Money Stuff: SpaceX Investors Can’t Complain

“We believe we have identified the largest actionable total addressable market (‘TAM’) in human history,” says the prospectus for SpaceX’s initial public offering, and, duh, of course. Every other company in human history has had essentially the same business model, which is “we will sell goods or services to people on Earth for money.” The upper bound on every company’s TAM has been something like the number of people on Earth times the amount of money they can spend, the gross domestic product of the Earth.

SpaceX has much higher ambitions. “Our mission,” it says, “is 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.” The upper bound on SpaceX’s TAM is the gross domestic product of the universe. Elon Musk is going to make humanity a multiplanetary species, and then we’re really cooking. Why sell goods and services to a few billion people crammed onto Earth, when you can sell goods and services to a few trillion people spread among the stars? “We believe that our current space efforts will catalyze transformative breakthroughs that could reshape terrestrial industries and lead to the emergence of new trillion-dollar markets on the Moon, Mars, and beyond,” says the prospectus. Every other company is stuck in our dreary modern reality, but SpaceX operates in a Star Trek universe with obviously larger economic potential. [1]

I’m sort of kidding. Here is SpaceX’s actual description of its total addressable market [2] :

We estimate that our quantifiable TAM is $28.5 trillion, consisting of $370 billion in Space from space-enabled solutions; $1.6 trillion in Connectivity across $870 billion in Starlink Broadband and $740 billion in Starlink Mobile as well as additional opportunities in enterprise and government; $26.5 trillion in AI across $2.4 trillion in AI infrastructure, $760 billion in consumer subscriptions, $600 billion in digital advertising, and $22.7 trillion in enterprise applications. For illustrative purposes of sizing our addressable market opportunity, we exclude China and Russia from our global estimates.

The entirety of SpaceX’s estimated market for “space-enabled solutions” is about half of that for “consumer subscriptions” to AI chatbots. Substantially all — 79.6% — of SpaceX’s total addressable market is for enterprise AI applications. SpaceX looks around at the economic possibilities of extending the light of consciousness to the stars and thinks “we’re gonna build tools to automate spreadsheets and sell them to investment banks.” 

No no no, Elon Musk doesn’t think that. Elon Musk wants to shoot rockets into space and so forth. (Though, also, he is personally selling the spreadsheet tools to banks.) The prospectus begins with a bunch of color illustrations of rocket launches and Mars colonies seen from space. Musk’s pay package is contingent on establishing “a permanent human colony on Mars with at least one million inhabitants,” absolutely straight-faced Star Trek stuff.

There is a tension here. SpaceX was, until February, Musk’s space company; then it merged with xAI, Musk’s artificial intelligence company. Now it is both. (Data centers in space!) More specifically:

• It makes most of its money from space, or really from satellite internet. In the first quarter of 2026, SpaceX had revenue of $4,694 million, of which $3,257 million came from its Connectivity segment (Starlink internet), $619 million from Space (rocket launches) and $818 million (17%) from AI. [3]
• It spends most of its money on AI: The AI segment had a first-quarter loss of $2,469 million and capital expenditure of $7,723 million, three times as much capex as in Space and Connectivity combined. 
• Its long-term aspirations are obviously interplanetary and science fictional.
• Its short-term economic aspirations seem pretty AI-driven.

When SpaceX merged with xAI in February, I wrote that the rationale was “let’s use our space rocket business to subsidize our website’s data centers,” and that is more or less what is happening: The satellite business brings in money and the AI business spends it. But I also wrote:

Chatbots today, intergalactic colonization tomorrow. In 3026 our nth-great-grandchildren will encounter a race of intelligent aliens in a distant galaxy, and the aliens will be like “how did you get here,” and our descendants will say “well it started with some slop feeds” and the aliens will be like “what.” Lots of very smart people have had high-minded ideas about intergalactic travel for centuries, but perhaps it will turn out that a critical step in getting there is building an app to generate short-form pornographic video on demand.

The two things reinforce each other. You use satellite revenue to build data centers to sell enterprise AI applications, and then you use enterprise AI revenue to build your Mars colonies. You are selling both a long-term vision of intergalactic colonization, and also a medium-term vision of the revolutionary economic potential of AI. SpaceX is selling dreams, and it has a dream for every stage of the timeline. Bloomberg’s Sana Pashankar and Loren Grush report:

“The big takeaway for me is that SpaceX is now an AI company,” said Chad Anderson, an early SpaceX investor and founder of Space Capital. …

“Investors aren’t paying for today’s business, they’re paying for the platform that owns the next 50 years of orbital infrastructure,” Anderson said. …

Mike Alves, founder and fund manager of VIDA Vision Fund and early investor in SpaceX, said it’s a “shocker” how aggressively the company is pitching its AI capabilities.

