[oldfuture]

And the prospectus says it plainly: "Mr. Musk will be able to control the outcome of matters requiring shareholder approval."

Musk holds over 85% voting power through Class B super-voting shares (10 votes/share). Public investors combined will have 15%.

What Musk Controls:

- CEO removal = his consent. You can't fire him even if he destroys the company

- Take business for himself. SpaceX gets a rocket deal? Musk can say "I'll do it at Tesla instead"

- 85% voting forever. No expiration, no time limit, permanent control

- Board elections. You have no power to elect directors you trust

[ralph84]

Voting control doesn't change management's fiduciary duty to all shareholders. The founders retaining voting control has worked out fine for Alphabet shareholders.

[overfeed]

> The founders retaining voting control has worked out fine for Alphabet shareholders.

Only after the cofounders brought in veteran "adult supervision" who offered guided the company with a steady hand, while Larry and Sergei were safely in their moonshot hobby project play-pens, away from the core products - an arrangement that would greatly benefit shareholders in Musk companies.

[collinmcnulty]

Yeah but SpaceX says you need 3% of the company to sue, so that fiduciary duty is never going to be enforced.

[londons_explore]

Getting together a group of owners with 3% ownership by value or 3% by voting rights both seems do-able, and I'm sure would be done of there was a serious case of mismanagement.

[colechristensen]

It raises the bar to the courts for shareholder control.

The Google founders are, lets say, more reliable than Musk when it comes to making sound business decisions.

[cryptonector]

> The Google founders are, lets say, more reliable than Musk when it comes to making sound business decisions.

I've no idea about that and I won't opine. But every time I see that sort of statement it seems likely motivated by the whole Twitter acquisition. Perhaps that was just a toy or vanity project for him, one he could afford, so even if you think he's running X terribly it might have nothing to do with how he's run or would run any other companies that are not related to social media. In other words, what I read into such statements is "I don't like the politics he's brought to Twitter!", "the board should rein in the guy whose politics I don't like!!". It's like saying Bezos is bad at business because he owns the Washington Post -another vanity project- and you don't like the Post.

Do people not get bored of that sort of take?

Tell me he makes bad business decisions all you want, but in the context of everyone-hates-his-acquisition-of-Twitter I'd like to hear about his other businesses. Tell me something useful, not something political.

And, sure, politics at some point bleeds into business. Maybe Trump is out to get Bezos over Washington Post coverage, or maybe the next Democrat President will go after Musk for his politics. It's possible that X will eventually cost him dearly and personally, and it's a solid argument for these billionaires and trillionaires to stay out of politics. Or maybe it's a good argument for them to stay in because maybe by demonstrating electoral influence and power they can make the POTUS-of-the-day fear them enough to not go after them too hard. But if you made any such argument it still wouldn't say tell me anything about the rest of these billionaires' businesses.

[queenkjuul]

Space GPUs are stupid, so is hyperloop, so is the Vegas Loop; robotaxis don't work, cybertruck sucks, the humanoid robots don't work, the new roadster is nowhere to be seen.

SpaceX blew up an entire launchpad because Musk thought flame diverters are gay, or something.

And, yes, Twitter is now a shithole.

[christoph]

This doesn’t even include the whole taking money from people for FSD that was JUST 2 years away…

[karmakurtisaani]

Just wait until 2022 when SpaceX is ready to launch their first mission to Mars.

[Ancapistani]

Every single one of those examples is both valid and - I believe, at least - misunderstood.

Musk has a singular goal as far as I can tell: to make humanity a multi-planetary species. All of those things are testing the boundaries of what's possible in areas that will or could be very important for building a permanent settlement on Mars.

I posit that while there's much room for debate around whether or not those projects are viable, as far as I can tell everything Musk has done has been in service of building the corporate framework, talent pool, skills, and technology necessary to colonize Mars.

[phs318u]

Ok. A permanent settlement on Mars. Given the personal control structure at play in his companies giving him autocratic control there, why would anyone believe he wouldn’t be anything but a Martian autocrat, and who in their right mind would willingly submit their own sovereignty to Emperor Musk the First of Mars? It’s not exactly like you could change your mind and walk away. You’d be literally putting your life in the hands of this wildly erratic person.

[cyberge99]

It’s a noble effort for sure, but he’s burned so much goodwill with most people because of his deep alignment with persons of questionable character.

[joquarky]

How about we get our own house in order before messing with other planets?

