SpaceX IPO: Warren Presses Index Firms on Dual-Class Shares

Sen. Elizabeth Warren pressed S&P Dow Jones Indices and MSCI on Wednesday to keep SpaceX out of their benchmarks if the rocket company proceeds with a dual-class structure that gives founder Elon Musk outsized voting power.

Warren, in letters reviewed by AlphaScala, called the planned 10-to-1 voting ratio for insider shares "corporate governance malpractice." Her letters argue that Musk would control the company with a minority economic stake, disenfranchising public shareholders.

SpaceX filed confidentially for an IPO earlier this year with a target valuation north of $250 billion. The S-1, still under SEC review, is expected to detail a dual-class structure similar to Meta Platforms and Snap, where founder shares carry 10 votes each versus one vote for public shares.

S&P Dow Jones Indices already excludes companies with multiple share classes from the S&P 500. The rule does not apply to the S&P 400 or S&P 600, where many mid-cap and small-cap companies with unequal voting rights trade. MSCI includes dual-class stocks in its flagship indexes. It applies a 5% discount to the voting shares' weight.

"The index firms have positioned themselves as gatekeepers of corporate governance," Warren wrote. "Allowing SpaceX into their benchmarks with a structure that disenfranchises public shareholders would undermine that claim."

The letters follow a broader regulatory push against dual-class structures. The SEC under Chair Gary Gensler has proposed rules requiring index funds to disclose how they vote on governance issues, including multi-class structures. Nasdaq and the New York Stock Exchange already bar new listings with dual-class structures that sunset after seven years. SpaceX's IPO predates those rules.

SpaceX declined to comment. S&P Dow Jones Indices and MSCI did not respond to requests for comment.

Inclusion in flagship benchmarks like the S&P 500 or the MSCI World Index typically triggers billions in passive fund buying. A SpaceX listing without index inclusion would force active managers to decide whether to buy a stock that passive funds cannot touch. That dynamic could cap the IPO's valuation or create a persistent discount for public shares relative to private-market trades.

Warren's letters are not binding. Index providers set their own rules. Both S&P and MSCI have resisted political pressure on methodology changes before. In 2020, MSCI declined to exclude companies with unequal voting rights despite investor calls. S&P has maintained its S&P 500 rule. It has resisted extending it to other indexes.

The push adds uncertainty to an IPO that already carries execution risk from SpaceX's heavy capital needs and the cyclical nature of launch demand. The SEC is expected to clear SpaceX's S-1 for public filing in the coming weeks. A final index-inclusion decision would follow the listing date.