The dispute echoes 2022, when Musk called ESG “a scam” after Tesla was removed from the S&P 500 ESG Index.
- MSCI gave SpaceX a CCC rating, the lowest on its ESG scale, citing governance and sustainability concerns.
- The report also assigned SpaceX a controversy score of 1/10 and a governance score of 3.2/10.
- Musk responded on X, saying, “Unfortunately, electric rockets are impossible,” dismissing ESG concerns for emissions-intensive industries.
Shares of SpaceX slid 4% in overnight trading late Sunday after global financial services firm MSCI Inc. assigned the company its lowest ESG rating, placing it among the weakest-rated firms in its coverage universe and prompting a familiar rebuttal from CEO Elon Musk.
SPCX stock fell for a second consecutive session on Thursday after surging to more than 65% above its IPO price during its first week of trading. Investors are also weighing reports that SpaceX is considering a $20 billion bond sale to help fund its rapidly expanding AI and space businesses.
Musk Shrugs Off MSCI ESG Criticism For SPCX
MSCI assigned SpaceX a CCC rating on June 11, the lowest level on its environmental, social and governance scale, the Financial Times noted. The assessment comes shortly after SpaceX’s blockbuster public market debut and as major index providers fast-track the company into key benchmarks that could drive billions of dollars in passive-fund demand.
According to the report, the rating reflects the company’s exposure to ESG risks and insufficient management of those issues. The firm also assigned SpaceX a score of 1 out of 10 in its controversies category and a governance score of 3.2 out of 10. The rating places SpaceX in the same lowest ESG tier as Russia after its 2022 invasion of Ukraine.
However, Musk said on X late Sunday: “Unfortunately, electric rockets are impossible,” dismissing ESG rules that penalize emissions-intensive industries despite technological limitations.
Musk Revives Tesla-Era ESG Fight
The SpaceX controversy echoes a similar battle from 2022, when Tesla was removed from the S&P 500 ESG Index despite being the world’s leading electric vehicle manufacturer. At the time, Musk openly mocked the decision after Exxon Mobil ranked among the top ESG companies, while Tesla failed to qualify. “ESG is a scam,” Musk said on X at the time. “It has been weaponized by phony social justice warriors.”
S&P said that Tesla’s removal was driven by factors extending beyond environmental impact, including workplace issues, allegations of racial discrimination, and the company’s handling of regulatory investigations.
On the other hand, MSCI confirmed earlier this month that it would apply its existing fast-entry rules to large IPOs, potentially allowing SpaceX to enter key MSCI benchmarks much faster than with traditional public offerings. Funds tracking MSCI indexes would be required to purchase shares if the company is added to the benchmarks. A weak ESG profile is unlikely to prevent index inclusion, but it could discourage sustainability-focused investors and invite greater scrutiny of the company’s governance practices now that it is publicly traded.
SPCX Index Inclusion Tailwinds Remain Intact
Despite the ESG controversy, SpaceX is on track for potential inclusion in several major benchmarks. MSCI, Nasdaq, and FTSE Russell have all adopted mechanisms that could accelerate the company’s entry into widely followed indexes.
Despite growing expectations for broader index inclusion, SpaceX remains ineligible for the S&P 500 since it lacks the required 12 months of trading history, sustained GAAP profitability, and a public float exceeding 10%. Investors are now turning their attention to the company’s first post-IPO earnings report, expected in late July or early August.
How Do Retail Traders Feel About SPCX?
On Stocktwits, retail sentiment for SPCX was ‘bullish’ amid ‘extremely high’ message volume.
One user said, “$SPCX Going to IPO crash and burn. The numbers make no sense. $18B In revenue and $5B in loss – that doesn’t even include buying xAi off Elon Musk for $20B that a new bond sale is being used to cover the other loan.”
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Another user said, “$SPCX 170 tomorrow? in slow bleeding mode until first earnings report.”
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