Elon Musk is about to get richer and more powerful than ever
The SpaceX IPO is built on hype, but it will make him a trillionaire.
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In the finale of Amazon Prime series “The Boys,” a new character is briefly introduced: Günter Van Ellis, the richest man in the world, amateur astronaut, and father of 17 children.
After suggesting the acquisition of slaves to work in his factories, Van Ellis says to the evil superhero Homelander, “I’d love to bend your ear about white fertility rates.” Even Homelander is repelled; he grabs Van Ellis, flies him up to space, and leaves him there.
Elon Musk was not amused at the barely-concealed mockery, tweeting repeatedly about how much he hated the episode (without acknowledging the Van Ellis vignette). He seemed particularly bent out of shape that in the end Homelander loses his powers and is killed, which Musk, deploying all the analytic insight of a nine-year-old, pronounced “fake and gay.”
This is the man who in a matter of weeks will become the world’s first trillionaire, carried to impossible heights by his own hype machine and the hopes of huge numbers of investors. His company SpaceX will soon have its initial public offering — the first, and probably the biggest, of a series of tech company IPOs in the coming months.
If the artificial intelligence industry was built on a bubble before, it’s about to get even more so — and your retirement account could depend on whether that bubble pops.
This is big
Earlier this year, clearly looking toward this IPO, Musk combined SpaceX (which launches rockets and runs the Starlink satellite internet service) with his artificial intelligence company xAI (creator of the anti-woke chatbot Grok), which had already absorbed X (formerly known as Twitter). The IPO is expected to raise $80 billion for the company, making it by far the largest in history; the current record-holder is Saudi Aramco, the state-owned oil company, which raised $25.6 billion when it went public in 2019.
This has Wall Street in a tizzy, with everyone excited about getting in on the action. Even the banks managing the offering will scoop up over a billion dollars in fees and commissions; “Goldman Hits the Jackpot After Banks’ ‘Dogfight’ to Lead SpaceX’s I.P.O.”, read the story in the New York Times. OpenAI will follow with its own IPO soon, and Anthropic (which, amazingly enough, is actually profitable) could be next.
With the stock market one of the only parts of the economy where the news is good, this will be the year our economic dependence on AI kicked into overdrive. What could go wrong?
At this point we should acknowledge that unlike some tech companies, the ones Musk controls do produce some real things — cars in Tesla’s case, rockets and satellite internet systems in SpaceX’s. But that doesn’t mean they aren’t driven by hype.
For Musk, the key to that hype has always been impossibly ridiculous predictions of future success, meant to inspire FOMO (fear of missing out) and convince the gullible that if you don’t get on board, you must be a coward with no vision for the spectacular future to come. For instance, in February, Musk said on a podcast that within a few years, SpaceX will be conducting 10,000 launches per year of Starship, its largest rocket, to carry the materials to build data centers in space. That’s over one launch per hour, 24 hours a day, 365 days a year. Starship is an impressive rocket, but so far SpaceX has launched it successfully a total of seven times.
But neither the ridiculous predictions nor Musk’s … personality quirks … have dimmed the market’s enthusiasm to invest in him.
After the Nazi salute, the relentless white supremacist tweeting, the enormous wreckage of DOGE (including hundreds of thousands or even millions of deaths), the disaster of the Cybertruck, the scam that was the HyperLoop, the failed promises of full self-driving Teslas (which has been a year or two away for over a decade), and the “MechaHitler” chatbot Grok that served up nonconsensual porn (including CSAM) millions of people continue to believe that Musk is an unparalleled genius who will guide humanity to a glorious future — and that owning shares in his companies will make you rich.
That may be true in some sense; as long as there is a steady supply of investors willing to bet their money on Musk, the game can continue and the stock prices can keep rising. But in order to go from private to public, SpaceX was required to file lengthy documentation of its operations and financials with the Securities and Exchange Commission, and what is contained inside is underwhelming.
To start, the company is not exactly a juggernaut of profits, particularly given that it is expected to be valued at $1.5 trillion or more, making it more valuable than Walmart or ExxonMobil. It did bring in $18.7 billion in revenue last year — but it lost almost $5 billion. And in just the first quarter of this year, it lost another $4.3 billion. Most of its revenue comes from Starlink, and X is making significantly less money now than when Musk bought it (back when it was called Twitter).
