SpaceX is warning investors that it may commit “significant equity” to “future transactions” after its upcoming IPO — language added amid persistent industry gossip that CEO Elon Musk plans to eventually merge the space and AI company with Tesla.
The new language went deep into the risk factors section of SpaceX’s first formal amendment in its IPO filing, which was made public last month. The company tagged this sentence at the end of the first paragraph of a risk about how mergers and acquisitions can go sideways:
We may issue a significant amount of equity capital in connection with future transactions.
SpaceX has been busy with M&A, acquiring Musk’s AI company xAI last year and recently struck a deal with Cursor that includes an option to buy the startup for $60 billion in stock after the IPO. It’s certainly possible that SpaceX will have other goals in mind after raising a reported $75 billion when it goes public on the Nasdaq stock market (minus $20 billion committed to repaying former xAI and X debt). But that warning seems tailored to prepare investors for the possibility of a major dilutive event — such as a future combination with Tesla.
Musk has been thinking about combining his companies for years, and SpaceX’s IPO only fuels chatter that he will finally merge his two largest companies. A merger of this size would face a number of legal and potential regulatory challenges and would likely have to go through a vote of Tesla shareholders. But, as the IPO filing showed, Musk has the ultimate voting power at SpaceX. the only person who could vote against a merger on this side of the term sheet would be Musk.
Musk’s voting power at SpaceX would not be at risk during a major dilution event. SpaceX has three main classes of stock heading into this IPO. Everyone has the same basic economic rights, but different voting rights.
Class A shares are those that will be sold to the public and come with one vote per share. Class B shares are owned exclusively by Musk and carry 10 votes per share. SpaceX also owns Class C common stock, which does not carry any voting rights. While these Class C shares are currently used for executive compensation, Musk could use these shares to buy other companies without diluting his power. (SpaceX also has Class D shares in retirement, which have reduced financial rights; the company has not yet decided whether those shares will carry voting rights.)
When you purchase through links in our articles, we may earn a small commission. This does not affect our editorial independence.
