How Do You Buy Shares in SpaceX? Ask Elon Musk’s Friends.

Summary

WSJ Tech News Briefing: How Do You Buy Shares in SpaceX? Ask Elon Musk’s Friends
Release Date: April 28, 2025
Host: Katie Dayton, The Wall Street Journal

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Introduction

In the April 28th episode of the WSJ Tech News Briefing, host Katie Dayton delves into two distinct yet compelling topics: the modern dilemma of determining the appropriate age for children to receive smartphones and an investigative report on how to invest in Elon Musk’s private company, SpaceX. This summary encapsulates the key discussions, insights, and conclusions drawn from the episode, enriched with notable quotes and structured for clarity.

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Section 1: The Smartphone Dilemma for Modern Parents

Guest Speaker: Sumathi Reddy, WSJ Columnist
Timestamps: 00:00 – 04:34

Katie Dayton opens the episode by addressing a pervasive issue among today’s parents: deciding when their children should receive their first smartphone. With no clear consensus, the conversation centers around the pressures parents face and the implications of early smartphone ownership on children’s development.

Key Points Discussed:

1. Parental Pressure and Social Dynamics:

   • Sumathi Reddy shares her personal experience as her 11-year-old daughter expresses the desire to join peers who already have smartphones.

     "My daughter is 11, she's in 6th grade and all of her friends... have phones. She's really one of the last ones standing." [02:06]

2. Concerns About Maturity and Exposure:

   • Reddy contemplates the maturity required to handle smartphone ownership, highlighting the potential exposure to mature content and social media’s detrimental effects.

     "Getting your phone is when kids mature these days because they're exposed to all this more mature material." [02:33]

3. Impact on Child Behavior and Addiction:

   • Reflecting on her older son’s experience, Reddy notes that despite his initial self-control, smartphone addiction ensued post-adoption.

     "Once he got a phone, it did change him. I mean, as it does all kids and teenagers and adults... he's as addicted to his phone as anyone else or more." [03:03]

4. Changing Parental Perspectives and External Influences:

   • The discussion touches on the shift in parental attitudes influenced by extensive research on social media’s negative impacts and collective decisions among parent groups to delay phone introductions.

     "People are just more aware of that... we have a pact with these other parents. None of our kids have phones. We're all going to wait till high school." [03:38]

5. Practical Necessities in Urban Living:

   • Reddy emphasizes the practical reasons for eventually giving her daughter a smartphone, especially living in New York City, where access to real-time information and communication is crucial.

     "Once she starts taking the subway... it's going to be hard doing that here." [04:13]

Conclusion: The segment underscores the delicate balance parents must maintain between granting independence and safeguarding their children’s well-being in the digital age. Reddy’s insights reflect a broader conversation among parents navigating the complexities of technology in upbringing.

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Section 2: Inside SpaceX’s Private Investor Network

Reporter: Corey Driebush, WSJ
Segments Covered by: Antonio Gracias, Investor and SpaceX Insider
Timestamps: 05:10 – 11:27

Following a brief interlude, the episode transitions to an in-depth examination of SpaceX's elusive investor base. Reporter Corey Driebush, with input from Antonio Gracias, unveils the intricate methods employed to maintain SpaceX’s private status despite its substantial valuation.

Key Points Discussed:

1. SpaceX’s Uncommon Private Status:

   • Antonio Gracias explains the rarity of SpaceX remaining private given its size, comparing it to companies like Facebook which had to go public to comply with shareholder thresholds.

     "SpaceX is skirting that [SEC threshold]. It keeps a tight control over its investment base... often structured as special purpose vehicles or SPVs." [07:28]

2. Reasons for Remaining Private:

   • The necessity to protect sensitive government contracts and maintain financial confidentiality are highlighted as primary motivations for SpaceX’s privatization.

     "SpaceX's size and its stature for most companies would have forced it to go public, but not SpaceX." [05:38]

3. Elon Musk’s Strategic Control:

   • Musk prefers the autonomy that comes with being a private company, avoiding the quarterly reporting and stock market volatility that public companies face.

     "As a public company, you have a stock that trades every single day... it's nice to say that stocks trade in line with the fundamentals of a company, but we know that's not actually the case all the time." [07:35]

4. Investor Network and Relationships:

   • The segment delves into the personal relationships and financial intertwinements among SpaceX’s investors, emphasizing the exclusivity and trust within this closed network.

     "Their family spend Christmases together and they vacationed together in the Bahamas... extended a $1 million personal loan to Musk." [08:32]

5. Role of Special Purpose Vehicles (SPVs):

   • SPVs allow investors to indirectly hold SpaceX shares, maintaining the company’s private status by limiting the number of direct shareholders.

     "Investors buy shares of holding companies that own the shares of SpaceX." [07:28]

6. Lack of Transparency and Potential Implications:

   • The opaque nature of SpaceX’s finances leaves most investors unaware of the company’s true financial health, despite its soaring valuation.

