The SpaceX IPO Grift Explained

Talk about unethical.

Photo by Logan Voss on Unsplash

The SpaceX IPO is looking less and less like a galaxy-brained business decision and more like a carefully engineered way to give the billionaire SpaceX insiders an exit strategy and to make the scorching-hot potato that is SpaceX stock everyone else’s problem. The notion that this looks like a pump-and-dump scheme to scam the world of their retirement funds is now so widely recognised that it has become a meme. But how does this painfully obvious IPO grift actually work? Well, let’s go through it step by step.

I am not the first to talk about this topic. A More Perfect Union and Patrick Boyle have some great videos diving into the SpaceX IPO, and I highly recommend giving both a watch.

The Pump

All pump-and-dump schemes have two phases, hence the name. First, the price is artificially boosted, or pumped, way beyond its actual value. Then the insiders sell, or dump, at the peak, pulling the rug out from under everyone else, who are left holding the bag when the price comes crashing down. Thanks to the torrent of Crypto and NFT grifts over the past few years, most people are now fairly familiar with how this scheme plays out, how wealthy it can make the perpetrators, and how catastrophic the losses can be for the victims.

So, where is the alleged pump in the SpaceX IPO?

Well, how do you artificially raise the price of anything? Simple. Restrict the supply and coerce demand, and Musk is openly doing both.

Let’s start with supply. Most companies float between 10% and 30% of their shares in an IPO. Larger, more mature companies like SpaceX almost always aim for the higher end of that range. When you consider the colossal amount of capital SpaceX will require in the coming years just to remain functional (with more on that in a minute), it would make sense for SpaceX to offer more than 30%. But no, SpaceX is offering less than 5% of its stock.

This insane construction will create artificial scarcity, particularly when you take into account the company and the IPO’s publicity, and seriously jack up the price. This is the Beanie Baby approach to pricing.

But what about demand? Well, Musk has a way of jacking that up too.

In a normal IPO, 90% of the shares are allocated to institutional investors, such as banks and insurance funds, and 10% are allocated to retail investors, reflecting market demand. SpaceX has instead opted for a 70/30 split, allocating three times the typical amount of shares to retail investors! This strongly suggests that professional investors have seen the artificial scarcity tactics and don’t want to buy at that inflated price. So, despite offering an extremely constrained number of shares, SpaceX has to sell its wares to individual investors who are less likely to spot the ruse.

Musk has been hyping up SpaceX for years to his cult of brain-dead investors. Therefore, this split ratio also suggests they expect demand from those who swallow Musk’s constant lies and manipulations to be substantial

These factors alone are enough to jack the price up to insane levels. SpaceX targeted an IPO price of $1.75 trillion, then raised it to $2 trillion, and later lowered it to $1.8 trillion.

But I don’t think people realise the true extent of that estimate.IPOs are typically valued using a revenue multiple, where the overall value of the business is a multiple of its annual revenue, with the multiple being higher if the business is considered to have more growth potential. Most IPOs have a revenue multiple of around six, and famously, Facebook’s IPO was astonishingly high at around 11. Now, SpaceX generated $18.7 billion in revenue in 2025(including X and xAI, which recently merged). That means that it is targeting a revenue multiple of 96!

Even if you believe all of SpaceX’s BS (again, with more on that in a second), that is a totally fanciful and unjustifiable valuation.

Fortunately, Musk has found a way to push it even further and pull practically all of us into his grift.

SpaceX will be one of the biggest IPOs in history. As such, Musk could make some quite shocking demands given that exchanges would fight over who gets to list them. Ultimately, the NASDAQ won that fight by changing one of its rules at SpaceX’s behest, calling it the ‘fast entry rule’. Normally, a company has to be traded for a year before index funds, like the S&P 500, are allowed to include it. This is known as ‘seasoning’, and it is supposed to protect index funds from the crippling instability of IPOs and to give the market time to find a true value. This fast entry rule completely scraps that concept and shrinks the seasoning period to just 15 trading days!

