Elon Musk has lost his status as the world’s first trillionaire after a sharp decline in SpaceX shares erased hundreds of billions of dollars from his paper wealth.
Musk’s estimated net worth has fallen to between US$950 billion and US$970 billion after SpaceX shares retreated more than 30 per cent from their post-listing high. The decline has been compounded by weakness in Tesla, another major contributor to his fortune.
The pullback comes less than two weeks after SpaceX’s record-breaking public debut briefly valued the company at more than US$2 trillion and pushed Musk’s estimated wealth above the US$1 trillion mark.
Unlike realised wealth, Musk’s fortune is almost entirely tied to the market value of his equity holdings, meaning relatively modest percentage movements in SpaceX and Tesla shares can translate into swings of hundreds of billions of dollars in estimated net worth.
The reversal has coincided with a broader sell-off in technology stocks. The Nasdaq Composite fell 2.2 per cent while the Philadelphia Semiconductor Index dropped 7.9 per cent as investors questioned whether the scale of spending on artificial intelligence infrastructure would generate sufficient returns.
Expectations that the US Federal Reserve could keep interest rates higher for longer also weighed on high-growth technology companies.
Prior to this, SpaceX’s valuation had attracted scrutiny even before its market debut.
Anton du Plooy, 4Factor analyst at Ninety One, said the company’s valuation was difficult to justify using conventional metrics.
“Let’s start with what everyone is thinking but few may want to say plainly. The valuation being ascribed to SpaceX is, by any conventional measure, extraordinary. There are currently only 13 publicly listed companies worth more than $1 trillion.
“SpaceX would arrive at a multiple well above what comparable businesses trade at today, and the mental gymnastics required to justify that number on fundamentals alone are considerable.”
Research house Morningstar also challenged the company’s valuation before listing, estimating SpaceX was worth around US$780 billion, less than half its targeted valuation.
Others argued the market had underestimated the breadth of the business.
Betashares investment strategist Hugh Lam said SpaceX extended well beyond rocket launches through Starlink’s profitable satellite network and an expanding artificial intelligence business that had secured more than US$2 billion in monthly revenue from Anthropic and Google.
“The trillion dollar question remains whether Elon Musk can make SpaceX just as successful as he did for Tesla when the latter IPO’d on the Nasdaq stock exchange on June 29, 2010,” Lam said.
Despite the recent sell-off, Lam had previously warned that volatility was likely following the IPO because of the company’s fixed offer price, exceptionally strong retail demand and uncertainty around its fair value.
“That said, investors should note that price action following the IPO is likely to be volatile as markets try to determine what the fair price of the stock should be upon listing. With a fixed offer price and a larger than usual retail allocation, the early float is also likely to be held by a more diverse and potentially less patient investor base, which could amplify near-term volatility.”
Although Musk has relinquished the trillionaire title for now, his fortune remains closely tied to the market performance of SpaceX and Tesla, leaving open the possibility that a recovery in either stock could quickly restore the milestone.