[queenkjuul]

I'm sorry, you'll have to do an awful lot of explaining to do if you want me to believe Hyperloop, a 100+ year idea proven not to work, and the Vegas Loop, one of the most asinine infrastructure projects I've ever witnessed in my life, could possibly in any way whatsoever contribute to life on Mars

[johnthewise]

If you do so many things, some are bound to be stupid.

[phs318u]

While it is true that a broken clock is right twice a day, the inverse is not.

[ethbr1]

And, you know, regular use of ketamine.

Just to add that to the crazy pile.

[Zigurd]

Fiduciary duty is meaningless without recourse. The governance structure denies any recourse. A case of breach of fiduciary duty would never make it to trial under the governance structure.

[lenerdenator]

If we were a saner society, this would not be a valid way to carry out corporate governance.

This is just sole proprietorship with window dressing.

[joquarky]

It's not that different from an NFT.

[glaucon]

I haven't read the prospectus but I would be interested to know, when he dies, to what degree the "... control the outcome of matters requiring shareholder approval" part will be inherited. Does that facility just go along with the Class B super-voting shares? And if it does what does it mean if more than one person inherits his shares?

On the subject of the governance structure this [1] is worth a read ...

"The company significantly limits shareholders' rights to sue. SpaceX's bylaws will make it clear that anyone who owns shares "irrevocably and unconditionally" waives all rights to pursue a jury trial. Shareholders will also be prohibited from bringing class actions against the company, its directors, officers, controlling shareholders or bankers tied to the IPO, according to the filing.

Instead, shareholders will be subject to mandatory arbitration, which had long been illegal in the U.S. The Securities and Exchange Commission reversed its position, opens new tab in September, allowing companies to adopt mandatory arbitration policies, which are private proceedings overseen by arbitrators."

... I can't remember how much he spent in Pennsylvania but you might argue it was money well spent.

[1] https://www.reuters.com/sustainability/boards-policy-regulat...

[tristanj]

Per the S-1, the class B 10x voting shares Elon owns are converted to class A upon transfer or sale.

[nickff]

The voting issue is problematic, but the limits on shareholder class-actions seems like a good idea. Do you know of any shareholder class-action lawsuit that actually benefited the shareholders? They only ever seem to benefit the plaintiff lawyers pursuing the case.

[lenerdenator]

That's because they often don't go far enough, and that's because of limits on things like shareholder class-actions.

If you haven't wiped out their corporate savings and sent the stock price tumbling, you haven't really done anything to get the needed recompense and to discourage the behavior in the future. Right now, many companies are effectively sole proprietorships or partnerships with window dressing made to look like there's real accountability. If it becomes impossible to oust the CEO, you're not a shareholder, you're a bagholder.

[tyre]

But that’s the thing. In that case, the shareholders are the ones who were harmed and now they’re winning by…making their investment worth far less?

What you really need are lawsuits against individuals to be held accountable, otherwise it’s a lose-lose for shareholders.

[lenerdenator]

Unfortunately, articles of incorporation preclude that sort of thing.

Perhaps after a few high-profile cases, IPOs won't be structured to give absolute control to one person.

That, or you make the ousting of the execs in charge the settlement instead of massive monetary damages.

[verandaguy]

This should frankly be disqualifying for any company trying to go public. Super voting shares have their place but there's no scenario in which overall control of the company can be retained by super voting shareholders who make up a small minority of the overall shareholders.

The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction, in particular by offering escape hatches like being able to eject a CEO who's lost their mind and is no longer acting in the fiduciary best interest of the shareholders, which will so obviously happen here.

[WalterBright]

> The point of a company going public is not to just distribute possible profits among speculators, but to give the public a meaningful voice in company direction

The point is to raise money from investors. The investors get a voice in exchange.

[readthenotes1]

It should be described so buyers can beware, but it's a personal choice to decide whether someone trust Musk and his estate planning

[verandaguy]

Technically, it is described. It's described in the S-1. Trouble is that most (active) investors don't read the S-1.

Fund managers and the like do, which covers a lot of passive investors, which is good until a company joins one of the major indices at which points funds may be obligated to buy in.

It's a deeply distressing moment, and I see it as a time to renew calls for consumer-protecting regulations and antitrust laws with more teeth in the markets where this kind of behaviour's currently flourishing.

[laughing_man]

This is not a new thing. Off the top of my head, I can think of similar arrangements at Meta, Alphabet, and the New York Times Company.

