Musk will go down as the greatest engineer of our time, but as a financial engineer. He convinced the SEC and Trump and NASDAQ to include him in the 100, which no IPO has ever been included before. Meaning trillions of dollars of funds are mandated to put whatever percentage of a weighted index that SpaceX represents, that amount of their capital into SpaceX shares. No company right out of the gates has enjoyed that incremental demand. In addition, they were able to go public with just 5% of the float. Traditionally in the past, you needed more than 10%. So smaller supply, greater demand, you know, disco, and that is huge demand right out of the gates, which make no sense from a valuation standpoint.
Today we discuss Elon Musk, financial engineering, navigating office politics, and whether raising a family in a big city is worth it. Question number one. Our first question comes from Reddit user gulliblead3785. Is Musk a great financial engineer? I don't see how screwing over institutional and retail investors with mispriced stock valuation helps with the share price when he wants to sell. And for his SpaceX employees, it's far worse to let them think they are going to be rich and then take it away from them. Not great for morale.
Okay, so just some data. SpaceX priced at $135 a share at a valuation of about 1.8 trillion. The largest IPO in history, bigger than Saudi Aramco. That put the stock at roughly 94 times revenues on 18.7 billion in sales, which was richer than any company in the S&P 500. The next priciest is Palantir, which trades at about 67 times. Only about 4 to 5% of the company trades. That's the float. Everything else is currently locked up. The stock zoomed to 225 and then has fallen about 45% from its peak to 123, which is, you know, so it's technically now a broken IPO, but I wouldn't describe it. I mean, you could say it's a collapse from its peak by the time this airs. Just some fine print. SpaceX will have reported its first earnings and the first big lockup will have come off. So, the numbers probably will move again.
Now, the lockup: Musk and a group of unknown big investors are locked up for 366 days until June of next year with no early release. The 366-day term itself is longer than the standard 180 days. So, on that narrow point, Musk is the most restricted, not the least. I think to your point, Musk will go down as the greatest engineer of our time, but as a financial engineer. I mean, essentially what you have is he convinced the SEC and Trump and NASDAQ to include him in the 100, which no IPO has ever been included before, meaning trillions of dollars of funds are mandated to put whatever percentage of a weighted index that SpaceX represents, that amount of their capital into SpaceX shares. No company right out of the gates has enjoyed that incremental demand. In addition, they were able to go public with just 5% of the float. Traditionally, in the past, you needed more than 10%. So, smaller supply, greater demand, you know, disco, and that is huge demand right out of the gates, which make no sense from a valuation standpoint. And as the lockups come off and people can take advantage of that rich irrational valuation, they sell. That's what they've been doing.
Now, sure, the people who bought in are going to be angry. I don't know. Maybe some — I don't know what the lockups are on the employees, but his ability to manufacture that type of valuation. I had lunch with a guy here a couple weeks ago, nice guy, and a friend of his told me he's made a billion dollars on SpaceX stock. There are a lot of people out there who will always invest with Elon because he has a habit of getting shareholders a return, or at least most of his shareholders. So, I don't — I fail to see how this is a bad thing for Elon Musk that he was able to engineer a pop. Now, look out below. One of my failings as an investor is I tend to anchor off what it recently traded at. Yeah, it's 45% off its peak, but it's only what, 5 or 10% off its IPO price, and it's still crazy overvalued. I think this is a 10 to $30 stock there.
You want to see creative writing, look at the analyst reports from Morgan Stanley and JP Morgan, and I forget there was someone who put an $800 price on this. God, I would — I mean, those people really, it's like, okay, put down the mushroom chocolates. And if you believe that investment banking and wealth management fees don't influence analyst reports, this makes Henry Blodgett in 1999 look responsible. By the way, I think Henry was totally unfairly prosecuted for something everyone was doing and still continues to do by a zealous idiot called our attorney general, Spitzer. Anyways, I wouldn't get near this thing because I wouldn't even short it either, because it's a meme stock and he has an ability to fool people into thinking, 'Oh, wait, it's about data centers in space or the Reban or robots or I've got another rabbit I'm stuffing into it. Look over here. Don't look at Tesla. It's an automobile company wrapping steel around an axle.' No, it's a software. It's a robotics. It's autonomous. Literally reading that prospectus was like WeWork minus the charm. It was just so insane. All of the — and the pictures of rockets and this flowery talk about becoming an interstellar species, that's just buy my company for an irrational number, and that benefits him in a lot of ways. Their ability to go buy companies and backfill valuation. So I don't — you know, I don't — I think this is a win for them.