     "SpaceX is one of the largest companies in the US and it's also extremely secretive. Its finances are hidden from all but a small group of investors and insiders." [10:44]

7. Influence and Political Connections:

   • Musk’s proximity to Trump administration officials is noted as a factor that could further bolster SpaceX’s growth and valuation.

     "It stands to gain even more with Musk being so close to Trump administration officials, not just Trump himself." [10:44]

Conclusion: The investigative report sheds light on the complex and secretive investment mechanisms that sustain SpaceX’s private status. By leveraging personal relationships and financial structures like SPVs, Musk and his inner circle maintain tight control over the company’s ownership and financial disclosures. This exclusivity not only preserves SpaceX’s operational autonomy but also adds layers of complexity for potential investors seeking access to the high-valued aerospace giant.

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Episode Wrap-Up

Katie Dayton concludes the episode by acknowledging the production team and hinting at upcoming segments, ensuring listeners stay engaged with future Tech News Briefings.

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Notable Quotes:

• Sumathi Reddy on parental hesitation:

  "Getting your phone is when kids mature these days because they're exposed to all this more mature material." [02:33]

• Antonio Gracias on SpaceX’s financial secrecy:

  "SpaceX is one of the largest companies in the US and it's also extremely secretive. Its finances are hidden from all but a small group of investors and insiders." [10:44]

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This episode of WSJ Tech News Briefing offers valuable perspectives on the intersection of technology, parenting, and high-stakes investment, making it a must-listen for tech enthusiasts and concerned parents alike.

Transcript

[Sumathi Reddy]

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[Katie Dayton]

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[Katie Dayton]

Visit [e-mail] to keep your enterprise running smoothly. Hey, TMB listeners, before we get started, heads up. We're going to be asking you a question at the top of each show for the next few weeks. Our goal here at Tech News Briefing is to keep you updated with the latest headlines and trends on all things tech. Now we want to hear more about you, what you like about the show, and what more you'd like to be hearing from us this week. Which areas of tech are you most interested in hearing more about AI crypto tech policy gadgets. If you're listening on Spotify, look for our poll under the episode description or you can send us an email to tmbsj.com now onto the show. Welcome to Tech News briefing. It's Monday, April 28th. I'm Katie Dayton for the Wall Street Journal. Today we're reflecting on a very modern parental decision, the age in which kids should get a smartphone. There doesn't seem to be much of a consensus. Then we're zooming in on SpaceX. Elon Musk keeps its English inner workings is a bit of a mystery, and that opacity also applies to its investor base. We take a look at who exactly is getting a cut of the $350 billion business and how. But first, what do you do when your kid wants a smartphone but you're not sure if they're ready? WSJ columnist Sumathi Reddy recently found herself in that position when her 11 year old daughter asked to join the ranks of nearly all of her friends. With Dev, the question brought up a fair amount of soul searching for Sumathi who joins us to explain. So Sumathi, I'd love it if you could tell me a little bit more about your daughter and why she's pressing to get a phone right now.

[Sumathi Reddy]

My daughter is 11, she's in 6th grade and all of her friends, I would say except for a couple, have phones. She's really one of the last ones standing. So it's been this sort of pressure like when am I getting a phone? When am I getting a phone? And she's a very sweet girl so she's not like demanding one, but it comes up quite a bit.

[Katie Dayton]

You write in the story that you're clinging to her phone free days like a baby holds a mother. Why do you feel that way?

[Sumathi Reddy]

I guess the way I was thinking of it was like getting your phone is when, like kids mature these days because they're exposed to all this more mature material. And you know, I've noticed that like her and she has a couple of friends who don't have phones are like in some ways more not like childlike, but sometimes the things they do are more like play hide and seek or just don't involve looking at Snapchat and YouTube.

[Katie Dayton]

And do you think your daughter understands your reasoning for why you're a little bit hesitant to give her a phone right now?

[Sumathi Reddy]

No, I don't think she quite understands the whole thing. And I do mention in the story that I have an older son who in many ways was very similar to her. He was this great kid, really sweet, great self control, not someone who ever got in trouble or he wasn't addicted to video games or any of that stuff. Screenshots. Once he got a phone, it did change him. I mean, as it does all kids and teenagers and adults. And even though he had this great self control, he's as addicted to his phone as anyone else or more.

[Katie Dayton]

Since you gave your son his phone a few years ago, how much do you feel the conversation around kids and phones has changed, especially with other parents?

[Sumathi Reddy]

Yeah, I mean, I think there's been so much research and so many studies about the detrimental effects, particularly of like, social media and some of those sites which the Journal's done a lot of stories on as well, that people are just more aware of that. And even in writing the story, I got a lot of emails from parents that kind of signaled that the tide was turning a little bit. Especially like in California. It seemed like I was getting a lot of emails being like, oh, we don't do that here. I have like a pact with these other parents. None of our kids have phones. We're all going to wait till high school.

[Katie Dayton]

And you think, though, that you're not going to wait until high school at this point? You think it's going to be sooner rather than later that your daughter gets one?