[joquarky]

Whataboutism isn't an argument.

[laughing_man]

I'm pretty sick of everyone labeling points they don't like "whataboutism". The reason I brought it up is if you're going use that as a reason to get the SEC or Congress or whomever more involved you're going to have to come up with a reason beyond "I don't like Elon Musk".

[cameldrv]

It's really not a public company at all in the sense people are accustomed to. The super voting shares plus the 3% rule for a lawsuit plus the arbitration clause make Musk almost totally unaccountable. It certainly should not be included in stock indices that are used for passive investing, because it is a different category of asset.

[cyberge99]

This category is affectionately known as a “meme stock”.

[partial225]

- Take business for himself. SpaceX gets a rocket deal? Musk can say "I'll do it at Tesla instead"

In theory (were we talking about any other man, in any other time) that's very strictly illegal with a whole area of law dedicated to it (fiduciary duty).

[phs318u]

Truly, in the face of this, caveat emptor has never been truer.

If/when Musk’s misadventures turn his companies to shit, I may spare a thought for the collaterally damaged, but not a single tear will I shed for the shareholders.

[jaimex2]

Tons of people are already buying you don't have to sell it to them.

I'll happily take Musks proven and superior leadership with guarantees over letting the company decline chasing short term sugar hits that destroy it long term.

[outside1234]

It is seriously baffling to me who is going to buy shares in this with 1) this structure and 2) at this valuation.

And it is a LOT of money that he is floating ($77B) so there have to be dumb people at scale for this to work.

[sumeno]

Look at Tesla stock and you have your answer. This will be another meme stock

[Grombobulous]

It will be interesting to see how this actually plays out.

You could either be 100% right, or this could be another exercise in failed human hubris.

I.e., Elon and the financial architects behind this IPO are assuming that it will work just like Tesla.

However, in the back of my mind I have to wonder if Elon has spent too much social capital for this kind of cult of meme stock strategy to work again.

This plan has potential to backfire since this unique IPO scheme became a big news story. The microscope is on the company more than it was for Tesla.

[sumeno]

From your lips to god's ear

[nirav72]

>I have to wonder if Elon has spent too much social capital for this kind of cult of meme stock strategy to work again.

If social capital was an indicator , then Tesla stock would've cratered 2 years ago. Despite demand for tesla vehicles dropping. I don't think social capital matters these days.

[Grombobulous]

Tesla still has the benefit of selling actual cars and being a profitable company, plus they’re already in all the important index funds receiving automatic investment.

SpaceX doesn’t really have those advantages from day one.

Tesla may be overvalued but I think the stock would have been negatively impacted if they spent the two years losing money.

[laughing_man]

The structure isn't all that unusual, but I agree on the valuation.

[redox99]

I think this is a very big issue. If SpaceX is very successful, will he pay out dividends, or will he spend everything on a mission to mars at a massive loss or something like that?

[arjie]

If SpaceX is very successful he will spend everything on a mission to mars. He's pretty up front about this. If it costs a lot and the company runs at a loss then it costs a lot and the company runs at a loss. Read the S-1

> We believe that our current space efforts will catalyze transformative breakthroughs that could reshape terrestrial industries and lead to the emergence of new trillion-dollar markets on the Moon, Mars, and beyond. In particular, we believe our goal of establishing a lunar presence will enable terawatt-scale annual AI compute growth, support deeper space exploration and industrialization, and serve as a stepping stone to establishing a civilization on Mars.

There is no secret about this. If this scares you, do not invest. Mars is mentioned 60 times in there. That's what he's going to spend the money on if it comes to it. If you don't want to lose your money on a Mars mission then the guys who are saying they're going to spend your money on a Mars mission are not the guys for you.

[codechicago277]

Only a matter of time before SpaceX starts selling parcels of land on Mars, surprised they haven’t yet. It has to be good for a few extra billions.

[ksaj]

I wonder if the scammers have been doing this already. Remember when you could buy naming rights to a star, or acreage on the moon? Elon selling lots on Mars might not feel far fetched to at least one demographic he already caters to.

[T-A]

https://pieceofmars.com/

[redox99]

That talks about trillion dollar markets. Nothing wrong with investing in Mars if money can be made. The problem is if he decides to create a mars base just because it's cool, not because it's profitable.

And yes, I don't plan to invest unless SpaceX stock somehow becomes cheap, which is very unlikely.

