Warren Calls on SEC to Delay SpaceX IPO, Questioning Its Valuation and Corporate Governance Issues

According to CNBC, Democratic Senator Elizabeth Warren wrote to the U.S. Securities and Exchange Commission (SEC), urging it to postpone SpaceX’s upcoming initial public offering (IPO) and expressing concerns about the rocket manufacturer’s valuation and corporate governance.

In her letter to the SEC, Warren said that what is, in history, the largest-scale IPO poses an “unprecedented threat” to investor protection and market integrity.

In her 12-page letter, Warren cited multiple risks: potential accounting or valuation issues related to SpaceX’s acquisition of xAI; conflicts of interest stemming from Musk’s excessive power as a major shareholder; and the rapid inclusion of the company into major stock indices, which will bring significant risks to investors.

Warren is especially concerned that SpaceX’s rapid inclusion in major stock indices will force millions of passive index fund investors to be forced to hold the company’s shares.

She said that for investors who can independently choose specific investments, they can at least avoid investing in companies that engage in risky or unfair practices.

In addition, SpaceX’s IPO has created a new hidden worry. With SpaceX rapidly included in major stock indices, millions of passive index fund investors are forced to passively invest in SpaceX, leaving them with no choice but to face SpaceX’s major risks.

It is worth noting that SpaceX adopted an unusual pricing strategy, setting a “take-it-or-leave-it” price of $135 per share, rather than offering a price range based on market demand.

The report said the company also plans to allocate 30% more shares than usual to target retail investors, equivalent to about $22.5 billion. SpaceX is scheduled to begin trading on Friday, and the company aims to raise record-breaking funds at a historic valuation.

In her letter, Warren emphasized that this IPO is not only unprecedented in scale, but also poses an unprecedented threat to investor protection and market integrity, and she urged the SEC to delay the registration statement from becoming effective. As of now, SEC Chair Paul Atkins has not responded.

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