being the biggest revolution ever or making the history book etc ...
And that's also why they need to keep elon as CEO because in the scenario where they remove it and get the best car company CEO and become a great regular car company that works and ships lots of great car ... Their valuation would be reduced a factor of ten
It’s a scam and the party will be over when Tesla finally bites the dust, and it will. The worldwide trajectory is not in their favor.
Good for Denmark.
Yeah, for all the technical excellence by Shotwell and the team ... I don't want my ETF's and pensions buying into that piece of shit CEO and his corrupt 'at a whim' entity manipulation.
Sorry, fuck SpaceX
Now are we going to bomb Denmark? Or Venezuela style? Greenland of course is part of Miami anyway so that needs to be regaineed ASAP which is another top priority.
again, i’ve been posting this a lot recently, but i still think it’s worth sharing: it’s a summary of an academic paper i wrote, “it’s not finance, it’s your pensions” https://theloop.ecpr.eu/its-not-finance-its-your-pensions/
the piece explains how modern finance is de facto built on the shoulders of the privatization of the welfare state. i find it particularly relevant here: the finance class - in this case musk - wants pensioners money via mutual funds, even modifying the rules of indexing...
it’s not a great sight tbh.
Good. Would love to buy SpaceX stock at a 90% discount after the IPO and the next tech / AI correction.
Why is it a good thing to buy something that is financially not well run up front, and usually things don’t get better as time goes on however, if you’re in first, you can just sell it down the road and let someone else hold the bag in time.
Tesla was a great ride if you got in early but long-term from this point on if you had any significant amount of money, why would you buy them now? Unless you like sleepless nights…
Imagine not wanting to own a piece of the first company to make a re-usable orbital class booster.
Yeah, I also don't want to eat a tasty morsel if you roll it around in the dirt and serve it up covered in bugs and hair.
And that's basically what SpaceX is right now after you account for xAI and twitter in the mix.
So I'd love to own a piece of the SpaceX from a decade ago - but the current offering smells pretty bad.
Combined with the fact that at this point, Musk clearly isn't opposed to running a business with dramatically inflated valuations based on vaporware, lies, & hype (cough - Tesla - cough) it just makes me far more skeptical than I might otherwise be.
I think caution is warranted here.
Essentially - I want to own the SpaceX that could have been if we didn't end up with the shoddy k-hole version of musk in charge of things.
The current SpaceX is in a far better financial and operational position than 10 years ago. By an order of magnitude. 90% of all payload to orbit right now is SpaceX alone. Starlink is profitable all on it's own. Right now. And they are just now picking up steam. American Airlines just signed onto Starlink just last week. This company is most likely gonna be the Coca-Cola of transportation between celestial bodies in solar system for the next 500 years but people on here are arguing over peanuts. On HN of all places.
SpaceX is completely dependent upon the government. If said government decides to move on then what long-term and they will move on because of China, Russia and the EU but mostly because of China.
This brief dalliance in private enterprise in space will not last long-term.
Only a fifth of spacex revenue is currently from government contracts, a percentage that they forecast will continue to trend downwards.
(not to say that isn't a huge risk if it disappeared, it's just far from "completely dependent")
I guess I don't consider leadership integrity and honesty to be "peanuts".
If anything - as an investor I'd call those core concerns about how I'll make my money back.
Further... this company isn't actually making ANY DAMN MONEY. Of the bundled orgs, only Starlink is profitable, and not profitable enough to offset the losses on spaceX and xAI/Grok. (starlink +4b, spacex -700mm, xAI -6b = -2.7b..., with 30b in debt).
So... no... right now this company is not "Coca-Cola". And that delusional comparison is part of why I think it's correct to be wary right now. On a scale between Enron and Coke... I'd wager we're closer to Enron.
I'll pick up some shares by default given the ETFs I'm in anyways, and that's enough for me...
> Imagine not wanting to own a piece of the first company to make a re-usable orbital class booster.
They didn't say they didn't want to own it, they said they wanted to own it at a : "90% discount after the IPO and the next tech / AI correction."
It is possible for a company to be both technically impressive and horrifically overvalued.
I think it's undervalued.
Have you looked at the S1? The valuation is not based on launchers, it's based on all the potential money they can make as an AI company. Given that they are probably not even in the top 10 in that business, it's just pie in the sky.
Welp, if enough people think like the other fella, line will go up and money will be made
Something about finding out who's swimming naked once the tide goes out
Great, you have an opportunity to make bank, then, no?
If Musk thought that, why would he need to have all the rules changed?
With this governance structure, you won't actually own anything. Ownership implies that you have a say as a shareholder.
SpaceX is now an AI company with a rocket side hustle. At least that’s how the S1 looks.
