The SpaceX reckoning: Elon Musk's empire is built on taxpayer money, government subsidies

The SpaceX IPO is the logical culmination of this arc of public risk and private reward, paid for by those who can least afford it.

Elon Musk's rise is the perfect American myth of the lone visionary who bends the future through sheer will and brilliance. But Musk, the world's first trillionaire, built his empire substantially on public money and the stock market debut of his company SpaceX represents the final act of that extraction.

On June 12, Musk's SpaceX raised $75 billion in its initial public offering, ending its first day on the public markets with a market capitalisation of around $2.2 trillion.

Despite concerns about the SpaceX IPO being grossly overvalued, now a significant portion of Americans' retirement savings and pension accounts will be tied to the company's market value - a result of how present-day retirement investing functions.

Public money and government subsidies are at the heart of Musk's empire.

In 2006, SpaceX received $278 million from the National Aeronautics and Space Administration, for a demonstration programme on commercial cargo transport to space when it had nothing yet to show. The addition of a few more milestones eventually boosted the total contract value to up to $396 million.

This was followed at the end of 2008 by a $1.6 billion contract for 12 commercial-resupply flights - which Musk himself credited with saving the company.

A Washington Post analysis found that Musk's companies have received at least $38 billion in government contracts, loans, subsidies and tax credits over two decades - nearly two-thirds of that was received in just the last five years, and a record $6.3 billion committed in 2024 alone.

SpaceX now receives between $2 billion and $4 billion in federal contracts annually from NASA, the US Department of War, and the Space Force, agencies funded by the American taxpayers. Yet, Musk has had a paradoxical relationship with the regulatory state - of fierce anti-regulation rhetoric yet deep reliance on government contracts and subsidies.

In 2024, the Federal Aviation Administration proposed fining SpaceX $633,009 for two launches into space without a permit and failing required safety analyses. Musk, in response, claimed it was regulatory overreach and called for the resignation of Michael Whitaker, the aviation body's administrator.

Whitaker, who had been appointed by the US Senate with a term till 2028, left office on January 20, 2025, the day Donald Trump was inaugurated as president for the second time.

Then, through the Department of Government Efficiency, a US federal initiative under Trump 2.0 to cut government spending, Musk oversaw the downsizing of the tax-collecting Internal Revenue Service by about 25%.

Tax collection fell by roughly $3 billion in the fiscal year 2025 and 1,20,000 fewer audits were opened that year compared to the previous year.

The timing was convenient. SpaceX's initial public offering filings disclosed $1.9 billion in tax breaks that the company acknowledges would likely be disallowed on audit. Musk left DOGE in just five months in May 2025, with his controversial 'efficiency drive' having neutralised regulators and shielded Internal Revenue Servie tax exposure.

In its IPO, SpaceX sought a valuation of $1.75 trillion on annual revenue of $18.7 billion and a net loss of $4.9 billion in 2025. SpaceX's staggering price-to-sales ratio of 130. The ratio refers to the relationship between a company's share price and annual sales.

It eclipsed the price-to-sales ratio of tech giants such as Nvidia by 21 times, Microsoft by 12 and Apple by 7.

The New York Times further explains that the price-to-sales ratio of 130 means that, "it would take 130 years of sales, at last year's revenue rate, to reach the company's current market value".

SpaceX's valuation, thus, reflects "growth-at-any-cost" driven by speculation rather than current profitability and investors' FOMO or fear of missing out. Analysts at Morningstar, an investment and financial services company, put SpaceX's actual worth at closer to $780 billion, less than half the offering price.

Economic and financial experts have criticised SpaceX's inflated valuation. The Danish pension fund AkademikerPension blacklisted SpaceX while over concerns about its "overvalued stock" and governance structure.

Economist Robert Reich, who was secretary of labour under President Bill Clinton, described the SpaceX IPO as the universe's "largest Ponzi scheme". But Musk has an iron grip on SpaceX. Class B shares, a majority of which Musk owns, carry 10 times the voting power of Class A shares sold to the public.

Once SpaceX clears the float threshold for major indexes - potentially as soon as July 2026 - passive index funds and Exchange-Traded Funds will automatically purchase its stock, regardless of what individual savers think of the price or the governance.

Musk's entrepreneurial ambitions and his crowning as the world's first trillionaire has been underwritten by taxpayer money that funded his NASA and Department of War contracts and workers whose retirement accounts will now be automatically drafted into his offering.

Equally, it reflects the US economy at an inflection point. Middle-class incomes have stagnated, poverty and inequality have deepened, artificial intelligence threatens to consume jobs left behind by the previous wave of automation.

Data centres powering AI have proliferated, consuming precious resources while local communities bear the environmental and health costs, seeing little or nothing of the returns. The SpaceX IPO is the logical culmination of this arc of public risk and private reward, paid for by those who can least afford it.

Susmita Mohanty is the Director General of Spaceport Sarabhai, a space think tank and host of the 'Space for Diplomacy' podcast.