Two weeks after the IPO, they borrowed 25 billion, the biggest investment-grade bond deal of the year with debt running out to 2056. It did this sitting on a hundred billion in cash, which tells you the AI buildout is just extraordinarily expensive. And he's anticipating that. Management said future money will come from borrowing, not stock. So the IPO was a one-time sale. The plan was always to lever up. So in sum, the bond — the credit markets are always more telling, but they're less interesting, so they don't get as much coverage. The bond sale clarified the version of the company that people are actually buying. Not a rocket company that got profitable and then is layering on AI, but an AI infrastructure bet that happens to own the best launch business ever built and carrying debt. It won't finish paying off until 2056. The whole thing now rides on not rockets or being an interplanetary species or even Starlink. It works on — it's basically going to work or not work based on his AI capex bet. So the strategy: inflate the equity, sell 5% of it once at the peak, then borrow against that valuation while the business is still losing money.
So your employee morale point is interesting. Employees still can't sell a single share. I wonder if they can borrow against it. The first window opens August 6, two days after the company's first earnings, and even then only 20%. The rest unlocks in pieces through December. Keep in mind, people always think once the unlock happens, it'll flood the market. But keep in mind, the market knows those unlocks are coming and usually prices them in. Some data on Musk's financial engineering track record: he bought Twitter for 44 billion, then sold it to his own AI company, folded that into SpaceX, and all-stock chain where he sets the price on both sides. And in November 2025, Tesla shareholders approved a pay package worth close to 1 trillion, lifting a stake from about 13% to 25%. So yeah, unbelievable financial engineering. His co-conspirators are Trump, JP Morgan, and Goldman Sachs, who manufactured a pop.
We did call this perfect. I mean, quite — we called this perfectly. We said it would be a 20% pop out of the gate and then get cut in half. Right now, it had a 23% pop and it's for a 50% decline from the IPO price, it would need to be at 65 bucks, and I think it's headed there pretty crisply. Anyways, I don't — I think on the whole, sure, there's some people going to be angry, but on the whole, a lot of people made a ton of money here. Someone told me there's 14 new billionaires in Texas just from SpaceX stock. The capital markets in the United States are a marvel. I think this is low-grade corruption getting above artificial scarcity with artificial demand, but you know, it's legal and he did it. But I would stay away from the stock personally, both on the short side and the long side, because it could become a meme stock and go to 200 bucks if he announces that, 'Oh, I'm putting quantum computing on the moon.' That's his latest look over here, not my actual shitty business here.
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Question two. Scott Travis here from New York. I've been in my corporate job for almost nine years now, and one of my peers was recently promoted to become my boss. Things have been a little uncomfortable since then. He seems to favor some of my co-workers, giving them the better projects while I often end up with the less desirable ones. I'm not really in a position to look for a new job right now because my wife is currently job hunting, so we need the stability of my income. So, two questions here. One, how do you build a good relationship with a boss when you're clearly not one of their favorites? I worry that trying to get close to him will come across as fake and maybe make things worse. And two, how do you handle office politics when they conflict with your core values? Where do you draw the line between adapting and compromising too much?
A few thoughts. The American corporation is the greatest wealth generator in history. There's no better way to get rich slowly than working at a good company. And they not only will remove that mole off your back with the health insurance plan, but they're generally good at investing in human capital. They're incredible platforms. I'm shocked at how shocked people are when they leave an Alphabet or a Goldman and they find that they're not as — they don't get their calls returned as crisply. The platform of these companies is really powerful. Now, the downside is corporate injustice is just part of the game. That's just something you got to put up with. And part of being successful at a corporation, quite frankly, is learning how to handle what is real or perceived injustice. I would try and scan your own emotions and say, is he really favoring other people, or are you a bit jealous or envious and notice things and perhaps maybe are sensitive to the fact that he's cognizant of your friendship, or I don't know if you were peers or friends, and is just trying to be more equitable. I mean, quite frankly, how much of this is your perception in you versus him being unfair?
Now, the way out of this is through it, and that is to do your job, be really good at what you do, but also in your year-end review when you sit down with him, just be very transparent: 'It's a little bit awkward for me and a little bit disappointing that one of my peers got promoted over me.' I think that vulnerability is powerful, and that type of honesty, and say also, and tell me if I've got this wrong, 'I sometimes perceive that I'm not getting the better work here.' I would wait till the appropriate format for that, but I think being very honest and authentic is the way to approach this. I think the best relationships are open and honest ones. Do not be a squeaky wheel and a pain in the ass through the year. Just do your job. Be a good soldier. Try and be really helpful and thoughtful to other people. You know, all the stuff that makes you a successful team member. If it continues, then I would think about — the way through this is through it. If you continue to do good work, try and find other opportunities where you have a different boss. Sometimes people just don't jive.
