SpaceX says it may issue ‘substantial’ shares in ‘future transactions’

SpaceX is warning investors that it may distribute “significant shares” in “future transactions” after its upcoming IPO — language that was added amid persistent industry chatter that CEO Elon Musk plans to eventually merge his space and artificial intelligence company with Tesla.

The new language was placed deep in the risk factors section of SpaceX’s first official amendment to its IPO filing, which was announced last month. The company placed this sentence at the end of the first paragraph of the risks related to how mergers and acquisitions can go sideways:

We may issue a significant amount of equity in connection with future transactions.

SpaceX has been busy with mergers and acquisitions, acquiring Musk’s AI startup xAI last year, and recently closing a deal with Cursor that includes an option to buy the startup for $60 billion in stock after its IPO. It’s certainly possible that SpaceX will have other goals in mind after it raises $75 billion when it lists on the Nasdaq (minus $20 billion committed to repay previous xAI and X debt). But this warning appears designed to prepare investors for the possibility of a major dilution event — such as a future merger with Tesla.

Musk has thought about merging his two companies for many years, and SpaceX’s IPO has only increased chatter that it will finally bring the two largest companies together. A merger of this size would face a number of potential legal and regulatory challenges, and would likely have to pass a Tesla shareholder vote. But, as the IPO filing showed, Musk has supreme voting power at SpaceX; The only person who could vote against the merger on this side of the term sheet is Musk.

Musk’s voting power at SpaceX will not be at risk during the major dilution event. SpaceX has three primary classes of stock heading into this IPO. They all have the same basic economic rights, but voting rights are different.

Class A shares are what will be sold to the public and come with one vote per share. Class B shares are owned exclusively by Musk and have 10 votes per share. SpaceX also has Class C common stock, which has no voting rights at all. While Class C shares are currently used for executive compensation, Musk can use these shares to buy other companies without diluting his power. (SpaceX also has Class D shares aside, which have reduced economic rights; the company has not yet decided whether these shares will have any voting power.)