SpaceX: High Valuation, Low Rating
Why ESG rating matters even when markets don’t care.
Joanne Tay
6/22/20263 min read
SpaceX reached record IPO valuation, but can its ESG keep pace with its technological ambition? (Image: Unsplash)
The recent squabble between Elon Musk and MSCI over SpaceX’s lowest-possible ESG rating is a masterclass in the tension between short-term market dynamics and long-term corporate resilience. After MSCI slapped SpaceX with a ‘CCC’ rating, Musk dismissively responded that “electric rockets are impossible”. But the market’s initial reaction was not so dismissive, with SPCX stock sliding 4% overnight.
Then comes the twist: despite the blow, SpaceX remains on track for fast-track inclusion in major indexes with passive-fund demand likely to drive billions in inflows. Weak ESG credentials will not keep the company out of benchmarks, but they will shape the nature of its investor base and the scrutiny it faces. This paradox – high issuance demand coexisting with a poor ESG score – is exactly why ratings are essential.
Why the disconnect?
First, the operational reality. Musk is not wrong about the physics: emissions-intensive industries like aerospace face inherent technological hurdles. The MSCI report also flagged deeper governance issues, including a controversy score of 1/10 and governance score of 3.2/10 – factors that extend far beyond rocket emissions. The rating is not a referendum on space exploration; it is a judgment on how the company manages material risks from board oversight to regulatory compliance.
Second, the market’s current indifference. Index providers are fast-tracking SpaceX’s inclusion based on size and liquidity, not ESG virtue. For many passive investors, index inclusion is the only signal that matters. This creates a window where companies can achieve strong market access despite weak governance – but that window does not stay open forever.
Why the Rating Is Still Essential for Long-Term Health
An ESG rating is like a regular doctor's check-up – it may not be the most exciting appointment, but it catches the silent risks and underlying imbalances that determine whether a company stays robust and vital in the long run.
Key reasons why they matter for long-term value:
Governance as a Predictor of Resilience. The ‘G’ in ESG is the strongest predictor of long-term survival. SpaceX’s governance score of 3.2/10 signals potential vulnerability, whether in litigation, regulatory oversight, or succession planning. Active investors and long-only funds will incorporate this into their valuation models, even if high-frequency traders do not.
Cost of Capital. While passive demand may shield SpaceX today, the bond market is a different ballgame. The company is reportedly considering a $20 billion bond sale. A low ESG rating does not immediately block access, but it can increase spreads and narrow the pool of buyers, especially as more fixed-income investors integrate sustainability criteria.
Reputation and Talent. SpaceX’s ability to attract top-tier engineering talent, especially in a competitive AI-driven environment, is partly tied to its public narrative. Controversies and weak governance scores do not make headlines for nothing. Over time, they compound into a reputational tax that hits innovation and operational stability.
The Bottom Line
Ratings may be imperfect, but they are important signals of how a company manages non-financial risks that eventually become financial risks. A low rating does not spell immediate doom and a high rating does not guarantee immunity.
What it does do is create a conversation that the market often postpones: Are we building long-term durable companies or just riding short-term momentum? For SpaceX, the challenge is not to make electric rockets possible, but to prove that its governance, social responsibility and environmental stewardship can keep pace with its technological ambition.
Contact us to discuss how we can support your ESG rating needs.
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Reference:
Sri, D. (2026, June 22). SPCX stock slides overnight: Musk says ‘electric rockets are impossible’ after MSCI slaps SpaceX with lowest ESG rating. Yahoo Finance. https://finance.yahoo.com/markets/stocks/articles/spcx-stock-slides-overnight-musk-033131823.html