US major unions write to SEC: SpaceX $2 trillion IPO defies financial logic

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One of America’s largest public unions has issued a warning to securities regulators, targeting the largest IPO plan in SpaceX history, saying its valuation "defies financial logic" and demanding the SEC conduct a strict review of related filings.

On Wednesday, the American Federation of Teachers (AFT) sent a letter to the U.S. Securities and Exchange Commission (SEC), requesting the regulator to deeply scrutinize SpaceX’s IPO application materials. AFT President Randi Weingarten stated in a release, “This isn’t just another IPO—it will be the largest public offering in U.S. history, and it's being rushed to the market at a valuation that defies financial logic.” Neither SpaceX nor the SEC commented.

The core issue centers on SpaceX seeking to raise about $75 billion at a valuation as high as $2 trillion, while its current revenue falls well short of supporting that valuation. Analysts note the figure relies more on CEO Elon Musk’s vision for the company’s future than on actual financial fundamentals. If successful, it will be the largest public offering in history.

The union acts for the first time, urging the SEC to scrutinize closely

AFT’s letter to the SEC marks the first time the union has proactively pressured regulators on the eve of an IPO, representing the interests of around 1.8 million education, healthcare, and public sector workers.

In the letter, Weingarten expressed concerns across multiple areas—including SpaceX’s management practices and accounting methods. AFT also called on the SEC and its chairman, Paul Atkins, to focus on the risk of “forced investment”—a risk stemming from recent rule changes proposed by several index providers.

The union cited certain precedents to justify its actions. In 2000, the AFL-CIO (American Federation of Labor and Congress of Industrial Organizations) organized a “counter roadshow” regarding PetroChina’s U.S. IPO, deterring some potential investors and subsequently promoting reforms in foreign entity disclosure rules.

Index rules loosened, “passive investment” becomes the focal point of controversy

Another key concern for AFT is that major index providers are accelerating their pace to include large private companies like SpaceX, possibly causing ordinary retirement savers to passively hold SpaceX stock without their knowledge.

According to WallStreetCN in March, SpaceX has already listed inclusion in the Nasdaq 100 Index as a prerequisite to going public on Nasdaq, with the IPO possibly launching as early as June this year. Nasdaq has pre-approved related rule changes, allowing large newly listed companies to be included in the Nasdaq 100 just 15 days after listing, instead of several months previously. S&P Dow Jones Indices and subsidiaries of London Stock Exchange Group are also considering similar rule changes.

Reena Aggarwal, finance professor at Georgetown University, commented:

“Passive investing already accounts for a significant share of the market; not including large IPOs like SpaceX means many investors will miss out on related returns.”

AFT takes the opposite stance, arguing that Nasdaq’s rule change will essentially “force” its members to invest in SpaceX at ratios disproportionate to its actual market value. The union’s members participate in retirement and welfare fund assets totaling about $3 trillion, and some members also invest personally in the market.

Valuation logic questioned: SpaceX’s ambitions are great, but risk is unclear

The dilemma of SpaceX’s valuation stems from the vast gap between its ambitious long-term goals and its current revenue scale. Reports indicate that the company’s current revenue is far below the level implied by a $2 trillion valuation. Its pursuit of multiple goals—including visions like interstellar colonization—require continuous years of investment, and whether these can ultimately be achieved is still uncertain.

AFT worries that once SpaceX is listed, its members will indirectly bear the challenges and risks facing the company through their pension accounts’ market investments.

Weingarten asserted in a strongly worded statement:

“The Commission must require airtight disclosure, independent oversight, and safeguards against forced investment—or else, workers’ lifetime savings would be wagered on an entity operating more like Musk’s family business than a transparent public company.”

Not the first clash: continued friction between AFT and Musk

This letter to the SEC is not the first conflict between AFT and Musk. Last year, the union warned financial institutions including Fidelity and BlackRock about Tesla’s plummeting stock price, saying that members’ holdings in Tesla may put their pensions “at risk,” and joined forces with others to pressure investors to vote down Musk’s executive compensation plans.

In October last year, Weingarten publicly criticized: “Tesla’s board not only failed to uphold basic governance standards, but gave the green light for a CEO busy with childish political disputes and unable to create shareholder value, approving a sky-high $1 trillion pay package.”

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