SpaceX received a CCC rating from MSCI Inc. on June 11, the lowest level on the firm's environmental, social and governance scale, with a controversy score of 1 out of 10 and a governance score of 3.2 out of 10. MSCI cited governance and sustainability concerns in the assessment. SPCX stock fell 4% in overnight trading late Sunday following the rating announcement. CEO Elon Musk responded on X late Sunday, saying "Unfortunately, electric rockets are impossible," dismissing ESG rules that penalize emissions-intensive industries. The rating places SpaceX among the weakest-rated firms in MSCI's coverage universe and arrives shortly after the company's public market debut.
MSCI Assigns SpaceX CCC Rating and Musk Responds
MSCI assigned SpaceX a CCC rating on June 11, according to the Financial Times. The assessment reflects the company's exposure to ESG risks and insufficient management of those issues, the report stated. 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.
Musk said on X late Sunday: "Unfortunately, electric rockets are impossible." 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. Reports indicate SpaceX is considering a $20 billion bond sale to help fund its rapidly expanding AI and space businesses.
Tesla Removed From S&P 500 ESG Index in 2022
The SpaceX controversy echoes a battle from 2022, when Tesla was removed from the S&P 500 ESG Index despite being the world's leading electric vehicle manufacturer. Musk said on X at the time: "ESG is a scam. It has been weaponized by phony social justice warriors." Exxon Mobil ranked among the top ESG companies while Tesla failed to qualify.
S&P said that Tesla's removal was driven by factors extending beyond environmental impact, including workplace issues, allegations of racial discrimination, and the company's handling of regulatory investigations.
MSCI Confirms Fast-Entry Rules for Large IPOs
MSCI confirmed earlier this month that it would apply its existing fast-entry rules to large IPOs, potentially allowing SpaceX to enter key MSCI benchmarks faster than with traditional public offerings. Funds tracking MSCI indexes would be required to purchase shares if the company is added to the benchmarks. MSCI, Nasdaq, and FTSE Russell have all adopted mechanisms that could accelerate the company's entry into widely followed indexes.
SpaceX remains ineligible for the S&P 500 since it lacks the required 12 months of trading history, sustained GAAP profitability, and a public float exceeding 10%. The company's first post-IPO earnings report is expected in late July or early August.
Retail Sentiment Remains Bullish as of June 21
On Stocktwits, retail sentiment for SPCX was "bullish" amid "extremely high" message volume as of June 21. One user said: "[$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 $20B that a new bond sale is being used to cover the other loan." Another user said: "[$SPCX] 170 tomorrow? in slow bleeding mode until first earnings report."
FAQ
What ESG rating did MSCI assign to SpaceX on June 11?
MSCI assigned SpaceX a CCC rating on June 11, the lowest level on its environmental, social and governance scale. The firm also gave SpaceX a controversy score of 1 out of 10 and a governance score of 3.2 out of 10, citing governance and sustainability concerns.
Why did SPCX stock fall in overnight trading late Sunday?
SPCX stock fell 4% in overnight trading late Sunday after MSCI Inc. assigned the company its lowest ESG rating. CEO Elon Musk responded on X late Sunday, saying "Unfortunately, electric rockets are impossible," dismissing ESG rules that penalize emissions-intensive industries.