But that’s reality, which is boring. What about the fantasy? Here are some of the numbers the company throws around in its filing:
We believe we have identified the largest actionable total addressable market (“TAM”) in human history. 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.
Every one of those numbers is absurdly inflated, but it’s the last one that stands out. Musk is claiming that the company will be able to seize a market worth $28.5 trillion; for comparison, the GDP of the entire United States of America is just under $32 trillion. And 80 percent of the total is “enterprise applications” from Grok. So many companies are going to rush to use the anti-woke porn image generator that it will produce $22.7 trillion in revenue? That seems implausible, to say the least.
Of course, every stock purchase is a bet that a company will be more valuable in the future than it is today, and Musk has always pumped his companies with the promise of almost infinite profits to come. That has been Tesla’s story, especially as the company’s sales have declined in the last couple of years. Forget about the cars, Musk now says; it’s the robots that will bring riches. Specifically, the Optimus humanoid robot, which has yet to go on sale after years of development; last year Musk predicted that Optimus “has the potential to be north of $10 trillion in revenue, like it’s really bananas.”
Yes, that is bananas.
Like it or not, this affects us all
There’s a good chance that you will be invested in SpaceX, whether you want to or not.
If like many people your 401k, 403b, or IRA includes index funds, SpaceX will probably be slotted into your holdings. The NASDAQ has changed its rules, and the S&P 500 is considering the same, to give SpaceX and other upcoming AI IPOs a fast-track to inclusion, shortening the waiting period and waving profit requirements.
When you invest (willingly or otherwise) in SpaceX, you’ll really be investing in Elon Musk, and his ability to deliver either world-changing profits or, more likely, an endless supply of hype. According to filing documents, Musk owns 42.5 percent of SpaceX, but through “supervoting shares” will control 83.8 percent of the voting power, essentially giving him total control over the company. And if the SpaceX shares do what everyone expects, his fortune — currently pegged at over $800 billion — will surely pass the one trillion mark.
In the last couple of years, the state of the stock market — and thus the entire economy — is increasingly determined by the tech industry, and more specifically the “Magnificent 7”: Alphabet (parent company of Google), Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. These companies account for over a third of the market capitalization of the entire S&P 500. To a great degree, they are the stock market, and the thus economic future of everyone with a retirement account. There is a widespread belief that once the SpaceX IPO is complete, Musk will merge the company with Tesla to make one giant MuskCorp. These are not just tech companies, these are AI companies, even if a couple of them do make hardware.
That means that for all you might loathe the way AI is being shoved down our throats already, for all you may cheer the students booing tech executives who tell them they have no choice but to embrace it, for all you may worry about how it will destroy jobs and make us dumber and less human, in the short run we all have at least some interest in the success of these firms. If the bubble does burst, it would probably touch off a recession that would hurt almost everyone.
That does not mean, however, that we are powerless. We can organize against them, as people are doing all over the country to resist data centers taking over their communities. We can refuse to put their products where they don’t belong. We can hold them accountable when those products do demonstrable harm. We can use our political power to regulate them, and insist that in a democratic society, the right to determine the shape of our economy lies not with a tiny number of ultrawealthy sociopaths but with the people.
As the brilliant science fiction writer Ted Chiang has written, despite all the stories we’ve told ourselves about rogue AI escaping our control, “capitalism is the machine that will do whatever it takes to prevent us from turning it off.” There is no off button for that — just a long, hard fight to retain our autonomy and our humanity.
That’s it for today
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Sometimes I am glad I am old. This will not end well.
How does Musk keep conning investors? His cars are death traps. His rockets keep blowing up. France has brought criminal charges against him for child-porn. His baby-mommas, who all hate him, are willing to spill incriminating info about election fraud in 2024 and he's in the Epstein files. Some people say they hope live long enough to see a certain prominent funeral. I hope I live long enough to see a certain will read, follwed by the feeding frenzy that will ensue when all those children and baby mommas rip that fortune to shreds. Bleak House for billionaires!