Imagine ignoring actual financial reality because Wow Big Rocket Go Up!!!
This implies there's no price at which owning SpaceX is a bad idea, which is obvious nonsense.
I'd love to own SpaceX - what I don't want to own is all the unprofitable, toxic dogshit its ketamine-addled CEO folded into it that has nothing to do with putting stuff into orbit or selling Starlink.
Don’t make emotional investment decisions!
Imagine buying the most overvalued company of all time helmed by a crazy man who does Nazi salutes. Payback period? Who cares! Orbital class booster yayyyy
Say what you want about nazis, but they are good at rockets.
The part that gets me is that changing of the rules by exchanges and financial regulators to essentially force mass purchases on a small float. That's disgusting and in a just world, those people would go to jail.
The funny part of all this is that SpaceX has achieved a lot but what might break them, or at least weigh them down heavily, is the impulsive and forced purchase of Twitter. Before anyone claims it was some kind of master plan, Elon went to court to get out of it but was forced into it [1].
What happened? Mass firings, pushing his own tweets because his fragile ego couldn't handle Joe Biden getting more likes [2] and Twitter opened the floodgates for hate speech [3] and worse [4]. Advertisers fled. Fidelity (who foolishly was part of the acquisition) massively wrote down the value [5]. Elon had used Tesla shares as collateral and was possibly facing a margin call.
How did he get out of it? Well, in 2023 Elon founded xAI to challenge OpenAI. People invested in this for some reason. And by 2025, Elon merged Twitter with xAI, overvaluing Twitter at $33 billion (which is still down 25% from the purchase) [6].
Now, I imagine the xAI investors were unhappy with Elon using xAI to bail out himself so what did he do? Easy. Make SpaceX acquire xAI of course [7].
Thing is, xAI and Twitter/Grok are a massive drain on SpaceX's finances, losing more than $10 billion annually allegedly [8].
Twitter did not have to end up as part of SpaceX. SpaceX would've been a better company without it. SpaceX already faces headwinds from the incredibly expensive and behind-schedule Starship program. Part of all of this regulatory fixing is to make sure the insiders (and Elon himself) get bailed out.
It's also not the first time [9].
[1]: https://www.pbs.org/newshour/economy/elon-musk-offers-to-end...
[2]: https://www.theguardian.com/technology/2023/feb/15/elon-musk...
[3]: https://www.nytimes.com/2022/12/02/technology/twitter-hate-s...
[4]: https://www.washingtonpost.com/technology/2023/07/27/twitter...
[5]: https://www.axios.com/2023/10/29/fidelity-twitter-x-value-el...
[6]: https://www.fintechweekly.com/magazine/articles/xai-acquires...
[7]: https://www.reuters.com/business/musks-spacex-merge-with-xai...
[8]: https://www.bloomberg.com/news/articles/2025-06-17/musk-s-xa...
[9]: https://www.theverge.com/2016/11/21/13698314/tesla-completes...
Matt Levine described it well (https://www.bloomberg.com/opinion/newsletters/2026-05-21/spa...)
> The deal, with SpaceX, is that Elon Musk runs it however he wants, and he does weird stuff, and you have to trust him, and if you don’t like it you can’t complain.
> When SpaceX acquired xAI a few months ago, did a special committee of independent directors approve the transaction? Did Musk recuse himself from negotiations? Was the price set by independent valuation experts using a rigorous process? Did outside shareholders sue to block the deal? Stop. Musk wanted SpaceX to buy xAI, so it did.
> [...] Surely SpaceX has created all that shareholder value more because Musk does what he wants than in spite of Musk doing what he wants; it is hard to accidentally create $1.75 trillion of value. SpaceX’s shareholders signed up for this deal — letting Musk cook — and have been rewarded;
Isn't that how Facebook is ran too? Basically Zuckerberg's private company, that in theory is public?
Though (at least to my knowledge) Zuckerberg doesn't have a history of abusing his authority to make deals that advantage other companies he owns at the expense of Facebook.
E.g. SpaceX buying up large numbers of Cybertrucks Tesla couldn't sell at MSRP, not even negotiating a good fleet sale deal.
Right, if Meta had good governance Zuck wouldn't have been allowed to invest so much in Metaverse.
Facebook is still a Delaware company, with lots of established case law for what Zuckerberg can and can not do, voting majority or not. SpaceX is now some Texas corporation with a state legislature ready to enable whatever Musk wants.
Tech bros reinvent autocracy
It seems like a fine offer to have exist, but one that a pension fund with low risk tolerance wouldn't want to take. So everything seems reasonable with the world.
Similarly I don't understand why indicies are rushing to change their rules to allow SpaceX in. People accept a certain risk tolerance and changing the rules to ramp up the risk seems questionable at best.