[Sumathi Reddy]

Yeah, I mean, once she starts taking the subway, going further afield, I feel like you kind of need a phone just to be able to look up subway delays and issues and reach your parents and friends more easily. So I feel like living in New York City, it's not really practical for us. Maybe if you live somewhere else, we could get away with waiting longer, but it's going to be hard doing that here.

[Katie Dayton]

That was our columnist Sumathi Reddy coming up inside the complicated and secretive world of SpaceX's investor base. That's after the break.

[Corey Driebush]

With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business helps turn today's enterprises into engines of modern business. Powering the engine of modern business powering possibilities restrictions apply.

[Katie Dayton]

Friends of Elon Musk have a side hustle selling access to stakes in his private companies, including SpaceX. The setups operate through a complex web of funds, allowing the company to remain private. Corey Driebush was one of the reporters navigating the web to get the story. So, Corey, can you start by taking us through just how SpaceX has remained a private company despite it being so old and sporting this incredibly high valuation?

[Antonio Gracias]

Sure. So it is pretty rare for a company to remain private as long as SpaceX has, particularly one that is backed by venture capital firms. SpaceX's size and its stature for most companies would have forced it to go public, but not SpaceX. There's quite a few reasons why. For one, SpaceX, by nature of the business, has government contracts. And maybe some of the business that it does wants to remain private. It doesn't want to reveal all of these contracts in its financials, which as a public company must do. Another way SpaceX has been able to stay private is by limiting its investor base. The SEC requires that once you reach a certain number of quote unquote holders of record in a company, you the company is legally required to disclose financial information regularly similar to that of a public company. That number has grown. This famously is one of the reasons Facebook was forced to go public back in 2012. That was when the threshold was 500 shareholders of record post Facebook's IPO that was increased and now it's 2000. And SpaceX is skirting that. And one of the ways it does that is it keeps a tight control over its investment base space by doling out the shares to existing investors. And then those investors in turn sell interests in the shares and their funds through a spider web of funds, if you will, that are often structured as special purpose vehicles or SPVs. And so in that case, investors buy shares of holding companies that own the shares of SpaceX.

[Katie Dayton]

In this example, from what you gleaned from your reporting, why has Elon Musk kept it this way for so long?

[Antonio Gracias]

Many CEOs, even public CEOs would say they wish their company were still private. Think of a public company. Every three months you need to report financial results. Also, as a public company, you have a stock that trades every single day in the public markets and your stock price really is at the whim of whomever is trading that day and whatever news or whatever feelings that people have. It's nice to say that stocks trade in line with the fundamentals of a company, but we know that that's not actually the case all the time. I mean, look at Tesla right now. Look at Tesla stock price that has a jumped wildly up and then fallen wildly down this year around the Musk's kind of polarizing role in the White House Doge or the Department of Government efficiencies and overseas competitive pressures.

[Katie Dayton]

Your piece runs us through a host of characters that are sort of the conductors of who gets a slice of SpaceX, one of which is the investor, Antonio Gracias. Can you tell me a little bit more about him and how he ended up in Musk's inner circle?

[Antonio Gracias]

Yeah. So Antonio Gracias and his Valor Equity Partners was one of the early investors in SpaceX. So they've been invested for a very long time and Gracias and Musk have become friends. What we learned through court documents is that their family spend Christmases together and they vacationed together in the Bahamas in Jackson Hole, Wyoming. At one point in court testimony a few years back, Gracias said that he also invested directly in Musk himself and he extended a $1 million personal loan to Musk. And Gracia said that he couldn't recall if he had charged interest to him. So that kind of speaks to their level of friendship.

[Katie Dayton]

Another one of the people you mentioned in the story is Luke Nosek. Can you tell us a little bit more about who he is and what he does?

[Antonio Gracias]

Nosek is a SpaceX board member who also worked with Musk at PayPal before he joined Founders Fund in 2006. And he and Musk remained close. For instance, we learned from our reporting that they've attended game nights in Austin, Texas, where they play the game Werewolf together. Nosek, his fund is Gigafund. And how Gigafund has worked in this story is that Gigafund purchases secondary sales of spirit SpaceX and then they form their own funds and they sell interest in those shares.

[Katie Dayton]

How did the people named in this story, including Musk, respond to your reporting?

[Antonio Gracias]

As we mentioned in our story, everyone, we reached out to, all the investors we reached out to either declined to comment or did not respond to requests for comment.

[Katie Dayton]

What was your big takeaway from this reporting?

[Antonio Gracias]

When you think about this story, it's important to think about SpaceX in particular as a company. This is one of the largest companies in the US and it's also extremely secretive. Its finances are hidden from all but a small group of investors and insiders. So most people with stakes in SpaceX, including those who buy into SPVs, they have no clue how much money the company makes or loses. And yet the valuation of this company has grown astronomically over the years. And it stands to gain even more with Musk being so close to Trump administration officials, not just Trump himself.

[Katie Dayton]

That was WSJ reporter Cory Driebush. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer Melanie Roy. I'm Katie Dayton for the Wall Street Journal. We'll be back this afternoon with TMB Tech Minute. Thanks for listening.

[Corey Driebush]

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