SpaceX, Elevated to Mega-Cap Tech Status on Future Potential, Faces Scrutiny Over Earnings and Governance Risks

Despite lackluster financial performance, investor enthusiasm surrounding SpaceX remains largely intact following its IPO.
Hidden risks, including the scale of related-party transactions and governance concerns, are also drawing attention.
As the private credit industry grapples with mounting pressure amid the AI boom, questions are emerging over whether SpaceX could become a similar fault line within financial markets.

SpaceX, the space venture led by Chief Executive Officer Elon Musk, has rapidly joined the ranks of America's mega-cap technology companies following its public listing. However, critics argue that the company's actual revenue and profitability still fall short of justifying the market's lofty expectations. According to this view, the company's elevated valuation primarily reflects expectations for future growth rather than current fundamentals. Some observers have even warned that if SpaceX fails to demonstrate meaningful growth over time, investors could find themselves facing circumstances similar to those confronting the private credit sector, which has absorbed substantial risks amid the AI investment frenzy.

SpaceX's Share Price Strength and Underlying Vulnerabilities

According to a June 18 report by Yahoo Finance, SpaceX shares closed the day 37% above the IPO price of $135. The company's market capitalization stood at approximately $2.4 trillion, placing it in a range comparable to major technology giants such as Microsoft and Amazon. Investor demand, which had already reached feverish levels before the listing, has yet to fully subside. During its June 10 IPO subscription period, SpaceX successfully attracted approximately $350 billion in subscription deposits. The company ultimately raised $75 billion, more than double the previous record of $29.4 billion set by Saudi Aramco in 2019.

Nevertheless, the financial foundation supporting such share-price strength remains limited. SpaceX reported a net loss of $4.9 billion last year and recorded an additional loss of $4.28 billion during the first quarter of this year. Its AI subsidiary xAI also continues to generate substantial losses, having invested $12.7 billion last year alone in capital expenditures, including the construction of large-scale AI data centers. The contrast with similarly valued technology giants is striking. Microsoft generated more than $300 billion in revenue over the past 12 months, while Amazon's revenue exceeded $700 billion. Both companies already produce massive cash flows and substantial net profits.

Within the venture capital industry, however, many argue that SpaceX's strength reflects a natural outcome of how investors assess the future value of innovative companies. Speaking at a joint press conference hosted by the Korea Venture Business Association, the Korea Venture Capital Association, and the Korea Startup Forum in Seoul's Yeouido district on June 15, Korea Venture Capital Association Chairman Kim Hak-kyun stated, "Investors are not pouring capital into SpaceX simply because it is profitable today," adding, "Market participants place a high value on its future growth prospects and technological competitiveness." He further noted, "Tesla recorded losses for roughly a decade following its Nasdaq listing in 2010, yet raised approximately $10.9 billion in investment capital during that period. Investors were betting on the future rather than current earnings."

Indeed, investors increasingly view SpaceX as more than a rocket-launch provider or satellite communications company. The company is widely perceived as a future infrastructure platform combining Starlink satellite internet services, launch operations, defense capabilities, satellite data, communications infrastructure, and AI-related opportunities. As a result, investors assign greater value to the revenue streams SpaceX may build in the future than to its current sales figures. Yahoo Finance echoed this sentiment, stating that "SpaceX must transform its existing revenue base into a future profit machine." If market expectations fail to translate into meaningful earnings, the company's current valuation could ultimately become a significant burden.

Related-Party Transactions and Governance Concerns

The issue is that SpaceX's potential vulnerabilities extend well beyond earnings performance. One prominent concern involves transactions among companies controlled by Elon Musk. According to SpaceX's prospectus, xAI purchased $191 million worth of Tesla Megapacks in 2024, with purchases increasing to $506 million last year. During the first three months of this year, xAI made an additional $34 million in payments, while another $269 million worth of Megapacks was purchased in April alone. SpaceX itself also purchased $131 million worth of Cybertrucks from Tesla last year.

SpaceX maintains that all of these transactions were classified as related-party dealings and conducted under terms comparable to those available from independent third parties. However, investors continue to express concerns about potential conflicts of interest. Given Musk's substantial influence over both companies, it remains unclear whether transaction pricing, volumes, and timing were truly optimized for the benefit of each company's shareholders. If demand from one Musk-controlled company continues supporting the revenue growth of another, questions regarding the independence and sustainability of that growth could intensify.

Corporate governance has also emerged as a major issue. Through Class B super-voting shares, Musk controls the overwhelming majority of SpaceX's voting power. While Class A shares available to public investors carry one vote per share, the Class B shares held by Musk and certain insiders carry ten votes per share. This structure enables Musk to retain majority voting control even after the company's public listing. As a result, ordinary shareholders have limited influence over board appointments, mergers and acquisitions, and other major corporate decisions. These concerns become particularly significant when combined with controversies surrounding related-party transactions. Even if such transactions continue, ordinary shareholders may have limited ability to pursue corrective measures through board restructuring or management changes. In addition, the company's bylaws and the legal framework of Texas make shareholder litigation relatively difficult.

Excessive Valuations as a Potential Time Bomb

Financial markets are increasingly concerned that these vulnerabilities could eventually evolve into a major source of systemic risk. Some analysts warn that SpaceX investors could ultimately follow the same path as participants in the private credit industry, which has become increasingly exposed to risks stemming from the AI boom. In recent years, major technology and AI companies have poured enormous sums into data centers, power infrastructure, semiconductors, and cloud computing facilities. The scale of these investments has expanded so rapidly that traditional bank lending and corporate bond issuance alone have struggled to meet funding needs. Private credit funds, operating outside conventional banking regulations, have stepped in to fill the gap by providing substantial financing for AI infrastructure projects and related companies. Consequently, the AI boom has evolved from a stock-market phenomenon into a source of growing credit-market risk.

At present, this structure appears relatively stable. Data centers continue signing long-term lease agreements, while demand for cloud and AI services remains robust. These conditions have encouraged investors to view related loans as relatively secure long-term cash-flow assets. However, the situation could deteriorate rapidly if AI demand fails to maintain its current growth trajectory. Should returns on AI investments and data-center demand fall short of expectations, or if rising power and semiconductor costs erode profitability, the value of underlying loan assets could come under pressure. This is where vulnerabilities within the private credit market become more apparent. Loans held by private credit funds are inherently difficult to liquidate, yet an increasing number of semi-liquid funds have emerged in recent years to attract capital from individual investors and high-net-worth clients by offering limited redemption rights. The result is a structure in which underlying assets remain illiquid while investors expect liquidity. If doubts about AI demand intensify and fund asset values decline, investors could seek redemptions simultaneously. Under such circumstances, funds may be forced either to restrict withdrawals or liquidate assets at distressed prices.

PIK (Payment-in-Kind) loans present an additional source of risk. Under PIK structures, borrowers do not pay interest in cash but instead add accrued interest to the principal balance for repayment at a later date. If AI-related companies and infrastructure projects fail to generate the expected cash flows, interest obligations may be deferred on paper while actual debt burdens continue to grow. During periods of low interest rates, expectations for future growth often obscured such structural weaknesses. In an environment of higher rates and increased investor focus on profitability, however, these mechanisms can amplify financial fragility. Ultimately, risks within the private credit industry involve a complex web of loans, investment funds, banks, insurance companies, and pension capital. If conditions worsen, the resulting reassessment of financial institutions' exposures could trigger broader instability across the financial system.