Shameful Secret Heart

SpaceX has filed publicly for an IPO expected to price on June 11th, with trading beginning the following Friday. The company carries approximately $18 billion in annual revenue run rate and is currently unprofitable, yet valuation discussions range from roughly one trillion dollars to two trillion dollars, with the upper figure representing approximately 100 times revenue. Matt Levine attributes the elevated multiple to an Elon Musk premium he expects to persist in the stock even if early investors are disappointed.

The prospectus opens with 12 pages of rocket launch and Mars colony imagery before repositioning SpaceX as an AI infrastructure company running orbital data centers in partnership with Anthropic. The company identifies a total addressable market of $28 trillion, nearly all attributed to enterprise AI, and treats orbital data centers as a near-term revenue source rather than a speculative one. The IPO is expected to bring approximately $75 billion of stock to market, with roughly 30 percent allocated to retail investors assumed to be price insensitive and a free float of approximately 5 percent at launch.

The index inclusion timeline creates unusual demand pressure. Russell fast-tracked SpaceX into the Russell 3000 around day five after IPO, and NASDAQ won the listing after agreeing to admit SpaceX to the NASDAQ 100 around day fifteen, meaning significant index fund buying will hit within one to three weeks of trading despite extremely limited supply. Index providers are described as waiving normal eligibility rules, generating public criticism, though one speaker argues they are responding to index fund users who want public companies included rather than simply accommodating Musk.

The governance structure is described as intentionally designed to prevent the kind of Delaware litigation that resulted in Musk losing his Tesla compensation package. Musk holds approximately 85 percent of voting control through super-voting stock and retains the right to appoint more than 51 percent of SpaceX directors regardless of his ownership percentage. He has no legal obligation to offer SpaceX corporate opportunities, meaning he can start competing companies without consequence. A plaintiff seeking to sue Musk for breach of fiduciary duty would need to hold 3 percent of SpaceX stock, worth tens of billions of dollars, and securities fraud suits must be filed in Texas state court rather than Delaware. One speaker notes this sets a precedent for founder-friendly public company governance and that other tech CEOs are already seeking to replicate it, with the caveat that not all who follow the model will perform as Musk has. Active managers benchmarked to indexes containing SpaceX face career risk because under- or over-weighting the stock creates large tracking error, and index fund investors who will be among the largest near-term buyers generally do not favor the governance structure SpaceX has adopted.

Robinhood announced a feature allowing users to connect AI agents to their brokerage accounts, with a sandbox limiting losses to whatever funds are allocated to the agent. Options, crypto, and prediction markets are planned for future inclusion. Robinhood is also developing a credit card feature allowing agents to make purchases based on user-defined conditions such as price thresholds. Public made a similar announcement about agentic brokerage functionality around the same time. One speaker revised a prior view that ETFs would become the universal wrapper for trade ideas, now predicting ETFs will revert to being primarily index fund vehicles as agentic AI takes over complex strategies including long-short, pair trades, and single-stock options. Agentic trading benefits Robinhood and its market maker partners through increased payment for order flow revenue, though invisible transaction costs such as spreads persist even when visible commissions are zero, and retail traders running high-frequency bot strategies are unlikely to beat the market after accounting for actual transaction costs.

Fernando Tatis Jr. accepted a deal from Big League Advance around 2017 when he was a minor league player, receiving $2 million in exchange for 10 percent of his future major league earnings. He later signed a 14-year, $340 million contract with the Padres, making the stake worth approximately $34 million. Tatis Jr. subsequently sued, arguing the arrangement was a usurious loan charging roughly 1,000 percent interest and that he was a naive 17-year-old. The central legal dispute is whether the deal constitutes a loan subject to usury law or an equity-like income-share agreement. Tatis Jr. lost an arbitration case after failing to object soon enough and still owes the company millions. Levine frames the arrangement as functioning like a venture capital portfolio where most investments return nothing and a few return large multiples, and notes that Tatis Jr. was considered the top prospect in baseball at the time, which makes the deal harder to defend as a necessary financial hedge given how clear his upside appeared. Tatis Jr. did subsequently face a suspension for performance-enhancing drugs and injuries, which provides some context for why the deal might have seemed more reasonable when it was struck.