Trick or treat? Musk has a long record of saying things have little relation to reality.
Elon Musk wants to give American kids shares in SpaceX. Maybe.
Elon Musk says he will give away one share of his future-intergalactic-empire company SpaceX "to every kid in America" next year.
But America's 72 million children, as well as their parents, should probably hold off on the celebrations for now.
Musk is an extraordinary, even brilliant, man in many ways, but he has a long and abysmal record of saying things - especially on Twitter, or X - that turn out to have little relation to reality. Or none at all.
Like the time he randomly and falsely accused a complete stranger on the other side of the world of being a child molester, simply because the man had disagreed with him? (Musk even doubled down on the accusation, before eventually admitting it was all made-up.)
Or the time he announced he had the financing to take Tesla private, causing enormous turmoil in the markets? Yeah, no - he didn't. Musk and Tesla had to pay $20 million each to settle with the SEC over the affair.
And the time he said he was willing to buy Twitter, only to try to back out of the deal? (He agreed to follow through on the offer once Twitter sued him.)
Only last year he said he had discovered millions of dead people claiming Social Security.
Once again: Yeah, no.
Two years ago, in an attempt to influence the 2024 presidential election, he promised to shower millions of dollars on people who registered to vote and signed a petition.
Musk has only just settled the lawsuits from all the angry people who say they were misled. Terms of the settlement weren't disclosed. But Musk made sure to settle before he had to testify under oath - always a good sign.
It's also two years since he promised U.S. taxpayers that he would find "$2 trillion" in savings in the federal budget by uncovering waste, fraud and abuse. All we had to do was give him the U.S. president he wanted.
Well, he got his wish, but we never saw the savings. Musk slashed the promise in half before Donald Trump even took office. In the end, federal spending went up this year by 5.5% to $7.4 trillion. That's $600 billion more than it was during Joe Biden's last year in the White House.
And Musk's pal Trump has just proposed the first $8 trillion federal budget in history.
But, hey, Musk got a free chainsaw out of it.
There was no accountability, no apology, no mea culpa. Musk went on Joe Rogan and blamed his failure on a vast, shadowy and mysterious conspiracy against him.
The truth is out there.
All of this is to say that you shouldn't be surprised if these SpaceX shares (SPCX) never end up in your children's accounts. Maybe they will. Maybe they won't. Trick or treat!
The second thing is that your children will need to get a so-called Trump account to get the shares. Musk says he will donate the stock through those accounts. Trump accounts, or 530A accounts, are brilliant tax dodges set up by the president and his sidekicks on Capitol Hill that mostly benefit trust-fund kids. They are a poor deal, or no deal at all, for most other children. Their main value is the $1,000 in "free" money, transferred from U.S. taxpayers, given to children born during Donald Trump's presidential term. (Really.)
The third thing to bear in mind about Musk's proposed giveaway is that, while one share of SpaceX is better than no shares, the value is currently $150. And if your kids try to cash it in, they will owe capital-gains tax.
So this gift isn't going to make a material difference to your child's life. I'm not being churlish. Free money is free money. I'm just saying this isn't Oprah giving you a new car. Musk is giving you a child's bicycle from Walmart.
And it's not merely altruistic. We can never read another person's mind, and Elon Musk didn't respond to my email requests, so I can't tell you for certain what he's thinking.
But it is surely not a coincidence that he is making this offer so publicly two weeks before an election that he is desperately trying to influence. Musk has already spent $280 million to help save his favored Republicans from voters. (It also came on the heels of the AI company Anthropic's announcement it would commit a portion of its shares to a "public benefit fund," with possibly more to come as the company grows.)
And this is business. SpaceX depends on the U.S. government for about 20% of its revenue. This company, like his other publicly traded operation, Tesla (TSLA), is heavily exposed to federal spending, regulations and laws. Musk wants as many friends in Washington as he can get.
His grandiose offer is excellent marketing for SpaceX. There is very good research that finds, as you would expect, consumers tend to like a company more if they own stock in it.
Musk is effectively hoping to buy 72 million young SpaceX fans. Maybe they will be motivated to use the SpaceX AI bot, called Grok, instead of its many competitors, like Gemini, Claude, Perplexity or Chat GPT. Maybe they will be more friendly toward Musk in future years when he tries to extract more money from the taxpayers. Who knows? It can't hurt.
And the cost to him really isn't onerous. While Musk is saying he will give away 72 million shares, that's barely 1% of his stock. In total, including options and restricted stock, his ownership in SpaceX totals 6.4 billion shares, valued currently at $960 billion.
Musk won't have to pay a penny. He will simply transfer paper. He could not cash out all of those 6.4 billion shares anyway, so his actual sacrifice is nonexistent.
But first things first. Believe the giveaway only when you see it.
-Brett Arends
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