The New York Times: Musk treats SpaceX as a personal piggy bank, taking out $500 million in low-interest loans

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A New York Times investigation revealed that between 2018 and 2020, Elon Musk obtained three personal loans totaling $500 million from SpaceX, where he serves as CEO, at interest rates far below market levels, sparking criticism regarding legal and corporate governance issues. (Context: Bloomberg reported that SpaceX will price its IPO on June 15, with employees having already been allocated their vesting periods for what is set to be the largest IPO in history, with a valuation exceeding $2 trillion.) (Background: New progress on Musk's SpaceX IPO: Reports indicate discussions with four major banks, including Bank of America and Goldman Sachs, regarding listing details, with a potential fundraising scale exceeding $30 billion.) A New York Times investigative report has ignited public debate: between 2018 and 2020, Elon Musk took out loans three times in his personal capacity from SpaceX, totaling $500 million. The interest rates were nearly symbolic, ranging from less than 1% to just under 3%, far below the commercial benchmark rate of approximately 5% during the same period. With only about six weeks left until SpaceX's expected record-breaking IPO, the New York Times investigation pointed out that if Musk had borrowed at market rates, he would have needed to pay approximately $40 million in interest; in reality, he paid only about $14 million. In other words, SpaceX saved the billionaire over $26 million in capital costs. All loans were repaid with interest by the end of 2021. The report noted that this is not the first time SpaceX has acted as a "firefighter" for Musk's business empire. The New York Times compiled a "blood transfusion list" spanning nearly two decades: - During the 2008 financial crisis, SpaceX provided a $20 million loan to Tesla, offering a lifeline when Tesla was on the verge of bankruptcy. - Between 2015 and 2016, SpaceX violated its own internal rules by purchasing $255 million in bonds from SolarCity, another Musk-affiliated company, at a time when SolarCity was facing a risk of default. - Additionally, SpaceX purchased 1,279 Tesla Cybertrucks, a move widely interpreted as a strategic effort to boost Tesla's sales figures. The report concludes by pointing out that perhaps the most controversial aspect of the entire acquisition is 2025: SpaceX fully absorbed Musk's cash-burning AI company, xAI, which was valued at approximately $80 billion, with the merged X platform valued at approximately $33 billion. The timing of the New York Times investigation is particularly sensitive. SpaceX is expected to list this summer, with a target valuation between $1.75 trillion and $2 trillion and a fundraising scale of approximately $75 billion, with the S-1 filing expected in May. If successful, this would become the largest IPO in U.S. history. Citing legal context, the report pointed out that once SpaceX is officially listed, under Section 402 of the U.S. Sarbanes-Oxley Act, public companies are explicitly prohibited from providing personal loans to senior executives. In other words, such operations will become illegal after the listing, and the "fast track for capital" that Musk has habitually used will be officially closed after the IPO. The report quoted Ann Lipton, a law professor at the University of Colorado Boulder, who criticized the situation directly: "These are conflict-of-interest transactions. This is exactly why investing in someone who runs multiple companies simultaneously is extremely risky." Michael Garland, Assistant Comptroller for the New York City Retirement Systems, specifically opposed Musk's practice of using Tesla stock as collateral, arguing that it makes it difficult to separate corporate and personal financial risks. In the same investigation, another New York Times report revealed that Musk demanded five IPO underwriting banks—Bank of America, Citi, Goldman Sachs, JPMorgan Chase, and Morgan Stanley—subscribe to his xAI chatbot, Grok, as a condition for underwriting. Some banks agreed to pay tens of millions of dollars in subscription fees annually. Outsiders have dubbed this "Grok subscription extortion," further deepening market concerns regarding the transfer of benefits between Musk's various enterprises.

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