Economist Robert Reich has criticized the upcoming initial public offering (IPO) of Elon Musk-led SpaceX, scheduled for Friday, calling it a potential Ponzi scheme. In a post on X on Thursday, Reich argued that the IPO forces public investment regardless of individual choice. The economist drew parallels between the SpaceX offering and the short-lived Department of Government Efficiency (DOGE), suggesting both rely heavily on Musk's influence.

Reich highlighted the valuation of SpaceX, noting that Musk is offering stock at roughly 100 times the company's total revenue in 2025. The commercial space flight company reported $18.7 billion in revenue last year. Reich described the pricing as a "ballsy" move and pointed to the inherently speculative nature of SpaceX's goals, such as interplanetary inhabitation and interstellar travel. He characterized the IPO as "nothing more than a show of faith in Musk."

Governance structure also drew sharp criticism from Reich. He noted that Musk's Class-B shares will carry 10 times the voting power of shares offered to the public, effectively limiting shareholder voice. He expressed concern that Americans with savings in index funds would automatically have their retirement savings and pensions tied to SpaceX's market value. Reich stated that the closer one looks at the IPO, the more it resembles Musk's DOGE initiative, depending on the will of a single individual.

The criticism extends beyond Reich, as Senator Elizabeth Warren has called for delaying the IPO. The Massachusetts Senator warned of potentially misleading or inaccurate accounting of valuation ahead of the public offering. The scrutiny comes as the company prepares for its blockbuster market debut.

Key Valuation and Governance Details

Reich's comments underscore the growing debate surrounding the financial and governance structures of high-profile technology IPOs. As the listing date approaches, investor focus remains on the sustainability of the valuation and the long-term viability of SpaceX's ambitious projects.

Retail investors are liquidating positions in major semiconductor and AI stocks to raise capital for the SpaceX initial public offering, creating selling pressure across the technology sector. The IPO, priced at $135 per share, aims to raise $75 billion at a valuation that could reach $2.4 trillion, with over $70 billion in retail orders already submitted. This liquidity event has prompted individual investors to net sell equities for three consecutive days through Wednesday, the first such streak since March 2020, according to Vanda Research. The selling is concentrated in chip names and AI-adjacent stocks as investors reallocate funds to secure shares in SpaceX, which booked a $4.9 billion net loss on $18.7 billion in 2025 revenue.

Chip stocks face selling pressure

Micron Technology, Inc. has become a focal point of the sell-off. BNP Paribas reported $6.5 billion in net retail inflows into Micron over the past month, which helped drive the stock up 87% in that period. However, shares remain nearly 16% off their 52-week high of $1,089.29 as recent selling has taken a toll. Greg Boutle of BNP Paribas attributed Micron's decline directly to retail "selling off recent winners and leveraged products" to fund SpaceX allocations. Advanced Micro Devices, Inc. is also under pressure, trading at $468.33, up 3.52% on Thursday but still roughly 14% below its yearly peak. Broadcom Inc. and Apple Inc. have seen modest recoveries after earlier declines, while the iShares SOX Semiconductor Sector Index Fund traded down in four of the last five days.

Liquidity event dynamics

BNP Paribas warned that the SpaceX liquidity event could be unlike any other during the AI rally. The bank estimates retail plus passive flows into SpaceX could reach $50 billion. Since retail investors rarely hold idle cash, they must sell existing holdings to participate. These holdings are heavily concentrated in chip stocks and leveraged Nasdaq products. U.S. equity leveraged ETF assets recently hit a record $175 billion, with most parked in NASDAQ-100 and semiconductor plays. When retail investors redeem these funds, the underlying derivative positions unwind, amplifying selling pressure on the underlying stocks.

SpaceX IPO details and outlook

SpaceX has reserved at least 20% of shares for individual investors, an unusually large retail carve-out, and Fidelity cut its account minimum to $2,000 to widen access. Viraj Patel, global macro strategist at Vanda, noted that the question is not whether retail will buy into the SpaceX deal, but whether they do so by establishing new positions or by more aggressively selling recent chip winners. The recent tech sell-off suggests the latter is already occurring. The offering, which trades under the ticker "SPCX," is set to debut on Friday. Nasdaq bent its rules to admit SpaceX to the Nasdaq-100 after just 15 trading days, forcing Invesco QQQ Trust and other passive funds to buy in within weeks. The S&P 500 declined to waive its profitability rule, delaying the larger wave of passive buying until 2027 at the earliest.