The majority of indices, like the S&P 500, track the most valuable companies. Because of the restricted supply artificially boosting value, SpaceX will likely become one of the most valuable companies on the planet following its IPO. That means most of your investment portfolios, retirement funds, and even some savings accounts will be forced to buy a huge portion of SpaceX’s highly restricted stock after little more than a fortnight of public trading.

But here’s the thing: there is more passive money, such as these index funds, in the stock market than active money, such as traders. This means that after 15 days of public trading, a veritable tsunami of demand will strike, jacking the price up even higher!

This demonstrates all the hallmarks of a pump, particularly when it seems to totally deny the reality of SpaceX.

The Reality

SpaceX has some serious problems and baggage that should drastically weigh down its valuation.

SpaceX owns X/Twitter and xAI and after a series of bailouts — I mean, all stock mergers,neither company is doing great. I’m sure I don’t need to remind you of X/Twitter’s severe legal troubles after the horrific Grok child and unconsentual sexual abuse image debacle, but on top of that, it makes a fraction of the revenue it once did.

xAI, whose chatbot only produced the heinous material on X/Twitter, is also embroiled in said legal trouble. But it too is deeply unprofitable, losing around a billion dollars a month! Not to mention that this cash burn isn’t actually growing xAI either. Their data centres have such catastrophically low utilisation rates, thanks to no one actually using Grok, that they have rented compute to their competitor Anthropic to help pay the bills (read more here)! Moreover, the main founders have left, and Musk has admitted that xAI needs to be rebuilt from the ground up, causing many to ask what the hell SpaceX actually bought when they merged, other than all of xAI’s gargantuan debt.

Then there is SpaceX, which is complicated. Despite what you might think, SpaceX doesn’t actually make that much money from rockets, because the space launch market hasn’t really grown in decades, as demand outside of Starlink has remained quite stagnant. That is why over 70% of SpaceX’s launches last year were for its Starlink satellites. In fact, thanks to how much Starship is costing them, the launch business is losing money!

As I covered in a previous article, Starlink appears to be profitable, reportedly making just over a billion dollars last quarter. But thanks to the IPO filing, we now know that it isn’t a truly scalable business. Their service is too patchy, and their costs are too high to dominate the market, despite what Musk claims. So yes, well done — Starlink works as a business, but it doesn’t warrant excessive speculative valuation at all.

Then there is Starship, which is heading down a path to nowhere. The IPO filings and recent launch have proven that SpaceX is really struggling to increase its payload capacity to even useful levels, let alone the promised 100 tonnes to Low Earth Orbit, and that it is not getting any closer to full reusability, let alone the rapid zero-maintenance reusability Starship requires to hit its launch price goals. There is also zero evidence that SpaceX can solve the boil-off problem, which is critical for Starship to reach higher orbits, the Moon, or Mars (read more here). Starship should be seen as a project that costs SpaceX billions of dollars a year without delivering any real value. Let’s not forget this rocket has yet to even reach orbit!

Some will say that SpaceX’s plans to deploy a million orbital data centres could justify its price, but that is so far off the mark it’s painful. For one, Starship has to succeed for that to be even close to viable, and it has provided no proof that it can ever work. But as I have covered before, orbital data centres will be too catastrophically expensive, cumbersome, risky and inefficient to ever be viable. This is purely fanciful thinking.

When faced with the hard facts, SpaceX doesn’t look like a growth company. It looks like a company wasting billions of dollars a year to mak itself look like a growth company.

This brings me to the gap problem. As my fellow Substack writer Capefearadvisors points out, SpaceX faces around $235 billion in spending commitments through to 2030. Considering the overall business is losing money, you’d think SpaceX would want to raise this amount of money through the IPO, right? After all, that is the point of an IPO: to raise money to pay for growth. But no, even with its insane valuation, this IPO will ‘only’ raise $50 billion to $75 billion due to the fact that so few shares are being sold. On top of that, $20 billion of it must be used to pay down the $20 billion in debt SpaceX has on its books. As such, SpaceX actually needs roughly five times the amount of capital this IPO will raise.