“For a rocket company, that’s wild,” Alves said.

It’s both! In 2126, SpaceX will be making like $4 quadrillion in revenue selling nutrient slurry to asteroid minors off the shoulder of Orion, but in 2036 it will be making $4 trillion selling enterprise AI slurry to banks in New York. [4]  

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. 

The deal with Tesla Inc. is … almost that? But not quite? When Tesla acquired Musk’s solar power company a decade ago, did a special committee approve the transaction? Sure. Did Musk recuse himself? I mean, no, but maybe a little. Was the price set by independent valuation experts using a rigorous process? It was set by somebody using some process. Did shareholders sue? Oh yes! They lost, eventually, but it was a whole thing.

Similarly, this year SpaceX’s board gave Musk a billion shares of restricted stock contingent on hitting various market capitalization milestones and also the Mars colony. Tesla’s board has given Musk similar options packages, but at the cost of long-running lawsuits and much agitation, though again it all worked out.

The difference is that SpaceX is a private company and Tesla is a public company. There are certain rules and norms that apply to public companies; private companies can be run however their owners and managers want. Anyone can own shares in a public company, and if they don’t like what the CEO gets up to they can sue. Public companies have to disclose material information, and if that information is misleading then shareholders can sue about that too.

One obvious sensible goal for Musk, in taking SpaceX public, would be to keep his deal the same: When SpaceX is public, Elon Musk still gets to run it however he wants, and he can do weird stuff, and you have to trust him, and if you don’t like it you can’t complain. This is a sensible goal for Musk in part because he clearly has been burned, or at least annoyed, by the Tesla experience, and he would like to avoid repeating it.

But it is also a sensible goal because that deal has worked out for shareholders. SpaceX is worth, you know, $1.75 trillion or whatever. 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; the people who buy into the IPO presumably want the same deal. Not all of them! Some index funds will own the stock soon without necessarily being Musk fans, and some, like, municipal pension funds will probably buy some stock specifically because they aren’t Musk fans and want to keep an eye on him. But most of the people putting in orders in the IPO are doing so because they like what Musk has done with the place and want more of the same.

As far as I can tell, Musk has accomplished this goal. When SpaceX goes public, nothing much will have to change about its governance; Musk will still be in total whimsical control, he can do what he wants, no one can stop him and shareholders can’t complain. Specifically:

• SpaceX will have dual-class stock, with Class B shares getting 10 votes per share. Musk owns 93.6% of the Class B (and 12.3% of the low-vote Class A), for total voting power of 85.1%. [5] Tesla does not have dual-class stock, Musk is a minority owner, and he has worried aloud about the risk of losing control of Tesla’s robot army because he doesn’t have voting control of the company. Not a problem at SpaceX! Build all the robot armies you want!
• Because of Musk’s voting control, SpaceX is a “controlled company” under stock exchange rules, so it doesn’t have to have a majority of independent directors or an independent compensation committee. So the board of directors can be made up of Musk’s buddies, and they can pay him whatever they want.
• Even aside from controlling 85% of the voting stock, Musk gets to appoint a majority of the board of directors himself, without the Class A shareholders even voting. [6]
• He can still do whatever extracurricular activities he wants: SpaceX “will renounce any interest or expectancy  … in being offered an opportunity to participate in, certain business opportunities … that are from time to time presented” to Musk, “even if the business opportunity is one that we or our subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue.” [7]  “Mr. Musk and his affiliates are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us and will not have any duty to refrain from engaging, directly or indirectly, in the same or similar business activities or lines of business as us,” says a risk factor in the prospectus. “He does not devote his full time and attention to our businesses and devotes time and attention to other significant roles (and may in the future serve in additional roles),” says another.  If Musk decides to spend all his time building a robot army, or space data centers, or an intergalactic colony nutrient slurry business, in a new company, he can go ahead and do that, and SpaceX and its shareholders can’t complain.

More generally, and more importantly, SpaceX’s shareholders can’t complain about anything. There are two main venues for shareholder complaints at public companies: shareholder derivative lawsuits, and securities fraud lawsuits. A derivative lawsuit is basically a shareholder suing the executives or board for breaching their fiduciary duties to the company; the Tesla lawsuit against Musk’s pay package was a derivative suit. A securities fraud lawsuit is a shareholder suing the company for lying to shareholders in its public statements, though as I often say, “everything is securities fraud” and any complaint about a company can be pretty easily expressed as a securities fraud lawsuit.

