Why was SpaceX's largest IPO in history described as "the ultimate form of financial nihilism"?

SpaceX files S-1 for IPO, rumored to be valued at over $1 trillion, but last year the company lost nearly $5 billion, with the only profit coming from satellite internet Starlink. The Verge's commentary calls this "the ultimate form of financial nihilism."
(Background summary: AI stock genius Serenity promotes the Swedish photonics factory SIVE, expecting further upgrades?)
(Additional background: xAI rushes Grok Build to v0.2.11! Poaching two core members from Cursor, aiming to catch up with Claude Code)

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• What does the prospectus reveal
• Grok packaging techniques and true financial structure
• Who is taking over, and where are the risks?

This is a company famous for rockets and Mars colonization, but when opening SpaceX’s recently filed S-1, the first thing that jumps out isn’t the vast universe, but AI, which openly admits this using its listed market size figures.

Elon Musk bundles rockets, satellites, chatbots, and social platforms into a grand "multi-planet civilization" story, preparing to push into the market. But what can we learn from its financial structure?

What does the prospectus reveal

The S-1 states SpaceX’s potential market size (TAM) at $28.5 trillion, larger than the U.S. annual GDP (about $24 trillion). Of this figure, $26.5 trillion, over 90%, is categorized as "AI application" market, deliberately excluding Russia and China markets.

Simply put, SpaceX is writing its market size as "all AI that might use our services worldwide."

By 2025, about two-thirds of SpaceX’s approximately $13 billion capital expenditure will be invested in AI development, resulting in an AI division operating loss of $6 billion, with revenue only $3.2 billion.

On the rocket side, Starship V3 launched two days after filing (May 22), successfully lifted off and reached space, but one engine failed, and the booster exploded during return, aiming to deploy 60 fake satellites but only deploying 20.

The S-1 states V3 can carry 100 tons to space, but 60 satellites at 2,000 kg each total 120 tons, which doesn’t add up. Satellite industry analyst Chris Quilty directly calls this "Elon math."

First-quarter revenue from launch services dropped over 25% year-over-year, and the prospectus also reveals that SpaceX’s biggest rocket customer is actually itself.

Grok packaging techniques and true financial structure

The S-1 claims Grok is a "truth-seeking AI model, one of the most advanced frontier models globally." But according to The Verge’s investigation, Grok is distilled from other frontier models—simply put, it’s a small model learning from larger competitors’ models, not developed from scratch. Musk himself admitted in March this year:

"xAI was not built right the first time, so it is being rebuilt from the ground up. Tesla experienced the same."

"xAI was not built right first time around, so is being rebuilt from the foundations up."

"Same thing happened with Tesla."

— Elon Musk (@elonmusk) March 12, 2026

By early 2026, Grok’s ranking had fallen to fifth, behind ChatGPT, Claude, Gemini, DeepSeek, with monthly active users dropping 12.5% to about 12.2 million. xAI’s government contracts in Washington also stalled, directly weakening the core narrative of "AI + government market" in the IPO.

Another noteworthy aspect of the financial structure: the risk factors in the S-1 show debt approaching $30 billion—refinanced with a $20 billion bridge loan before listing, paying a $1B prepayment penalty, and spending about $4 billion on share buybacks that quarter. When acquiring xAI, the debt brought by xAI caused SpaceX to technically default on a $1.5 billion credit line.

Environmentally, Musk repurchased $2.8 billion worth of polluting gas turbines for data centers, details hidden in the footnotes of the prospectus; SpaceX has been sued over this, and despite approval for 15 turbines, they actually used 46.

On governance, Musk holds about 80-85% of voting rights, with arbitration clauses possibly blocking future securities fraud lawsuits; director Antonio Gracias’s fund and SpaceX subsidiaries have three lease transactions totaling $20 billion, with $9 billion rejected by auditors for off-balance-sheet treatment.

The S-1 also discloses Grok’s investigation over generating non-consensual sexual images (including children), with three lawsuits filed, two seeking class-action status.

Who is taking over, and where are the risks?

Nasdaq has fast-track rules, and SpaceX will enter the Nasdaq 100 within 15 days of listing, with passive index funds estimated to need to buy about $7 billion worth of SpaceX stock daily. The IPO reserves 30% for retail investors.

The Verge comments that this is a structural risk transfer: Musk bundles several loss-making businesses (AI, rockets) onto the only profitable Starlink, packaging it as a vision for going public. Last year, Starlink’s revenue exceeded $11 billion, but revenue per user has dropped about 25% due to steep discounts; if Grok and Starship continue to lose money, the cash flow engine supporting the entire valuation will itself come under pressure.

The Verge directly describes this IPO as "the ultimate form of financial nihilism": if SpaceX ultimately fails, the buyers are ordinary people in retirement accounts, while Musk might wait for government bailout through connections with the Trump administration, and become the world’s first trillionaire.

Whether this IPO can realize Musk’s visions remains to be seen, but before they materialize, who bears the costs and risks? That’s another important question to consider.