SpaceX, OpenAI and Anthropic are already public companies

This summer, an absurd company plans to go public at an absurd price. If SpaceX—the rocket-maker, internet provider, artificial-intelligence lab and social network controlled by Elon Musk—raises anything close to $75bn, at a valuation anywhere near $2trn, its initial public offering (IPO) will be the financial equivalent of landing on Mars.

Already the enormous gravity of SpaceX is bending public markets. Nasdaq has changed the rules on how quickly firms are included in its index to attract Mr Musk to the exchange. Moreover, some listed companies have become public proxies for its private stock. Most obvious is Tesla. Although it owns just a sliver of SpaceX, the pair share hardware, software and Mr Musk himself. Some analysts imagine the eventual creation of a consolidated Musk Inc, an industrial Frankenstein’s monster with the body of Optimus, Tesla’s robot, and the brain of Grok, the chatbot developed by xAI, which SpaceX subsumed in February. Others fret that SpaceX’s listing could undermine Tesla: after all, why would Mr Musk’s adoring retail investors put their money into a carmaker valued at 14 times its sales when they could buy a cosmic creator of super-intelligence at 100 times?

Tesla is not the only big company whose value is tied to SpaceX. Alphabet, the parent of Google, owned 6% of it at the end of last year. This investment, made in 2015, is a large part of the $107bn of private shares on its balance-sheet, the rising valuations of which contributed almost half of Alphabet’s pre-tax profit in the first quarter. In March EchoStar, a loss-making telecoms company, improbably shot into the S&P 500 index for no reason other than the $11bn of stock in SpaceX it is set to receive in exchange for selling its spectrum licences. “We have made our bet, and that is with SpaceX,” said EchoStar’s founder after nearly five decades betting on himself.

Buying SpaceX, like buying bitcoin, can transform even the smallest company into a speculative vehicle. Consider XMax, a furniture business listed in America with only $17m of annual sales. Until recently it faced the threat of having its shares delisted because they were worth so little. Since September, though, it has aggressively bought into special-purpose vehicles (SPVs) which it says hold shares in SpaceX. Now its market value is an inexplicable $380m. Jet.ai, a tiny aviation company whose main product appears to be a flight-booking app called “CharterGPT”, attempted to collar the market’s attention in a similar way, though is still worth less than the $5m of SpaceX shares the firm says it owns through an SPV.

SpaceX stock lurks Forrest Gump-like in the background of every big financial story these days. In South Korea markets are soaring. The share price of Mirae, one of its biggest brokers, has almost tripled this year—but mostly because of its small investment in Mr Musk’s empire. SpaceX has also had a cameo in the private-credit panic. A chunk of its shares are, oddly, held by one of Blue Owl’s beleaguered lending funds.

American finance operates under the same principle as American cooking: what average Joe wants, he must have in abundance. Accordingly, many ultra-processed SpaceX-flavoured products have been produced for retail investors. Remarkably, the largest holding in one exchange-traded fund (ETF) is an SPV which holds SpaceX stock. On prediction markets anyone can wager on the date of SpaceX’s IPO, how much it will be worth, the banks on the deal and whether Mr Musk will ever make it to Mars.

There are almost as many ways to bet on the fortunes of OpenAI and Anthropic, two AI labs that also plan to list their shares this year. So important are these private firms that their fortunes, too, ricochet through public markets. Reports this week that OpenAI has missed some financial targets sent the share price of SoftBank, a Japanese conglomerate that has invested vast sums in the model-maker, down by around 10%. Meanwhile, Zoom, a video-conferencing company, has mostly escaped the recent massacre of software stocks precipitated by Anthropic’s coding capabilities—because it owns a chunk of Anthropic.

When executives from SpaceX, OpenAI and Anthropic tour the world’s financial capitals to drum up interest before their listings, they will, unusually, be pitching to investors who are already intimately familiar with their businesses. Once the companies have raised the mountains of capital they are after, their bosses are unlikely to be bothered too much by such shareholders. SpaceX will remain controlled by Mr Musk; OpenAI, run by Sam Altman, and Anthropic, by Dario Amodei, are just as unlikely to embrace shareholder democracy. The governance of these firms might stay more or less the same, but markets will be transformed by their listings. The magnificent seven will become the magnificent ten. For the first time investors will digest regular, audited financial information about the technology whose promise seems to be holding up the entire market.

Moonstruck

American capitalism is in the midst of a great experiment. The value of its firms is becoming far more concentrated, even as the ways to invest in them are multiplying. The result is a seemingly infinite number of wagers on a tiny cast of enormous firms. The strange shadow markets for shares in SpaceX are one extreme illustration of the trend, but the pattern is also visible on the public stockmarket it will soon join. The number of listed American companies has been in near-continuous decline since the late 1990s, though their combined profits have soared. At the same time, the number of investment vehicles has exploded: there are now more ETFs than there are listed firms. Markets are built around ever fewer famous executives—and ever more anonymous gamblers.