SpaceX will limit both of those approaches. To bring a derivative lawsuit, SpaceX will require that a shareholder own at least 3% of the company’s stock, more than $50 billion worth at a $1.75 billion valuation. (This sort of restriction is allowed in Texas, where SpaceX is incorporated, though not in Delaware.) You do not buy $50 billion of SpaceX stock because you are a teachers’ pension fund looking to nitpick Elon Musk. The only people buying $50 billion of SpaceX stock are people who want to let Elon Musk cook. (And giant index funds, fine, but giant index funds don’t pick these sorts of fights.) One could guess that, if SpaceX shareholders sued in Texas over Musk’s SpaceX pay package, a Texas court would side with Musk. But it doesn’t matter: SpaceX shareholders can’t sue over Musk’s SpaceX pay package.

SpaceX can’t limit securities fraud lawsuits that way. (If someone tricks you into buying 100 shares of stock, that’s still fraud, and you can still sue.) But it can limit where those lawsuits are brought. We talked last year about one approach: The US Securities and Exchange Commission now allows public companies to require arbitration of securities fraud lawsuits. SpaceX hasn’t gone quite that far. But it does say that, if shareholders want to sue for securities fraud, they have to do so in the Texas Business Court, which might be friendlier to Musk than most federal courts. It’s not entirely clear that this is allowed: “The law governing the selection of a forum other than a federal court for certain actions brought under the federal securities laws is unsettled,” says the prospectus. But SpaceX’s fallback option is that, if it can’t force securities fraud lawsuits into Texas Business Court, it will force them into arbitration. [8]

The upshot is that SpaceX shareholders can’t sue for breaches of fiduciary duty, and they can only barely sue for securities fraud. 

This is “bad corporate governance,” but it is also correct! This is how it should work! If you are buying SpaceX stock to tell Elon Musk what to do, you should stop. If you are buying SpaceX stock because you want exposure to the space/AI business but you have your doubts about current management, you should stop. If you are buying SpaceX stock because you like Elon Musk and want to go along for the ride with him, yes, that’s correct, that’s the investment thesis here. If, later, you are disillusioned with Elon Musk, if you feel like you were misled and he didn’t do the stuff he promised to do, I mean … that’s also kind of his whole thing? It is possible that, in hindsight, you will find something bad about SpaceX that was not specifically disclosed in this prospectus. But at a meta level everyone knows everything about SpaceX. Musk’s gonna do whatever weird stuff he wants, and if you don’t like it that’s your problem.

We have talked occasionally about efforts by the SEC to “Make IPOs Great Again,” to make it easier and more attractive for companies to go public. The stuff about securities fraud arbitration is part of that effort, as is the SEC’s recent proposal to make quarterly financial reporting optional. Presumably semiannual reporting will make it a bit cheaper for some private companies to go public, which might induce some of them to do it. But surely the main reason that visionary founders of hot startups are hesitant to go public is fear that they will lose control of their companies, either in the literal sense (lose a proxy fight, get fired by an independent board) or in the looser sense of having their behavior constrained by fiduciary duties and good-governance advocates and shareholder lawsuits.

SpaceX, it seems to me, has put together the correct package to solve that. SpaceX will go public, but nothing will change for Elon Musk. Nothing about being public will constrain his behavior. I am not sure how much of a precedent that will set: He’s Elon Musk, and you aren’t. On the other hand, Musk’s moonshot pay package at Tesla led to lots of imitators: Lots of CEOs would like to be Musk, and lots of boards of directors would like to think that their guy is as good as Musk. The same thing might happen with IPO structuring. “I want the Musk IPO,” startup founders might say; “I want to control the board forever and never let shareholders complain.” Maybe they’ll get it. Maybe then they’ll be more excited to go public.

Also, Bloomberg’s Sridhar Natarajan and Todd Gillespie report:

As Goldman Sachs Group Inc. campaigned to lead SpaceX’s IPO, Chief Executive Officer David Solomon opened up a new channel to the rocket company’s billionaire owner, sliding into Elon Musk’s DMs.

With banks jockeying to get their name first on the deal, Solomon worked with staffers to message Musk directly on X, his social media platform, according to people familiar with the matter, who asked not to be identified citing private details.

Solomon’s move helped highlight the bank’s commitments to Musk and the mercurial billionaire’s various businesses, which also include xAI. The move shows how investment banks seek to pull out all the stops to win a client’s favor. …

Solomon is known for using gimmicks to help win a deal, with one instance becoming investment-banking lore at Goldman. The CEO, who was banking head at the time, showed up with a team decked out in Lululemon gear to clinch the mandate for the activewear retailer’s 2007 IPO.

(Disclosure, I used to work in equity capital markets at Goldman.) A couple of points here. First, is … sending someone a DM actually pulling out all the stops to impress them? Like I get that it’s like “ooh, we are trying to do an IPO of X, so we should use X to show how committed we are to the company and how well we understand its products and story.” But it’s a pretty low-effort communication channel? “I sent a DM” is not quite “I am a terminally online X power user.” In another, more relevant gimmick, Musk apparently asked prospective IPO bankers to pay millions of dollars to subscribe to Grok, xAI’s chatbot; I hope Solomon at least used Grok to draft his DM. 

