Elon Musk lost his trillionaire status just weeks after claiming it, as shares of SpaceX and electric car maker Tesla came under heavy pressure this week.
The billionaire’s net worth fell to $957bn on Wednesday, according to the Bloomberg Billionaires Index, a daily ranking of the world’s richest people. It’s a remarkable turnaround for a businessman who, this month alone, became the first person in history to be worth more than $1tn.
Musk crossed that threshold when SpaceX made its long-awaited stock market debut. The aerospace group raised a record $75 billion at a valuation of $1.75tn, quickly placing it among the world’s most valuable companies and turbo-charging its founder’s paper fortune.
The shares have not been adjusted since then. After the listing, the stock soared, carrying SpaceX briefly above the $2tn valuation and boosting Musk’s estimated net worth to $1.1tn. They have since fallen sharply from that high, wiping hundreds of billions of dollars off the company’s market value.
The slide appears to have been boosted by SpaceX’s small public float. For a small piece of the company that trades freely, the relatively limited amounts are enough to trigger price swings, a dynamic that is familiar to anyone who has watched a small stock market unfold in their past.
Some investors also pointed to the group’s $25bn bond sale, completed this week, which SpaceX says will help repay a bridging loan it took out in March. Fundraising is a reminder of the financial strength of a business, a business that eats up cash at a rate that few firms can sustain.
SpaceX shares fell another 0.8 percent on Wednesday to $154.83 in New York. Tesla, where Musk remains chief executive, fell 1.6 percent to $375.61, extending a difficult run at a company already grappling with questions about its leadership and direction.
Tesla has been swept up in broader tech sales and growth stocks, as investors reassess higher valuations. Sentiment was further soured after a report by the Bank of America predicted that US interest rates would rise this year to fight inflation, while Goldman Sachs unsettled markets by drawing comparisons between today’s tech rally and the dotcom bubble of the late 1990s.
In a letter flagging the tension between strong fundamentals and extended valuations, the investment bank’s analysts wrote: “The big story around AI still looks very secure, especially compared to the late 1990s. The investment boom still seems to have room to grow, barring unexpected shocks, so the view of the beneficiaries of that market growth seems to continue to support the future. Benefits, making it vulnerable to any news that sets challenge that optimistic assessment.”
In all the drama, Musk remains the richest person in the world, and his trillionaire milestone may prove to be a question of time instead of a closed chapter, especially given the $1tn Tesla package approved by his shareholders. According to Bloomberg’s index, Google founders Larry Page and Sergey Brin ranked second and third, with $297bn and $276bn respectively, while Amazon’s Jeff Bezos followed with $257bn.
Whether this week shows the fading or the beginning of a long correction, it emphasizes an unpleasant reality for growing companies led by founders: when the wealth is built almost entirely on the share price of two volatile businesses, the way back below $ 1tn can be as fast as the rise above it.
