top of page

Rocket-Fuelled Risk: What the SpaceX IPO Actually Offers Retail Investors

  • Writer: Wahib Ansari
    Wahib Ansari
  • 10 hours ago
  • 5 min read

SpaceX is preparing what would be the largest Initial Public Offering in history. The company’s targeted June 2026 Nasdaq listing seeks a valuation of up to $1.75 trillion and aims to raise approximately $75 billion.[1] In an unusual move, up to 30% of IPO shares may be allocated to retail investors, roughly triple the industry standard with 1,500 individual investors invited to a dedicated event on June 11.[2] A syndicate of 21 investment banks, including Australia's Macquarie Group, will manage distribution across institutional, high-net-worth and retail channels globally.[3]


An IPO of this magnitude invites scrutiny not just of the business, but of how the offering is structured. Questions of corporate governance, directors' duties, related-party transaction integrity, and disclosure adequacy sit at the centre of this deal. This article examines three structural concerns that prospective investors (particularly Australian retail participants) should understand before committing capital.


Control Without Accountability


At the heart of any corporate governance framework is the principle that those who provide capital should have a meaningful say in how it is deployed. Dual-class share structures challenge that principle directly, and SpaceX's structure does so more aggressively than most.


Share Structure


SpaceX's S-1 prospectus confirms that Musk holds approximately 42% of the company's equity but controls roughly 79% of its votes through Class B shares carrying 10 votes each. Public investors receive Class A shares with one vote.[4] That ratio exceeds the dual-class structures at Meta and Alphabet and means incoming shareholders (who are providing $75 billion in capital) will have virtually no capacity to challenge board composition, executive remuneration, or strategic direction.[5]


Significance of this Structure


As a matter of both Australian and U.S. corporate law, directors owe fiduciary duties to act in the interests of

shareholders as a whole. Dual-class structures do not extinguish those duties, but they functionally neutralise the primary enforcement mechanism: the shareholder vote. Where a controlling shareholder also serves as CEO, CTO and board chair as Musk will, the usual checks on self-dealing, conflicts of interest and misallocation of capital are significantly weakened.


Compounding this, SpaceX is reportedly considering waiving the standard 180-day lock-up period, which would allow insiders to sell shares immediately upon listing. Lock-ups exist precisely to align insider and public investor interests during the critical post-IPO period. Removing that safeguard creates a stark asymmetry: insiders retain permanent voting control and gain immediate liquidity, while incoming investors receive neither governance influence nor any assurance that those who know the company best intend to hold.[6]


The xAI Merger: Related Party Risk


In February 2026, SpaceX completed an all-stock merger with xAI, Musk's artificial intelligence startup, valuing the combined entity at $1.25 trillion with SpaceX at $1 trillion and xAI at $250 billion. The deal was executed while both companies were privately held and controlled by Musk.[7]


This is a related-party transaction in substance. Musk controlled the acquiring entity, the target entity, and the terms of the exchange. There was no independent market mechanism setting the price and no indication that an independent special committee or external fairness opinion governed the process. Under Australian corporate law, a transaction of this nature involving a public company would require member approval under Chapter 2E of the Corporations Act, precisely because the conflict of interest is self-evident. In the U.S., a comparable public-company transaction would attract entire-fairness scrutiny, requiring the controller to demonstrate both fair dealing and fair price. By completing the merger while both companies remained private, neither regime applied, and now incoming investors bear the consequences of a valuation they had no role in setting.[8]


The commercial figures sharpen the concern. xAI generated approximately $80 million in revenue in 2025 while incurring $7.8 billion in expenses over the first nine months; roughly $28 million per day.[9] Its quarterly losses widened throughout the year. When the combined entity reported its 2025 financials, SpaceX swung from approximately $8 billion in profit the prior year to a loss of nearly $5 billion, with xAI's integration the primary driver.[10]


The pattern may not end with xAI. In April 2026, SpaceX announced a deal with AI coding startup Cursor that includes an option to acquire the company for $60 billion later this year.[11] If exercised post-listing, that would represent another major acquisition funded in whole or in part by IPO capital; again in the AI space, and again without any meaningful shareholder vote given the dual-class structure. For incoming investors, the question is not just what they are buying at IPO, but what additional commitments may follow that they will have no power to approve or reject?


IPO investors are now being asked to pay $1.75 trillion for a combined business in which a sub-$100 million revenue AI venture was folded in at a $250 billion valuation, by the same person who controlled both sides of the deal, with the prospect of a further $60 billion acquisition on the horizon. The adequacy of those valuations, and the processes by which they were and are being reached, could be among the first things scrutinised if investor returns disappoint.


What This Means for Retail Investors


SpaceX plans to direct up to 30% of shares to retail investors globally, including Australians accessing the offering through Macquarie Bank. For context, the typical retail allocation on a large IPO sits between 5% and 10%.

The risk profile warrants careful consideration. At $1.75 trillion, SpaceX would trade at roughly 95 times trailing revenue.[12] The core business is legitimate: Starlink ended 2025 with over 9 million subscribers and more than $10 billion in revenue, and the launch division remains the most active in the world.[13] But the valuation is not priced to the current business. It is priced to a future that assumes continued Starlink hypergrowth, a functioning Starship programme, xAI reaching commercial viability, and orbital data centres moving from concept to reality. Each assumption carries material execution risk.


For retail investors specifically, the combination of these factors is significant:

1.     A weaker vote;

2.     Potential exposure to insider selling from listing;

3.     Related-party merger completed without independent oversight;

4.     Limited financial transparency, and

5.     A valuation that demands near-flawless execution.


The question for any prospective investor is whether the potential return adequately compensates for the governance and structural risks embedded in the terms of entry.


Conclusion


The SpaceX IPO will be a landmark capital markets event, backed by genuine technological achievement and

commercial scale. But from a governance and corporate law perspective, the offering raises issues that should not be obscured by the headline figures.


Dual-class shares that entrench insider control while diluting the shareholder franchise. A related-party merger executed without the procedural safeguards that ordinarily apply to conflicted transactions. And a historically large retail allocation directed at the investor class with the least institutional protection and the least capacity to absorb downside risk.


For Australian retail investors weighing participation, the question is not whether SpaceX is an impressive company. It is whether the governance structure, disclosure limitations, and terms on offer adequately reflect the risks being assumed.


The content in this Article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. It should not be relied upon as such. You should seek legal or other professional advice before acting or relying on any of the content.


 


[2] Ibid.

[10] Ibid.

[13] Ibid



Profile of Sally Westlake, BlackBay Lawyers Associate.

ABOUT THE AUTHOR


Wahib Ansari is a commercially minded solicitor with experience across corporate and commercial advisory, regulatory matters, and dispute-related work. He is committed to delivering clear, practical legal guidance that supports clients in managing risk and achieving business-critical outcomes.


Wahib brings a structured and detail-focused approach to his work, with an emphasis on clear drafting, commercially informed analysis, and effective execution. His background across both private practice and regulatory environments enables him to identify key issues early and provide advice that is strategic, pragmatic, and aligned with client objectives.

 








manny-moreno-McrvtbYEFto-unsplash_edited.jpg
bottom of page