Elon Musk has lost his trillionaire status after shares in his rocket company SpaceX experienced a sharp decline, according to Bloomberg's Billionaires Index and Forbes' Real-Time Billionaires list. Musk's net worth fell to $957bn (£727bn) on Tuesday, down from $1.1tn less than two weeks ago when he became the world's first trillionaire. Forbes estimated his fortune at $964bn (£732bn) on the same day. Despite the drop, Musk remains the world's richest person by a considerable margin.
SpaceX IPO and Subsequent Decline
Musk's trillionaire status was achieved on June 12 after SpaceX's initial public offering (IPO) — the largest in Wall Street history — sent shares soaring. The IPO priced at $135 per share, with shares opening around $150, peaking at $168, and closing at just under $161, giving the company a market value of $2.1tn. However, shares climbed as high as $225 on June 16 before retreating to $156 on Tuesday. On Wednesday, shares were down 1.35% in early trading at $154.
The slump in SpaceX shares, in which Musk holds approximately a 40% stake, coincided with a broader sell-off in technology stocks. Factors include massive data-centre spending and rising geopolitical and economic risks, including the war with Iran, which have fueled doubts over the long-term profitability of artificial intelligence (AI).
Impact on Musk's Wealth
Musk's net worth also took a hit from Tesla, the electric vehicle maker he founded, in which he owns about a 12% stake. While he has slipped back into the billionaire club, his wealth still far exceeds that of his nearest rival, Larry Page. Musk is more than three times richer than Page, according to Forbes.
SpaceX's financial performance has been mixed; the company lost $2.6bn overall from operations last year despite the successful IPO. The recent sell-off may have been partly triggered by confirmation that SpaceX was planning a bond sale, expected to be around $20bn, according to Susannah Streeter, chief investment strategist at Wealth Club.
Expert Commentary
Danni Hewson, head of financial analysis at AJ Bell, commented: "For a stock like SpaceX, a lot of decision making might have been emotional and based on the anticipation of huge leaps forward in space exploration and utilisation, but investing should be something treated with clear eyes and patience, even when such huge numbers are involved."
Susannah Streeter added: "SpaceX has come down to earth with a bump, burning off most of its post-launch steam. The sell-off may have been partly triggered by the confirmation that it was planning a bond sale, expected to be around $20 billion. Issuing debt at such a heady valuation raises questions about cash flow for this hugely capital-intensive venture."
