One week ago today, Space Exploration Technologies (SpaceX) (SPCX 4.24%) made history. The $75 billion raised from its initial public offering (IPO) handily unseated Saudi Aramco's $29.4 billion IPO cash raise in December 2019.
Additionally, it took just three trading days for SpaceX's market cap to blow past Tesla, Meta Platforms, Broadcom, and even Amazon. Its $2.66 trillion valuation on June 16 gives SpaceX meaningful influence within the Nasdaq Composite.
Several factors have played a role in SpaceX's parabolic ascent, including:
- Retail investor euphoria
- New fast-entry index inclusion rules for the Nasdaq-100 and U.S. Russell Indexes
- Its historically low float
- Its focus on two of the hottest investment trends: artificial intelligence (AI) and the space economy
Image source: Getty Images.
But investors might be surprised to learn that SpaceX's IPO isn't all it's cracked up to be. Contained within its mile-long prospectus is a $20 billion surprise that's rapidly approaching.
Elon Musk is using retail investors' capital to pay off non-space-related loans
When SpaceX raised $75 billion by going public, investors were almost certainly under the impression that this capital would be used to further its reusable launch vehicle, Starship; build and launch new satellites for space-based broadband service, Starlink; expand xAI's data center infrastructure; and make acquisitions.
But what if I told you that $20 billion of SpaceX's $75 billion capital raise was already spoken for... and that it had nothing to do with the company's space-related operations.
In March 2026, just a month after merging with AI start-up xAI, SpaceX entered into a $20 billion bridge loan agreement with a consortium of banks. The company's prospectus notes that this $20 billion was used to repay two separate term loans for social media platform X, an xAI fixed-rate term loan, an xAI floating-rate loan, and an xAI 12.5% secured senior note. The icing on the cake is that Musk's company paid $1.163 billion in prepayment penalties.
Oh, I forgot the best part.
-- Thierry from arvy 🇨🇭 (@ThierryBorgeat) June 16, 2026
Months before the IPO, SpaceX took $17.5 billion of old junk debt from xAI and X and parked it on its own balance sheet through a $20 billion bridge loan.
The terms? Repaid within six months of listing.
So part of the $75 billion that retail and... https://t.co/6FRaZU8W8q
Bridge loans are inherently short-term. SpaceX's bridge loan is scheduled to mature on Sept. 2, 2027, with a company option for up to two three-month extensions. Either way, SpaceX owes $20 billion to this syndicate of banks by Sept. 2, 2027, Dec. 2, 2027, or March 2, 2028, at the latest.
In other words, that's 27% of the cash raised from SpaceX's IPO being used to pay back preexisting loans for Elon Musk's other companies.
Just in case this isn't enough of a kick in the pants for retail investors, SpaceX's "Capital Allocation and Funding Strategy" from its prospectus plainly states:
We plan to access a range of debt and equity financing solutions available to us as a public company to fund future investments in growth and to maintain strong liquidity.
Given that SpaceX isn't close to recurring profitability and has $20 billion of its capital raise already spoken for, its prospectus makes it abundantly clear that share-based dilution is on the way. In the event that SpaceX's staggered lockup schedule doesn't fleece investors, share-based dilution to scale xAI's compute capabilities should do the trick.
The list of reasons for retail investors to avoid SpaceX is growing.
