You are highly likely to have SpaceX shares in your pension investments
Whether you like it or not
There’s a global frenzy around SpaceX’s listing on the Nasdaq stock market today, with millions of individual — aka “retail” — investors piling into the stock like lemmings speeding joyfully towards a cliff. They, at least, have a choice in the matter, whereas literally hundreds of millions of other investors are investing in the stock by default, and without any choice to opt out.
How does this work? Simple: if your pension is invested in a default workplace fund, a target-date fund, or a low-cost global equity fund, there is a good chance that some of your money ultimately sits in index-tracking vehicles. These vehicles are designed to be extremely simple and very low-cost. All they do is invest a proportional amount in every stock in a reputable index, such as the S&P 500 or the FTSE 100. In doing so, you are, in a very real sense, “buying the market”, which means that you benefit from the wide variety of stocks in that index.
Because these funds require almost no management, the fees for investing are ten or twenty or even one hundred times lower. The fees charged by investment professionals look tiny — 1.5%, for example — but over decades they add up to eye-watering sums of money. So a fund that charges only 0.02% is an attractive prospect.
So what does this have to do with SpaceX? Well, the various shysters and crocodiles arranging the company’s IPO have arranged for the stock to be added to some of the biggest indices a lot earlier than is normally the case. SpaceX will be included in the Nasdaq-100 in just 15 days — roughly six times earlier than was the case until 1 May 2026, when Nasdaq decided to change the rules, for entirely innocent reasons, I am sure. This means that, if your pension has any exposure to any of these tracker funds, which is more likely than not, you are going to become a SpaceX investor.
OK, but SpaceX is incredibly cool and already makes, like, billions of dollars from Starlink and stuff, right? So why is this a problem? It’s a problem because the management of, and early investors in, SpaceX have contrived to price their shares at $135 each, which means the company is worth around $1.7 trillion.
All very impressive until you notice that their current profits are between $4 billion and $11 billion, depending on which accounting BS you use in your calculations. This means that it will take more than 100 years for SpaceX to earn enough profits to make its current share price make any sense.
This measure, called the price-to-earnings ratio, or “PE” for short, is an extremely useful rule of thumb for estimating the fair value of a company. Boring companies like supermarket chains or electricity producers typically have PEs around 5 or 6. Very exciting tech firms may be as high as 30 or 40. But a PE of over 100 strains credulity beyond endurance.
On top of this, the profits quoted above are, at best, a charitable interpretation of the company’s finances. In reality, SpaceX is currently making a loss of about $2 billion per year. And then there’s the fact that SpaceX justifies the implicit estimate of its future earnings by hand-waving at artificial intelligence. AI is supposed to account for 85% of those earnings, which is a curious ratio for a company famous for launching satellites into space.
Then there’s the inconvenient fact that, in order to justify its own value, SpaceX effectively expects that every human on Earth will, on average, pay it $105 every year for the next 20 years. Given how much all the other AI companies are planning to make on the same technology, you quickly reach the conclusion that most humans are not going to be willing to pay more than $500 every year for access to five or six AI slop generators.
OK, but the question still stands: why does all this matter? It matters because, once the shares are out in the general market, reality will begin to sink in. If SpaceX does not immediately begin to grow at the astronomical — ha ha — rate that it has baked into its assumptions, the share price will fall. That’s how it works. Shares are a claim on the future profits of a company. If those profits are lower, then so is the price of the share.
Your personal unwanted exposure to SpaceX may be relatively small — perhaps just a few hundred dollars, or even less — but the principle remains. SpaceX is contriving to use the plumbing of stock markets to artificially sustain its ludicrous share price just long enough for the early investors and managers to sell their own stock. And so, hundreds of millions of us will be left holding a collective bag of dog shit.
There is no guarantee that SpaceX will ever be profitable, but there is also no guarantee that it won’t eventually be one of the most important companies in the world. That’s not the point here: the future will be what it will be, and SpaceX’s eventual fate is not at issue. The real point is that investors are being screwed — intentionally and royally — and there’s almost nothing we can do about it. But at least Elon’s a trillionaire now, right? Cool, cool, cool.