Elon Musk pressed the button to begin trading on his SpaceX company on the Nasdaq Stock Exchange to the sound of Elton John's Rocket Man. It made him the world's first trillionaire. After a blaze of publicity, shares opened at $150 each, swiftly rising to $160 – well above their estimated price.
But this is not just a story of personal wealth. SpaceX is expected to raise $75bn by selling shares in what may be the largest initial public offering in history. And shortly after the shares begin trading, the company will be included in major stock market indices such as the Nasdaq 100 or the MSCI Global Equity Index. That matters because over the last 30 years, passive investing has become the norm for huge swathes of the world's retirement savings. UK savers have more than £3 trillion invested in passive funds; Americans have around $21 trillion. When a company enters an index, the money in those funds automatically flows towards it – whether you want it to or not.
“Elon Musk becomes world's first trillionaire as SpaceX shares soar; UK pensions automatically drawn into the stock.”
The SpaceX prospectus tells two stories: one is wildly ambitious, and the other is insane. According to the prospectus, SpaceX is primarily an AI company, and it contains xAI, which is also a social media company, but it's also nominally a rocket company that plans to build cities on other planets. Whatever it really does, it creates a massive presence in the market that draws your retirement savings inexorably towards it.
Many people in Britain are likely to be unhappy with the idea that their pension will help make Musk a trillionaire. Two thirds of UK voters polled by Survation in December 2024 – including a majority of Reform voters – believe he should not be influential in British politics. You might not drive a Tesla or use X, but you're going to give him money anyway. You almost certainly already have indirect ownership of Tesla through the funds in your savings. If SpaceX achieves its predicted valuation of $1.7 trillion, it will have significant weight in many indices, and your pension fund manager's index funds will flow towards it, regardless of your views on Musk's straight-armed salutes at political rallies.