How you and your superannuation came to be aboard SpaceX

Congratulations.

You may not be quite aware of this, but chances are some time tonight you're about to become a highly valued financial backer to Elon Musk.

If your superannuation is managed by any of Australia's big superannuation funds or if you've taken direct exposure to US stocks via a passive investment fund, then it's almost certain that your future is now tied up with Musk's SpaceX.

Tonight SpaceX will debut on the technology-heavy Nasdaq exchange, making history as the world's biggest ever stock market float, or Initial Public Offering, as they're now called.

With all the hype, and the wall of cash pouring into artificial intelligence stocks, the float is considered pretty much a guaranteed success and is destined to make Musk, the world's richest man, the world's first trillionaire.

While it will do little to diminish his perceived weirdness, the float will mark a key step in the reputational rehabilitation of Elon Musk.

As Donald Trump's hand-picked head of DOGE, the short-lived Department of Government Expenditure, Musk alienated almost everyone on the planet, undermining his once loyal customer base for electric vehicles.

That now seems to be on the mend and, even here, demand for his cars has rebounded, with the Tesla Y last month becoming Australia's best-selling car.

SpaceX may not grab the headlines like Tesla.

But it will become Musk's overarching parent company with a grab bag of investments in space rockets and satellites, the social media platform formerly known as Twitter but renamed X, along with his much-hyped plunge into artificial intelligence, xAI.

SpaceX has managed to corner the market with its satellite internet business Starlink and holds lucrative government contracts with a range of space technologies. It's also been quite the innovator, pioneering the development of reusable rockets.

It plans to list 555.6 million shares, only about 4 per cent of its total capital, at $US135 each.

That will raise about $US75 billion for the company and value the group about $US1.7 trillion.

A decent bounce in the share price on day one could push the share price and the valuation much higher. Given reports investors are clamouring for four times the number of shares being issued, a decent bounce is assured.

That's an extraordinary outcome for a company that doesn't turn a profit.

Why is Elon selling?

Why indeed. It's not as though he needs the cash.

Throughout his career, Musk has managed to finance his way through life by promising fabulous riches well down the track.

He's been notoriously late on both the timing and scale of those promises for years. But the Musk mystique lives on and the cash keeps rolling in.

In fact, Musk appears to have discarded the notion that profits or earnings are needed as a foundation for company valuations.

And its because he's learned how to capitalise on a basic human trait — that the dream is more powerful than reality.

Tesla is the prime example. Valued at an eye-watering $US1.24 trillion, it towers above every other car manufacturer on the planet, even though it doesn't sell as many vehicles or make as much money as many of its rivals.

It is worth more than double the combined value of the next nine most valuable car makers.

We're talking here about the likes of Toyota, BYD, General Motors, Ford, Ferrari, Porsche, BMW, Mercedes Benz and VW.

And yet it managed to earn just $3.9 billion in the past 12 months. That means the company is valued at more than 500 times its earnings.

In the normal world, outside of Elon's orbit, a multiple of more than 25 generally is considered a stretch.

The allure of SpaceX primarily revolves around the mania surrounding artificial intelligence. Bolted on are dreams for not just global domination, but intergalactic supremacy.

Space tourism, constructing data centres in space and the colonisation of Mars are being touted as realistic goals for the future of SpaceX.

All it will take is time and money.

Lots of it.

Rule one: Never sit still

Musk is looking to use SpaceX as an acquisition vehicle.

In SpaceX's updated float documents, a note was included that the company "may issue a significant amount of equity in connection with future transactions".

Essentially, it plans to use its hugely overvalued shares as currency to snap up rivals.

There's already a deal on the table. An AI coding assistant called Cursor has been targeted for $60 billion.

Like SpaceX, it doesn't have a history of profits. And at that price, it is valued at about 20 to 30 times its revenue, a metric usually employed to value businesses that burn cash.

But the big lure could well be Tesla.

Based upon their respective market valuations, if SpaceX did purchase Tesla, it would be the biggest merger in history and require SpaceX to stump up about 45 per cent of its shares to seal the transaction.

Effectively, it would be paying a multiple of about 400 times Tesla's earnings.

For years, Musk has battled Tesla shareholders over his pay and last year pushed through a package that would reward him $US1 trillion if he met a series of what then appeared to be almost insurmountable hurdles.

It's uncertain what would happen to that arrangement in the event of a purchase.

Musk owns about 43 per cent of SpaceX but will account for 82 per cent of the votes once the company is listed, thanks to his super-voting shares, delivering him unfettered control.

Ordinarily, that would set red lights flashing. But not with Musk.

In fact, authorities have been bending the rules to make life easier for him.

Until very recently, a major company listing on almost any exchange would need to pass three key tests to be included in the index that measures overall market performance.

It would have to wait for three months after listing for inclusion, to demonstrate it is profitable and have at least 10 per cent of its stock not controlled by those selling the shares.

Unlike S&P Dow Jones, which has maintained its standards, Nasdaq, the technology-heavy exchange that houses most of the technology heavyweights, has waived these rules for SpaceX.

It will be included in the Nasdaq index right from the get-go despite not earning a profit and with just 4 per cent of its stock hitting the market.

And that means tens of billions of dollars will flow straight into SpaceX, because the computer programs that run passive investment funds allocate money according to size.

This time it's different

That's the mantra most often spouted every time a boom turns into a bubble. But it's never proven to be true.

Those same passive funds that have directed investment towards the biggest listed companies have created a race for the mega caps, which have only grown bigger and attracted ever more passive funds.

It's the financial equivalent of a perpetual motion machine.

The end result is that huge amounts of money have gone to a tiny number of companies.

Almost half of all the money invested on the New York Stock Exchange's S&P500 index now sits in just 13 companies, a level of concentration unseen for more than a century.

The sheer volume of cash now chasing SpaceX has analysts concerned that investors may be enticed to liquidate other stocks to fund the purchase. Right on cue, in the past week, Wall Street has shuddered on several occasions.

Bubbles often burst during periods of rising interest rates.

In the past few sessions, unexpectedly strong US jobs growth coupled with May inflation rising to a three-year high at 4.2 per cent, strengthened the case for a rate rise, a development that could rattle investors just as SpaceX hits the boards.

Wall Street has powered through a series of crises since Donald Trump returned to office in 2024. And Australian super funds have ridden the wave.

About 20 per cent of the $4.5 trillion Australians have amassed in super savings finds its way to Wall Street. And the vast bulk of that goes to technology and particularly into AI.

Now, a large slice is headed into space.