SpaceX's upcoming initial public offering is facing serious headwinds from institutional investors who believe the company is dramatically overvalued and structurally mismanaged. A $25 billion Danish pension fund has announced it will blacklist SpaceX entirely, and major U.S. pension funds have raised similar concerns about the company's governance structure and asking price.

SpaceX filed for its IPO on May 20 and is targeting a valuation of at least $1.8 trillion. However, AkademikerPension, the Danish fund, argues the company "cannot reasonably exceed" a valuation of $1 trillion, according to Anders Schelde, the fund's chief investment officer.

What's Driving the Valuation Concerns?

The core issue isn't SpaceX's technology or engineering prowess. Instead, institutional investors are concerned about the company's financial fundamentals and the risks embedded in its recent expansion strategy. SpaceX acquired Elon Musk's artificial intelligence company xAI, which includes the Grok chatbot, in February 2026. The deal valued xAI at approximately $250 billion.

This acquisition transformed SpaceX from a space transportation company into a sprawling conglomerate with three distinct business divisions: space operations, connectivity services through Starlink, and artificial intelligence. While this diversification sounds promising on paper, the financial reality is sobering. In 2025, SpaceX generated approximately $18.67 billion in consolidated revenue but posted a net loss of roughly $4.9 billion. In the first quarter of 2026, the company reported revenue of $4.69 billion against an operating loss of $1.94 billion and a net loss of $4.27 to $4.28 billion.

The massive losses reflect the "extremely heavy" upfront investment burden of the AI division, combined with ongoing Starship development costs. Investors are being asked to accept what AkademikerPension describes as an "unprecedentedly low risk premium" for a "highly uncertain company," where pricing appears driven more by Musk's "narratives than by economic realities".

Why Is Governance Structure a Deal-Breaker?

Beyond valuation, pension funds are deeply troubled by SpaceX's governance arrangement. Musk is expected to control approximately 80 percent of the voting rights while simultaneously serving as chief executive, chief technology officer, and chair of the board. This concentration of power is unusual even by Silicon Valley standards.

In a letter published on May 14, New York City Comptroller Mark Levine, California Public Employees' Retirement System CEO Marcie Frost, and New York State Comptroller Thomas DiNapoli raised "serious concerns" about what they characterized as an "extreme governance structure" at SpaceX. For institutional investors managing retirement savings for millions of people, this level of individual control represents an unacceptable governance risk.

"Even if the valuation were reasonable, AkademikerPension would still feel compelled to blacklist SpaceX," stated Anders Schelde, chief investment officer at AkademikerPension.

Anders Schelde, Chief Investment Officer, AkademikerPension

Schelde emphasized that the pension fund's decision reflects investment risk, not skepticism about SpaceX's technology. "Our decision not to invest is therefore not a reflection of the quality of its technology or engineering expertise," he noted.

Schelde

How Are Institutional Investors Evaluating SpaceX's Business Model?

Rather than focusing on single-year profitability, sophisticated investors are examining SpaceX's underlying business structure and long-term cash generation potential. Key factors they're analyzing include:

• Starlink's Recurring Revenue: The connectivity division generates predictable monthly subscription income from residential broadband, aviation, maritime, and enterprise customers, creating a more stable revenue base than one-time launch contracts.
• Government Contract Stickiness: Long-term relationships with NASA, the U.S. Department of Defense, and intelligence agencies provide advance development payments and milestone-based funding that reduce uncertainty.
• Starship Cost Reduction Potential: Future improvements in reusable rocket technology could dramatically lower launch costs, but these savings remain speculative and years away from materialization.
• AI and Communications Integration: The strategic value of combining Grok, computing infrastructure, and Starlink's satellite network is theoretically compelling but unproven in terms of revenue generation.

However, investors also recognize significant headwinds. SpaceX faces growing friction from customers who worry about becoming "dependent on a single company," geopolitical supply chain risks, and the massive capital requirements of both Starship development and AI infrastructure buildout.

What Does This Mean for the IPO Timeline?

Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase are leading the IPO, along with 18 other banks. SpaceX is expected to begin formal marketing of the offering next month. Despite the pension fund rejections, the IPO will likely proceed, but institutional investor skepticism could affect demand and pricing.

AkademikerPension stated it will "not participate in the IPO, or any secondary-market transaction involving the company, including through the indexed portion of our equity portfolio". The fund's decision carries symbolic weight; it previously made headlines by dumping its Tesla stake over concerns that Musk was "in the process of destroying" the company's brand and value.

Notably, AkademikerPension signaled openness to investing in OpenAI, which recently prevailed in a lawsuit brought by Musk. The fund indicated it would "most likely" add OpenAI to its passive equity portfolio following an IPO, assuming the company becomes part of relevant market indices.