[tyre]

> Mars is mentioned 60 times in there. That's what he's going to spend the money on if it comes to it.

And yet the vast majority of addressable market they list is enterprise AI apps lol

[ericd]

Market to address, to pay for going to Mars.

[Laremere]

SpaceX has gotten reduced cost engineering since its inception, due to telling their employees that the entire purpose of SpaceX is to put humans on Mars. Everything was about making money while developing the technology to do, and then using that money to achieve that goal. Going public in this way fundamentally creates a conflict there. Given that Musk has already used SpaceX to bail out his Twitter acquisition, it feels like both investors and hopeful engineers are going to lose.

[bulbar]

Reminds me of 'Open'AI. All for the benefit of humanity, of course...

[dozerly]

It’s very simple. You should expect he will do whatever benefits himself.

[laichzeit0]

The one thing you can say though, is that “benefits himself” does not mean: buying a super yacht, a casino, an island, etc.

So yeah, he’d YOLO and do the Mars trip before any of the above. Which is what most nerds on HN would love, except their blind hatred for Musk would make them despise even that.

[wookmaster]

He’s certainly said things to deserve some hatred. I’m also lost why anyone thinks his mars trip is real. He has a long history of promising and not delivering.

[bobsomers]

Blind hatred? Given that, among a multitude of other things, he willingly threw out some sieg heils I think the hatred was easily earned.

[queenkjuul]

I only support a Mars trip if he takes it one-way

There's no way in hell I'd even remotely consider trying to build a Mars base if i had all that money, either. It's a fucking stupid way to waste money.

[jaimex2]

Its going to Mars. You can't play the oblivious share holder victim with this stock and try and sue later saying you didnt know.

Thats always been the plan.

[osigurdson]

I don't think many who plan on buying the stock it to be controlled by anyone other than Musk.

[jmyeet]

This isn't even a theoretical concern and it goes well beyond unfettered control of a single company. Look at the history:

1. One of Elon's companies (Tesla) bought out another of Elon's companies (Solar City) that was going bankrupt because it owed a lot of money to yet another of Elon's companies (SpaceX) [1];

2. Elon diverted $500M of NVidia H100 GPUs reserved for Tesla to xAI [2];

3. Elon made a buyout agreement for Twitter then tried to back out. Twitter sued (for specific performance) and a Delaware judge agreed. Elon completed the purchase before the court ordered him to [3]. That purchase was secured by his Tesla shares. He ran Twitter into the ground and then created xAI in 2023 [4]. Both Tesla and SpaceX "invested" billions into it. Elon ultimately used the funds to buy out Twitter at an inflated price (and still less than he paid) [5]. He ultimately then bailed out the xAI investors by having SpaceX acquire xAI [6]. IMHO this made SpaceX a significantly worse company. It was also used to inflate the value of SpaceX by using some wildly optimistic made up numbers about the AI total addressable market; and

4. The Cybertruck has been an unmitigated financial disaster. It's a terrible car and sales are awful. But that's OK because Elon uses SpaceX to buy Cybertrucks [7].

At least with the Google founders and Mark Zuckerberg, they only had one company so they weren't playing corporate shell games or using it as a personal slush fund on this scale.

[1]: https://www.nytimes.com/2026/04/24/technology/elon-musk-spac...

[2]: https://www.cnbc.com/2024/06/04/elon-musk-told-nvidia-to-shi...

[3]: https://www.npr.org/2022/10/06/1127346372/elon-musk-twitter-...

[4]: https://research.contrary.com/company/xai

[5]: https://www.reuters.com/markets/deals/musks-xai-buys-social-...

[6]: https://www.bbc.com/news/articles/cq6vnrye06po

[7]: https://www.businessinsider.com/spacex-bought-tesla-cybertru...

[queenkjuul]

I'd like to point out something i learned the other day:

Alphabet owns some SpaceX shares, which makes Google's sudden 90-day compute contract with xAI seem a little less than coincidental

[hparadiz]

It's quite simple. xAI bought a shit ton of GPUs for Grok thinking they would be competitive. When that didn't pan out they found themselves with either giving away Grok for mostly free or renting out the capacity to someone else for a shit ton of money. They chose a shit ton of money.

[queenkjuul]

Right; and Google chose to sign that contract the week of the IPO to preserve their share values, the contract allows them to bail after 90 days

[porknbeans00]

spacex didn't buy x.ai or twitter because they were profitable. the old Elon bailing out Elon maneuver is alive and well.