SpaceX is a breeding ground for risk

SpaceX is a breeding ground for risk. Beyond the hype around the company’s value and Elon Musk’s polarising nature, that risk is – and should remain – the core takeaway. It’s corporate governance 101. 

The company – with a three-pronged focus on spaceflight, telecommunications, and artificial intelligence – had its IPO in June 2026, 24 years after the company was founded. 

It was the largest IPO in world history and raised $86 billion. It also catapulted Musk to being the world’s first trillionaire. 

Across the globe, Musk and his companies are polarising topics, and this latest chapter is no exception. His supporters praise his unique leadership capabilities and ability to deliver growth. His critics focus on his leadership flaws and his companies’ complete lack of a proper governance structure and accountability. 

The bottom line, however, is that governance is the DNA of any business. If there are problems with that DNA, it’s an enormous risk, both short-term and long-term. 

SpaceX is the latest of Musk’s companies to be put under the governance microscope, after Tesla and X (formerly known as Twitter). Many of the same patterns surface each time, given the colossal global influence SpaceX has, and will continue to enjoy, it’s crucial to address the company for what it is: a breeding ground for governance risk.

Musk’s control over the company is at a level unheard of in modern business. Shareholder structure is designed in a way that Musk has an unmatchable influence over who sits on the board and, crucially, cannot be fired as CEO without his own say-so. 

It’s monarchical. Also, it completely removes any of the important checks and balances that ensure corporate stability. Governance is structured around firm oversight based on thorough analysis. None of this can exist in a company where the personal preferences of one man are the only factor in deciding the company’s future.

Say the company did experience huge financial trouble, giving shareholders cause to launch legal action, SpaceX has cleverly positioned itself so that such action is practically impossible for most. 

It’s domiciled in Texas (famed in North America for its looser rules around accountability), where any entity looking to sue would need to own as much as 3% of the company’s total value. For SpaceX, valued in the trillions, such rules would essentially filter out most dissent, no matter its merits.

As with other companies Musk has run or acquired, he retains significant influence over who sits on the SpaceX board. Predictably, his picks have come under fire for being too close to Musk and thus not trustworthy when it comes to voicing shareholder concerns. 

Boards are supposed to voice concern about anything and everything that doesn’t make sense. This is what good governance is all about. 

In practice, one of the biggest enemies of such arrangements is strong-armed owners/founders who adopt a “my-way-or-the-highway” approach. Musk is certainly not the only leader in this category. Still, his reputation in this area, combined with the colossal valuation of SpaceX, means that any boardroom concern is automatically far-reaching. If Musk doesn’t want to discuss it, it stands a huge chance of being forgotten. 

SpaceX’s reputation is already rocky in the eyes of prominent governance commentators and other experts. 

The company has been handed an abysmally low ESG rating by index provider MSCI. The Financial Times described Musk as “driving a cybertruck” through corporate governance norms. Bloomberg reported that SpaceX’s governance structure is “simply too risky” for any funds that have specific governance mandates. Meanwhile, while the IPO seemed to get off to a good start, the company’s value has fallen back, putting Musk’s “trillionaire” status in jeopardy. 

Musk almost always shrugs this off. He knows he has a large, loyal fanbase, he remains committed to his strong-armed leadership style, and try bringing him a criticism with the word “ESG” in it – you won’t get very far.