Second, Solomon “worked with staffers to message Musk directly on X”? How many Goldman employees, in what departments and at what level of seniority, were involved? Does that mean that he called the senior relationship banker to be like “get in here and give me five bullet points on the IPO messaging”? Or is it, like, he called an analyst and was like “how do I email someone on the Twitter”? 

Third, did he call someone in compliance and say “am I even allowed to email someone on the Twitter”? It was a long-running theme of this column that, in the Biden administration, the US Securities and Exchange Commission fined big banks billions of dollars for doing business on “unofficial channels.” Work email, work phones and Bloomberg are official channels, WhatsApp and personal texts are not, and I’m pretty sure Twitter DMs aren’t either. (Not legal advice!) Banks paid millions of dollars of fines because their employees messaged each other on LinkedIn. Imagine how illegal it would have been, two years ago, for a bank CEO to DM a client on Twitter to be like “can we do ur ipo”! Now it’s fine. 

There are various sorts of investing firms called “hedge funds,” but I mostly think about two extreme cases. One is the modern multimanager multistrategy hedge fund, the “alpha factory” that focuses on getting a steady return in all market environments with no exposure to the broad market and to identifiable factors. Your business is about rigorously identifying and evaluating people who can create alpha, using a quantitative and data-driven approach to demonstrate that their performance is real and repeatable and not just luck.

The other is, like, you buy a dozen stocks and hold them for a decade, but they are the right stocks. You are acting a lot like a traditional long-only mutual fund, with the differences that (1) you are probably more concentrated than most mutual funds, (2) ideally your stocks go up more than most mutual funds do and (3) certainly you charge higher fees.

People who come from the quant-y alpha-y world tend to be suspicious of the latter model, in part because it is difficult to distinguish skill from luck when there aren’t very many data points. But there are several famous proponents of it, people who have done it well enough for long enough that you can’t deny their skill. The most famous is Warren Buffett, who started as a hedge fund manager, though he ended up using this approach while running a public company. Bill Ackman is another famous example, and has also been trying to get into the public-company business.

This model has always appealed to me because it seems pretty relaxing. I once wrote:

Pick stocks, buy them, watch them go up, go to the beach. Or go on Twitter! (Or, now, X.) Spend your days getting in fights online, because your lavishly gainful employment only requires like 45 minutes of work per year.

That’s the low end, and probably 3,000 hours a year is more realistic. Buffett spent all of his time reading annual reports, because plausibly you have to think about stocks all the time so that once every six months you can sell one and buy another. Still it seems a lot more Zen than, like, working at Citadel. You might have to read and think a lot, but you don’t have to react a lot. You read and ponder slowly, and act rarely but decisively.

Anyway here’s a Financial Times profile of Chris Hohn, of the Children’s Investment Fund, another big member of this club:

The UK’s most successful hedge fund manager holds an intense gaze as he quotes a Hindu mystic, bathed in light streaming in from the windows of his corner office on London’s Clifford Street.

“God is not a man in the sky with a white beard,” Hohn recites softly, dressed modestly in a beige suit and white shirt. “Close your eyes, and in the darkness you can know God and God is consciousness.” …

“Most of us see the world in shades of grey, where there are three or five things which are important to an investment thesis,” Rishi Sunak, the former UK prime minister who once worked at the fund, tells the FT.

“Chris has an incredible ability to think in black and white. He focuses on one, maybe two things that drive the investment thesis and then has the confidence to scale up the bet so it’s a big part of the fund.”

The premise of most modern hedge fund investing is that more and higher-frequency data leads to better and more nuanced decisions. The contrarian view is “no, the way to make good decisions is by thinking very calmly about only one thing.”

Sure?

GameStop said in a filing last night that it now controls the equivalent of 6.55% of the company’s outstanding shares, up from around 5%, as it keeps trying to take over the e-commerce business.

Shares in both GameStop and eBay are little changed in premarket trading.

Here’s the filing. I suppose buying more stock could help GameStop win a proxy fight to take over eBay, but it’s apparently too late to nominate directors for eBay’s 2026 annual meeting, so it’s not like GameStop is launching a proxy fight any time soon. “One gets the sense that GameStop did not entirely think this through,” I wrote when GameStop first launched its takeover bid or whatever for eBay, and I still get that sense. On the other hand, when eBay rejected GameStop’s bid, I wrote that GameStop “could sell [its 5% stake] at a nice profit and go home,” which seemed like the most straightforward outcome. Instead GameStop has added to its stake. I guess they’re really going for it? Or something?

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