Elon Musk’s SpaceX is facing protests against the expected initial public offering from some of the same interest groups that helped wipe $600 billion from Tesla’s market capitalization early last year.
SpaceX’s IPO will be the largest in history, with the company founded by Musk raising tens of billions of dollars at a valuation of more than $2 trillion. If all goes according to plan in June, the conglomerate, which currently owns a missile manufacturer, a social media app and the creator of an artificial intelligence chatbot, will immediately be among the top 10 publicly traded companies.
On Wednesday, Randi Weingarten, president of the American Federation of Teachers, wrote to the U.S. Securities and Exchange Commission urging it to thoroughly investigate SpaceX’s IPO preparations. The company’s stock will likely end up in the retirement accounts of 1.8 million union members drawn from education, health care and government sectors. “I have serious concerns about the extent to which this unusually large offering will comply with the securities laws’ requirements for full disclosure of material information and fair treatment of investors,” Weingarten wrote in letter shared with WIRED.
The union is one of several organizations and activists advocating for greater oversight of SpaceX’s initial public offering. Some are even going so far as to call on investors to boycott the IPO for many of the same reasons they cited when pressuring Tesla shareholders to dump its stock last year.
The IPO “will bring an infusion of cash that Musk will control and use for personal and political gain,” says a loosely organized group of activists Get rid of Tesla. “Just as he used Tesla to gain access to enormous wealth, which he used not for the greater good but to sow the seeds of chaos and fascism, he will do the same with SpaceX.”
Weingarten and the American Federation of Teachers want SEC Chairman Paul Atkins to order his panels to closely scrutinize SpaceX’s IPO filings as part of an ongoing routine review. It raised concerns about the company’s business plans potentially relying on “non-existent or speculative technologies”, its reported accounting accuracy and the adequacy of its management. Members’ retirement funds will likely own SpaceX stock within days, not months, of the stock exchange debut in accordance with the newly adopted stock exchange regulations. However, it is doubtful whether SpaceX will ever be able to deliver the profits necessary to justify such an inflated valuation, meaning the value of the stake could plummet and hurt retirees.
“The commission must demand strict disclosures, independent oversight and safeguards against forced investments or risk spending workers’ life savings on the whims of a company that operates more like a Musk family venture than a transparent, publicly traded company,” Weingarten said in a statement.
Last year she urged state and local officials and six large investment funds to review its holdings in Tesla.
AkademikerPension, a pension plan for teachers and other government workers in Denmark, believes SpaceX’s valuation target, which is said to be “very high, and in isolation would mean caution in participating in it,” says the fund’s head of global equities Dan Wejse. As SpaceX reveals additional details closer to its IPO, Wejse also plans to take a closer look at the company’s finances and shareholder structure. AkademikerPension has been sold from Tesla since last year amid concerns about the carmaker’s lack of independence on its board and Musk’s involvement in politics.
The Lehigh County Pension Board in Pennsylvania halted novel investments in Tesla last year. County Comptroller Mark Pinsley says the board has not yet discussed a potential SpaceX investment, but is concerned it would automatically become part of the county’s portfolio through index funds, which typically hold shares in the largest companies. “SpaceX will be supported by pension funds not because it has good fundamentals, but because it is in the indexable range,” Pinsley says. “It’ll be OK, even if it shouldn’t be. Tesla has been losing revenues from hand to hand because [Musk] talked to Trump, but Tesla shares barely dropped.”