SpaceX seals private market’s triumph over public

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19/05/2026 16:04

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

By Jeffrey Goldfarb

NEW YORK, May 19 (Reuters Breakingviews) - SpaceX is the final frontier ... for corporate governance. Elon Musk’s rockets-to-artificial-intelligence venture stands poised to raise some $75 billion in a record initial public offering. Throngs of eagerly queuing investors, including possibly giant asset manager BlackRock BLK.N, also appear ready to sacrifice considerable protection for the risky ride. In doing so, they further shrink the distinction between private and public companies.

A big aspect of closely held firms leaping onto bourses is greater accountability to more investors. Musk sees things differently. He will control more than half of SpaceX, as he does now, with a special class of shares that confers 10 votes apiece, according to excerpts from the IPO prospectus reviewed by Reuters. The billionaire also is forcing holders of one-vote shares to pursue legal grievances in private arbitration instead of the courts.

A “controlled company” designation under U.S. securities law entrenches Musk even deeper by removing the requirement to populate important board committees with independent members. By moving to Texas, SpaceX also has secured extra insulation from proxy contests and takeover bids. Musk explicitly retains sole power to elect all directors and fire the chairman and CEO, roles he himself holds.

The ability to raise heaps of money before an IPO, like OpenAI’s $122 billion funding round, has curbed the allure of public listings. Outside investors have responded by allowing the spread of feudal shareholder structures everywhere from Mark Zuckerberg’s Meta Platforms META.O to Black Rock Coffee Bar BRCB.O. A Trump administration initiative that would allow public companies to publish financial information twice a year instead of quarterly further blurs the line.

SpaceX stretches these concessions into the stratosphere. A $1.75 trillion valuation target, though, gives it considerable clout. Money managers can ill-afford to exclude so big and hyped a company from their portfolios. Some are at least squawking. New York and California public pension funds expressed “serious concerns” last week about SpaceX’s structure and Musk’s shoddy governance track record at Tesla TSLA.O. They asked him to reconsider, but the choice will be either to genuflect or not buy the stock.

Opting out would be risky, too. When entrepreneurs keep a firmer grip, the company’s stock tends to outperform, at least initially, according to one academic study. The premium typically vanishes by the seventh year following the IPO and worsens after that. Separate research from index crafter MSCI found that overly concentrated control leads to weaker shareholder returns.

Fund managers and financial regulators around the world are fretting about the dearth of publicly traded companies. Championing greater opacity while investors increasingly abdicate their rights might encourage more stock debuts, but in the process will keep weakening capital markets.

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CONTEXT NEWS

SpaceX is aiming to list its shares as early as June 12 and picked the Nasdaq exchange as its trading venue, Reuters reported on May 15, citing unnamed sources. Billionaire Elon Musk’s rockets-to-artificial-intelligence company has targeted raising $75 billion at a $1.75 trillion valuation.

Feudalism prevails: more IPOs use dual-class share structures https://www.reuters.com/graphics/BRV-BRV/gkvlkybwdpb/chart.png

Controlled companies on average generate lower returns https://www.reuters.com/graphics/BRV-BRV/gdvzalkqbpw/chart.png

(Editing by Peter Thal Larsen; Production by Pranav Kiran)

((For previous columns by the author, Reuters customers can click on GOLDFARB/jeffrey.goldfarb@thomsonreuters.com))