I remember saying to some of the people that were working with me, I remember saying, 'You're really talented. We don't jive. I get the sense that generally speaking, we're just kind of oil and water. So, what I want you to do is I want you to report to someone else because I think you're going to be more successful.' Because humans are emotional beings and there's some people we warm to and others that we don't. What you don't want is to get in the way of someone's economic livelihood and reduce the quality of their good work because of some weird personal dynamic. So, one, some self-analysis here, boss: how much of this is on you? Two, at the end of the interview, be very open and honest and try and be constructive: 'What can I do to try and get on this better work that I perceive as being better?' And be very open and honest about the way you're feeling. And if it continues, see if there's a way to find another team and work for another team and see if you can, you know, quite frankly, just get out of this weird dynamic that quite frankly might not be either of your fault. It just might be awkward or strange for him or her as well. And sometimes it just makes sense to get to a different environment. We'll be right back after a quick break.
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Welcome back. Question number three comes from relativetrouble299 on Reddit. Hi Scott, you've talked about the huge advantages of moving to a major city when you're young to capture opportunity and network effects. This was my path. I moved to London right after university, built a solid career in finance, and met my fiancée here. We love the city. The problem is we both want a large family. Living in a tier-one city with multiple kids feels like the biggest display of wealth short of owning a private jet. While I know we're fortunate to even have that option, it's a massive commitment and lately the call to move to the countryside for space and a lower cost of living is getting much stronger. I'd love to hear your take. Do the benefits of big-city living naturally drop off as you get older and start having kids, especially relative to the insane expense, or is giving up the city a mistake in the long run?
Boss, you just answered your own question. I was forced out of Manhattan. I love Manhattan. I had two kids under the age of three. We were looking — my oldest, we were looking at pre-K or whatever it's called. It was going to be $48,000 for him to play with blocks. And by the way, we applied to seven schools and because he was speech delayed, he got into none of them. And I was so upset that I said, 'We're moving to Florida.' And it was just an incredible move because the bottom line is we couldn't afford to live in the city. It was just — and I'm not saying we couldn't pay our rent. I'm saying it was taking an emotional toll on us. And what you're talking about is welcome to the work week and life. And that is when it's just you and you're spending all your money on drinks and Ubers and you don't need to worry about a kid and life insurance and preschool, you can get a 500-foot apartment. And once you have kids, the majority of people leave the city because they want a yard, they want a pool, maybe they want to join a country club, maybe they want good public schools, whatever it might be. And there's always that family that kind of figures it out, that stays in the city, that dances between the raindrops. And then the other side is the ultimate wealth flex is having three kids in Manhattan. That means you're making a few million dollars. No, it sucks to be a grown-up. You move. And I mean, obviously try and maintain professional trajectory, but having a backyard where your kids can play and walk to school and yeah, that's — 90% of us do that. We eventually leave the city, move to the suburbs, move to a geographic arbitrage, lower cost of living, better lifestyle. Probably means dad and mom might have to commute more or maybe do one or two days a year remote. Fine. But this is what we do. And your priorities change.
The most important thing to me on a Wednesday night was going out and trying to meet fabulous people. And there was nothing better than Manhattan for it. Now, you know, a few years after that, the most important thing on Wednesday night for me now is watching the new drop of Fallout because my 15-year-old will watch it with me and I just want to spend time with him. So, and I can do that in a lower-cost neighborhood just as easily. You can't hit the membership clubs in Greenwich, Connecticut, or actually that's expensive. Wherever it is, I moved to Delray Beach, which was just the right move for us. Literally cut our burn in half. Could walk to the beach with my kids. Lovely little school. By the way, the school that my kids enrolled in, GFA, was $14,000 a year, and the schools my son got rejected from were $48,000 a year. By the way, my son — I'm dropping him off at UVA in a few weeks. So things worked out. But yeah, do the arbitrage, be thoughtful about it. Maybe there's an advantage to moving closer to family because you have some built-in support system if they're still young and healthy. But absolutely, living in the city is meant — the city is meant for young people whose parents are putting them through New York, or they're in tech or working for Meta, or they're incredibly wealthy. For the other 95% of us, you know, moving to the suburbs or a smaller city or a less expensive state, 100%, that's what it means to be an adult. And also, it's nice. You're gonna — you're gonna like living in this whatever neighborhood you're gonna find. Wow, it's fun to be able to sit in my backyard. Well, it's fun to barbecue, right? It's fun to go to little league that's 10 minutes down the road, not taking a bus up to the Bronx or wherever it is people play little league. So, this is just part of what it means to be an adult. It's an economic arbitrage. Be thoughtful about it, but brother, don't be sad about it. This is part of life, and it can be really a nice addition to your life, and your priorities are going to change. All of a sudden it becomes about the kids, not about you. It took me a while to figure that out.
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