MW A major union warns members and regulators that Elon Musk's SpaceX IPO 'defies' financial logic
By William Gavin
SpaceX is pursuing a valuation of up to $2 trillion, in what could be the biggest public offering in history
SpaceX CEO Elon Musk's vision for the company's future, and that of the world, is a major driving force behind its valuation.
One of the largest public unions in the U.S. is calling on regulators to crack down on SpaceX's upcoming initial public offering, saying that it "defies financial logic."
The American Federation of Teachers on Wednesday published a letter asking the U.S. Securities and Exchange Commission to closely scrutinize SpaceX's IPO filings. AFT President Randi Weingarten cited concerns in several areas, including SpaceX's leadership practices and accounting methods.
SpaceX is attempting to raise about $75 billion at a reported $2 trillion valuation, which would make its IPO the most successful of all time. But the company's revenue resembles that of a much smaller company, and its valuation is based more on CEO Elon Musk's vision for the future, experts have said.
"This is not just another IPO - it's the largest in U.S. history, and it's being rushed to market with a valuation that defies financial logic," Weingarten said in a statement.
SpaceX did not respond to a request for comment on the letter. An SEC spokesperson declined to comment.
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The AFT's outreach to the SEC ahead of a company's IPO is a first for the union, which represents 1.8 million education, healthcare and public-sector workers. Still, it's not without some precedent.
In 2000, the AFL-CIO held an "alternative roadshow" to campaign against PetroChina's IPO, which scared off some potential investors. The federation of unions later repeated those tactics and encouraged reform, including stricter rules requiring the disclosure of foreign entities in U.S. markets doing business with nations facing U.S. sanctions.
The AFT said it's concerned about the mismatch between SpaceX's financials and its valuation because, if the company ultimately goes public, the union's members will be exposed to any challenges SpaceX faces through their retirement benefits invested in the market. SpaceX is pursuing a number of goals that will require years of investment and ultimately may not even be realized.
In its letter, the AFT also asked the SEC and its chair, Paul Atkins, to examine the issue of "forced investment" as a result of recent proposed rule changes by index providers. A few of these companies are exploring ways to speed up the time it would take for SpaceX and other prominent private firms to join the rosters of major indexes.
Nasdaq $(NDAQ)$ was the first company to approve such a rule this year, allowing new large public companies to list on the Nasdaq-100 NDX after just 15 days rather than months, along with other changes. S&P Dow Jones Indices and a subsidiary of London Stock Exchange Group (UK:LSEG) (LSEGY) are considering similar rules.
Dig deeper: Here's who benefits if the S&P 500 eases its rules for 'megacap' companies
SpaceX made early inclusion in the Nasdaq-100 a condition for considering listing its shares on the Nasdaq stock exchange COMP, Reuters reported in March. The company's IPO could reportedly come as early as June.
Joining the roster of such an index can be a big deal, since many funds track specific indexes and adjust their holdings to match them. The Invesco NASDAQ 100 ETF QQQM, for example, invests at least 90% of its assets in stocks in the Nasdaq-100 and rebalances each quarter.
"Passive has become such a huge part of the market," Reena Aggarwal, a professor of finance at Georgetown University, told MarketWatch. "So if you don't include [SpaceX and other major IPOs], a lot of investors are not getting the benefit."
The AFT argues that Nasdaq's rule changes will effectively "compel" its members to invest in SpaceX in amounts "disproportionate to its real market capitalization." The union's members participate in retirement and benefit funds with about $3 trillion in assets, and some also invest as individuals, it said.
"The commission must demand ironclad disclosures, independent oversight and safeguards against forced investment - or risk consigning workers' life savings to the whims of a company that operates more like a Musk family venture than a transparent, publicly traded enterprise," Weingarten said in a statement.
It's not the first time the AFT has criticized Musk. Last year, the union took aim at Musk through Tesla $(TSLA)$, which he has led as CEO for nearly two decades.
At the time, the AFT told financial-services firms, including SpaceX investor Fidelity and BlackRock $(BLK)$, that its members' exposure to Tesla shares could put their pensions "at risk" as the company's stock price sank. The union also joined a coalition pressuring Tesla investors to vote against Musk's executive compensation package.
"The Tesla board, instead of upholding basic governance standards, wants to green light an outrageous $1 trillion pay package for a CEO who has spent most of the year engaged in childish political brawls, rather than working to create shareholder value," Weingarten said in a statement last October.
See more: Why SpaceX could trade like a meme stock after its blockbuster IPO
-William Gavin
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May 06, 2026 15:03 ET (19:03 GMT)
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