SpaceX's IPO prospectus, valuing the company at up to $1.25 trillion, unusually lists CEO Musk as the biggest risk factor—he is both an irreplaceable core asset and the most difficult variable to quantify. The document reveals a network of related party transactions worth hundreds of millions of dollars within Musk's business empire, as well as a risky bet of up to $20 billion behind the merger with xAI. Betting on SpaceX essentially means betting on Musk himself.

Written by: Zhao Ying

Source: Wall Street Insights

The SpaceX IPO prospectus reveals the grand space vision of a rocket company while candidly listing its CEO Musk as the biggest risk factor—this risk is highly overlapping with its greatest asset.

According to the S-1 document submitted by SpaceX, the company explicitly acknowledges its "high dependence" on Musk, with his leadership, vision, and technical expertise seen as core pillars for the company's future.

At the same time, the prospectus bluntly points out that potential conflicts of interest exist between Musk's various businesses, which may compete with SpaceX, and that Musk himself is not subject to any restrictions.

This 330-page document presents the intricate network of financial transactions and equity interrelations within Musk's business empire, providing a rare glimpse into the internal workings of this vast ecosystem. After merging with xAI, SpaceX was previously valued at $1.25 trillion, and this public offering will open investment at a historic high price.

Musk: Both a Moat and a Risk Exposure

It is uncommon to list the CEO himself as a risk factor in an IPO prospectus, but SpaceX's S-1 document clearly states that the company is "highly dependent on Mr. Musk's continued services," and if his involvement diminishes, it would have a "significant adverse effect" on the company's business, financial condition, and future prospects.

The prospectus also acknowledges that Musk is not fully dedicated to SpaceX. He currently serves as Technoking and CEO of Tesla and is involved in the operations of several emerging tech companies such as Neuralink and The Boring Company, and previously acted as a senior advisor to the U.S. President.

The document further points out that Musk may have conflicts of interest with his related businesses regarding commercial transactions, potential competitive activities, or other opportunities, and that Musk is "not restricted" from engaging in businesses that directly compete with SpaceX. The prospectus states: "Mr. Musk and his related companies may now or in the future directly or indirectly compete with us for investment or business opportunities."

Network of Related Party Transactions: The Flow of Funds Within Musk's Empire

The S-1 document reveals the intensive commercial interactions between SpaceX and Musk's other companies.

In terms of Tesla, SpaceX purchased $131 million worth of Cybertrucks from Tesla at suggested retail prices. According to The Verge, Bloomberg previously disclosed that SpaceX bought 1,279 Cybertrucks in the fourth quarter of 2025, but the S-1 document indicates that the actual purchase quantity may be higher. Additionally, SpaceX accumulated about $697 million worth of Tesla Megapack large-scale storage batteries between 2024 and 2025 to stabilize electricity supply during peak usage at its Colossus I and II data centers located in Memphis, Tennessee.

In terms of equity, Tesla holds about 19 million shares of SpaceX Class A common stock, accounting for less than 1% of total outstanding shares. Tesla's previously held shares of xAI were converted into SpaceX shares after Musk merged xAI with SpaceX this February.

The interactions with The Boring Company are relatively limited: the tunnel company paid approximately $1.2 million in office rent to SpaceX, while SpaceX spent about $1 million commissioning it to dig a tunnel at its headquarters in Bastrop, Texas.

The xAI Merger: A Costly Strategic Bet

The merger of SpaceX and xAI is an important backdrop for this IPO and is one of the most heavily discussed topics in the document—"xAI" appears 356 times in the prospectus, "Grok" 243 times, and "X" 267 times.

However, the cost of this merger is substantial. The S-1 document shows that SpaceX will allocate about 60% of its capital expenditures (approximately $20 billion) to xAI in 2025. According to TechCrunch, xAI recorded multi-billion dollar losses last year, with a year-on-year revenue growth of only 22%.

The prospectus admits that there is competition for scarce high-value resources like AI chips and memory among Musk's various enterprises, creating both business synergies and potential cannibalization effects.

Shareholder Lawsuit: The Legal Shadow of Conflicts of Interest

Musk's multi-pronged approach has led to legal challenges. In 2024, several Tesla shareholders filed a lawsuit against Musk, accusing him of intentionally transferring talent and resources from Tesla to xAI; this lawsuit is still under consideration.

The prospectus also admits that Musk and his associated enterprises frequently attract significant media attention, and his words and actions—whether directly related to SpaceX or not—may have a positive or negative impact on the company's business, customer relations, regulatory relations, and even stock prices.

For potential investors, this prospectus poses an unavoidable question: betting on SpaceX largely means betting on Musk himself—which is both the most attractive aspect of this investment and the most difficult risk to quantify.