SpaceX currently depends heavily on Elon Musk - a rare talent in the world, but not immortal.
Before its IPO in June, aerospace company SpaceX described CEO Elon Musk as its "driving force of growth, innovation and success". The loss of Musk, "whether due to death, incapacity or any other cause... could cause serious disruption to the management structure".
Although this is just a standard expression in documents submitted to regulatory agencies, it still shows the existence of "key-person risk". Musk is leading a giant corporation, with businesses ranging from rockets, robots, satellites to AI, and the ambition to "bring life to many planets". He may be a rare talent, but he is not immortal.
"There is only one Elon Musk and they will not be able to create a second person like him. That is both a blessing and a risk, because when buying stocks, investors also bet on Musk," said Dan Ives - a veteran technology analyst on Wall Street.
Key personnel risks are not a new issue. Some Tesla shareholders have sought to block Musk's remuneration packages, partly because they believe the company is too dependent on him. Besides, not only SpaceX, any business with a famous CEO also faces the same problem.
However, the risks associated with Musk go far beyond the corporate scope, potentially affecting millions of individual investors. Tesla is a popular stock with passive investors looking for stable long-term returns. Tesla has a large weighting in both the Nasdaq 100 index and the S&P 500. SpaceX has also been quickly included in the Nasdaq and could join the S&P 500 as early as mid-2027.
The total capitalization of these two companies is currently up to 3,000 billion USD. Analysts said this valuation was significantly boosted thanks to Musk. Investors trust the world's richest man with bold statements such as building data centers in orbit, sending humans to settle on Mars or commercially developing millions of humanoid robots.
In fact, investors loyal to Musk have received dream profits. Tesla has been listed since 2010 and currently has the largest capitalization in the auto industry, although sales are only a small fraction of its competitors.
But now, it's not just people who trust Musk who are investing in his companies. Millions of people who own retirement accounts are also indirectly investing here. In theory, funds that simulate indexes must buy shares of component companies to closely follow the movements of that index.
So the worry is that if Musk were suddenly no longer able to lead, much of that $3 trillion valuation could be gone. "The impact will be huge, because many people believe that Musk's entire empire is essentially him," said Tim Quigley - Professor of strategic leadership and management at the International Institute for Management Development (IMD).
One investor even said Musk is the "biggest risk" for SpaceX. "With stocks like SpaceX, I think about $1,000 billion of value comes from Elon himself. They have no succession plan and will have no future if he passes away," Ross Gerber, co-founder of investment firm Gerber Kawasaki told The Information earlier this year.
Musk founded SpaceX in 2002 and now controls 48% of the company through both class A common stock and class B "super voting" shares reserved for insiders. So essentially, Musk completely controls the board and can only be removed if he decides to fire himself.
SpaceX does not appear to have a formal succession plan. This is something management experts believe is necessary to minimize key personnel risks and ensure shareholders do not panic if something goes wrong.
In the prospectus, SpaceX itself admitted that the company is heavily dependent on Musk continuing to work. His "leadership, vision and expertise are critical to the development of our technology and the execution of our business strategy," they said.
Musk has also never publicly announced a succession plan at Tesla, although in 2023 he told the Wall Street Journal that he had proposed to the board "a number of individuals" who he would like them to take over "if something unexpected" happened to him.
In fact, Musk has experienced lieutenants at both SpaceX and Tesla to run the day-to-day operations as he turns his attention to other activities. For example, early last year, he joined US President Donald Trump's Department of Government Performance (DOGE).
Craig Crossland - Dean of the Neeley School of Business at Texas Christian University, said that the question now is whether Musk's vision and special abilities have been transformed into the abilities of his subordinates. "I don't think we've had a chance to see that," Crossland said.
Of course, Musk's companies are not the only businesses facing key personnel risks. But only a few businesses have capitalization equivalent to Tesla and SpaceX. And no CEO has the ability to captivate Wall Street like Musk.
"At some point, the succession issue will have to be resolved. I think investors understand this risk. They take it into account, but for now it's on the back burner," Ives concluded.
