Elon Musk has stated that he wants to be the world’s first trillionaire.
So it shouldn’t come as any surprise that he’s picked an inflated US$1.77 trillion valuation (US$135 per share) for this week’s SpaceX IPO that would indeed make him a paper trillionaire, if enough global investors can be persuaded to hand over the record-breaking US$75 billion in cash he’s asking for.
And after corporate regulator ASIC controversially delivered a rapid-fire SpaceX prospectus approval, Australians are set to apply for what could be multiple billions of dollars worth of over-hyped SpaceX shares.
In financial terms, SpaceX is inarguably one of the biggest black holes ever presented to Australian retail investors. The prospectus shows that it suffered a US$5 billion loss in calendar 2025 when it had a negative free cash flow of US$14 billion.
Based on its history and plans, it certainly needs to raise the targeted US$75 billion, given it is saddled with US$15 billion of net debt and has racked up US$41 billion in accumulated losses since Musk founded the company in 2002.
A corporate Frankenstein
Whilst the proposed valuation is scandalous, it’s also a Frankenstein’s beast from a corporate governance perspective.
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Musk, who is the controlling shareholder, chairman, CEO and chief technology officer, is proposing to only give the millions of incoming IPO participants just 4.26% of the company in exchange for the targeted US$75 billion. Never before in the history of global capitalism has someone asked for so much in exchange for an ownership stake so small.
Elon Musk Image: AP Photo/Matt Rourke.
Even worse, the 555.55 million new SpaceX shares being offered have limited voting rights, ensuring that Musk will retain gerrymandered control after taking US$75 billion from public investors with about 82% of the votes, despite only owning about 42% of the total shares on issue. His other gig, Tesla, has a conventional single class of share, and Musk’s 15.7% stake was worth about US$193 billion on Friday night.
As the AFR’s Chanticleer columnist Anthony Macdonald explained on Sunday, ASIC has certainly rolled out the red carpet to Musk and his Australian lawyers, Gilbert + Tobin.
After SpaceX requested in early May that its fanciful US prospectus be used for direct selling to Australian investors, the corporate plod got to work helping to produce an acceptable Australian version of the prospectus that was a good deal more sober.
If ASIC was going to be so permissive, it could have at least insisted on SpaceX seeking a secondary listing on the ASX so that local investors could trade the stock through their regular Australian broker.
ASIC ‘pragmatic’
An ASIC spokesperson told Crikey the regulator’s Musk fast-track was because “the SpaceX IPO is unprecedented in scale” and ASIC was simply being “pragmatic” in facilitating participation for Australian retail investors “in a globally significant transaction”.
This contrasts with the situation in New Zealand, where only “sophisticated” investors can participate.
And if SpaceX shares are not available for retail investors in large countries such as Mexico, South Africa, India and the whole of South America, why was Australia chosen by SpaceX, and why did ASIC say yes? The other six targeted jurisdictions are the US, Canada, Japan, South Korea, the UK and the European Union, so Australia is the smallest.
Given that over-hyped Tesla has the most US retail shareholders of any US-listed company — which partly explains why its shares trade so highly relative to its profits — Australia’s well-established 7 million-strong army of direct retail investors and circa $4.5 trillion in compulsory superannuation savings are an obvious target for any global share spruiker.
Which brings us to the controversial role of Australia’s biggest bank, CBA, and its all-conquering online stockbroking outfit CommSec, which has circa 3 million Australian customers — or an estimated 50% of the overall user-base for online share trading.
I’ve been a CommSec client for 25 years and have paid them more than $70,000 in brokerage to handle almost 2,000 trades designed to facilitate AGM access over that period. One of the benefits of being a CommSec customer is that they don’t regularly hit you with secondary capital raisings offers or IPOs. This is potentially because they were badly burnt underwriting a $600 million ABC Learning hybrid note offer before the GFC and ended up losing $445.6 million on that particular security, in addition to further heavy losses on the bank’s $240 million regular loan to ABC Learning.
SpamX
So it came as quite a surprise when the first mass CommSec email promoting the SpaceX IPO landed at 9.22am on May 26. This triggered a story in the AFR which suggested CommSec and its fellow travellers had been hired to raise up to $1 billion from Australian retail investors. While not mentioned in the prospectus, the AFR reported that seven other Australian brokers — Bell Potter, JBWere, Ord Minnett, Morgans and Evans & Partners, along with Morgan Stanley Wealth Management and Macquarie Private Wealth — had also been mass emailing clients.
This was followed up by another, more specific, CommSec mass email at 5.40pm on June 4 — the very day ASIC registered this 505-page SpaceX Australian prospectus for distribution.
The mass emails are clearly resonating with CommSec customers, as its call centre stayed open right through the long weekend with regular online apologies offered for the delays.
This was mainly because the only CommSec customers who could participate were those with an International Share Trading account. It took me about 10 minutes to set this up online over the weekend, and then I successfully lodged an application to buy A$2,000 worth of SpaceX shares as quickly as you could lodge a multi with Sportsbet. Participants have until 5pm, June 10 to apply, and the limits for individual retail applicants on the CommSec website range between $1 (surely it should have been US$135 to buy 1 share) and a farcical $100 million.
It’s not as if Commonwealth Bank is not aware of the dangers of mass emails.
In October 2024, CBA agreed to pay a $7.5 million fine after admitting it sent 170 million unsolicited emails without an unsubscribe button. It even managed to get regulator ACMA to delay the announcement so it didn’t generate bad headlines coinciding with its 2024 AGM in Adelaide.
I sent a detailed list of questions to CBA on Friday about Commsec’s conduct and received a reply saying they had nothing to add to the public record. If Australian investors get burnt, this issue might be one for the dynamic duo of Labor Senator Deb O’Neill and Greens Senator Barbara Pocock to explore through their all-conquering role with the Joint Committee on Corporations and Financial Services.
Once they finish dealing with KPMG, of course.
- This article first appeared on Crikey. You can read the original here
