The SpaceX IPO Will Be the Theft of the Century

Lawrence FossiJun 03, 2026434211ShareAs the SpaceX IPO approaches, a few observations and predictions: In a real sense, the entire SpaceX value proposition rests upon the Starship project. And when I say “Starship,” I mean a Starship version that is far more capable than any we have yet seen. Starship is needed to launch the heavier V3 Starlink satellites. Starship — a reusable Starship — is needed to make those launches (and others for third parties) more economical. Starship is needed for the promised orbital data centers. Starship is needed to fulfill SpaceX’s Artemis program obligations to NASA. Starship is needed for any Moon colony or Mars colony (the SpaceX IPO registration statement foretells “the emergence of new trillion-dollar markets on both the Moon, Mars, and beyond.” But while the Starlink satellites orbit at about 300 miles above the Earth, the highest any Starship has reached (the most recent Version 3 launch, which featured the loss of both the booster and the upper stage) is only 121 miles. It’s a long way, and a whole lot of extra fuel, from 121 miles to 300 miles. Will Lockett does the math to show why the Version 3 Starship is, in his words, “functionally useless.” And that’s before we reach the impossible physics of orbital data centers and the extreme improbability of the Starship meeting its cryogenic propellant transfer obligations in Artemis III. (I’ve used this before, but I like it too much not to use it again.) Now, perhaps you believe that xAI is the true key to SpaceX’s ultimate success, even if shorn of the orbital data centers. If so, I invite you to acquaint yourself with the facts that the inestimable Patrick Boyle discusses in this YouTube video (start at 10:25). As Boyle notes: The company [xAI] whose AI product represents 93% of [SpaceX’s] claimed addressable market has a flagship product [Grok] its own engineers won’t use, and it is spending $60 billion trying to buy a competitor [Cursor] so that they can get it to work. As for the much-vaunted $15 billion per year contract with Anthropic, Boyle makes the obvious point that xAI is leasing its competitor, Anthropic, computational power and hardware at the xAI Colossus and Colossus II data centers. This strongly suggests that xAI is, as yet, unable to make use of its own data center capacity. (Boyle makes that less obvious point that Anthropic can cancel the three-year deal at any time on 90 days’ notice.) All these hard facts, however, will take some time to become fully evident. How much time? Two years? A year? Perhaps less? Of this, alas, I am pretty certain: these facts will not become fully evident before the various private parties who have invested in SpaceX over the past two decades have a full opportunity to unload their shares at a massive profit on the unsuspecting public. A confluence of rules changes by Nasdaq, the S&P 500, and the FTSE Russell all but guarantee that the SpaceX IPO will vastly enrich SpaceX insiders while raping unsuspecting retirement investors with 401k and IRA money parked in broad market index funds. Way back on March 10, when chatter about a SpaceX IPO was still in its early stages, the eponymous author of the Keubiko’s Musings Substack posted a prescient piece called Nasdaq’s Shame (subtitle: “How to rig an index to appease a billionaire.”) Not only did Nasdaq gut its “seasoning” requirement to allow SpaceX into its index only 15 days after its IPO, it also changed how it adjusts its weighting in the Nasdaq 100 index for “low-float” stocks. SpaceX will be a very low-float stock, with only 5% of its shares available for sale, yet Nasdaq will weight the stock as if the float were 15% of total SpaceX shares.1 Per Keubiko: The index is applying a phantom, mega-dollar weighting to a restricted, tightly-held float. Tens of billions of dollars of price-insensitive, passive capital are legally mandated to aggressively bid for the stock over a matter of days. You are effectively forcing a firehose of mega-cap index capital through a garden hose of actual liquidity. It is a recipe for a massive, artificial supply-and-demand squeeze. Oh, but it gets worse. Much worse. Where, as Keubiko writes, the math becomes “truly sadistic.” Once the 180-day lock up period for insiders ends, and the SpaceX float exceeds 20%, Nasdaq will weight the stock based on 100% of the shares outstanding. Musk, of course, has perfectly timed the end of the lock-up period with the moment that Nasdaq rebalances its index in mid-December. Again, Keubiko: [Index funds will be] legally mandated to aggressively buy billions of dollars more of the stock the exact moment the insiders are able to flood the market with their unlocked shares. Can you feel your baggy liver turning to foie gras yet? Since Keubiko first blew the whistle in his piece, a host of financial journalists and market experts have awoken to what’s afoot. You can now find scores of articles describing how Nasdaq’s rewriting of its rules

The SpaceX IPO Will Be the Theft of the Century

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