So why bother going public? It won’t materially help the business. It makes no sense, unless growing the business isn’t the point of this IPO. This context should make investors cautious and seriously depress the valuation.

With all of this being considered, a more realistic yet extremely generous revenue multiplier for SpaceX would be around six. That would put SpaceX’s valuation at just $114 billion, or roughly 94% below its IPO target!

This is what I mean when I say the reality of SpaceX is at total odds with this IPO.

But, somehow, it gets worse.

The Dump

Okay, so that’s the pump; now for the (alleged) dump.

There are standards in place to prevent insiders from using an IPO to dump their stock. Normally, insiders are not allowed to sell their shares for the first 180 days of trading.

But, guess what? That isn’t the case for SpaceX. Insiders are allowed to sell 20% of their shares for just three months. If the shares are selling for 30% above the IPO price at that time, that limit is raised to 30%. After that, there is a rolling schedule where they can sell the rest of their shares in stages up to 135 days post-IPO. Musk is exempt from this policy and can’t sell his shares for a year.

By this three-month mark, the index fund tsunami has a decent chance of pushing the value of SpaceX up 30% from its IPO (up to $2.34 billion). That would mean insiders could offload 30% of their shares in just a few months’ time. These insiders, who include the likes of Google and some of the most deranged and greedy venture capital firms on the planet, own approximately 53% of SpaceX (Musk owns 42%, the public will own 5%). So, they could legally sell roughly $372 billion worth of SpaceX shares just 90 days out from the IPO. To give you an idea of how maniacal that is, SpaceX was valued at just $350 billion in late 2024. This sell-off would repay these insiders many times over the amount they invested into SpaceX (or X or xAI), but it would also utterly tank SpaceX’s valuation, destroying the investment portfolios and retirement funds of millions.

And, don’t think that Musk won’t get involved just because his loans are locked up. He is infamous for using his stock as collateral for loans to the tune of billions of dollars, and you can do that pretty much immediately after the IPO. This means that Musk could pull a an astronomical amount of cash from this IPO without ever violating his lock-in period.

Admittedly, we don’t know that these are their immediate plans. The only way we could get an inkling of that is if the IPO included provisions to give them cover to make such a brash exit.

Oh wait… It does that too!

This IPO makes it very clear that upon buying SpaceX shares, you waive all right to sue the company or its leadership. In other words, investors, retirement funds, and even banks can’t raise a class action lawsuit to hold these insiders accountable if they pull the rug out from everyone else. For the life of me, I can’t think of another reason why his IPO would include this stipulation (given that such a provision will reduce the value of the stock) apart from clearing the way for these insiders to jump the sinking ship.

Summary

If not a pump-and-dump, why is it pump-and-dump-shaped?

Most of the SpaceX insiders only own their shares because they were stupid enough to invest in Musk’s catastrophic Twitter purchase or his cash-burning xAI. But even the actual shareholders who invested in SpaceX must be noticing how badly Starship is failing and how comparatively little money Starlink is making and feel worried about whether their cash will disappear into thin air. Sure, these are all heinously greedy billionaires with venture capital firms; they could easily stand to take such a loss, and quite frankly, it would be good for them to learn a lesson about not backing dumb ideas.

But no, it seems they refuse to take the hit. They are instead trying to make this our problem by grifting the stock market and clearing the way for the biggest rug-pull dump the world has ever seen. At least, that is what all of this looks like.

I can’t help but feel like these oligarchic morons have stolen control of the ship, immediately crashed it into an iceberg, and are now frantically making their way to the lifeboats while locking the rest of us below deck as the ship begins to slip under the waves.

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Thanks for reading! Everything expressed in this article is my opinion, and should not be taken as financial advice or accusations. Don’t forget to check out my YouTubechannel for more from me, or Subscribe. Oh, and don’t forget to hit the share button below to get the word out!