Jeremy Bowen
Elon Musk became the world’s first trillionaire on Friday after shares in his SpaceX company IPO. It is a rocket company that soared during the biggest-ever stock market debut. The company listed on the Nasdaq stock exchange with a value of $2.2tn. The company said its shares would be offered at $135 each, but trading opened at $150 and briefly reached $176.50 in a show of investor enthusiasm.
The initial public offering (IPO) of SpaceX raised $75bn from investors, easily topping the previous record IPO from oil giant Saudi Aramco in 2019.
Musk’s Staggering Wealth
Between his holdings in SpaceX and Tesla, Musk is now worth an estimated $1.1 trillion. He is now worth more than the next five richest billionaires in the world combined. His personal net worth is larger than the national GDP of Taiwan, Ireland, or Sweden.
Musk’s 42% stake in SpaceX gives him essentially unilateral control over everything it does.
The “Elon Premium”
“Much like Tesla, SpaceX is a bet on Elon Musk,” said Matt Kennedy, senior strategist at Renaissance Capital. “A market cap of $1.5 trillion-$2 trillion would certainly throw all traditional valuation methodologies out the window. It is instead best characterized as the ‘Elon Musk premium.'”
“The second richest person has been hovering around $300 billion, so about less than one-third of what Musk can potentially be worth tomorrow,” said Matt Durot, deputy editor at Forbes Wealth.
SpaceX’s Big Ambitions
As stated in its IPO prospectus, the mission of SpaceX is: “To build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe and to extend the light of consciousness to the stars.”
Musk reiterated his lofty goals: “Not just a few astronauts, I mean you literally. Whoever you are watching this, SpaceX wants to be able to take you to the moon, take you to Mars and ultimately beyond.”
Concerns & Criticism
Analysts at research firm Morningstar wrote that the IPO is “significantly overvalued,” estimating the company is only worth $780 billion – less than half its IPO value.
Nancy Tengler, who heads Laffer Tengler Investments, called the company’s AI business a “cash incinerator.” “It’s important to take some of the projections with a grain of salt,” Tengler said.
Democratic US senators Bernie Sanders and Elizabeth Warren condemned the trillionaire milestone. Warren said it should be a “wake-up call” and argued it underlines the need for wealth taxes.
Investor Optimism
“There’s a lot of hype, but I see the faith that investors have in Musk,” said Yordys Coro, an IT support contractor in Miami. “I’m going to hold on.”
Nevertheless, Tengler is buying into the company for its long-term potential. “Our investment horizon is three, five, and even ten years,” Tengler said.
Industry Praise
“He renewed the world’s respect for American ingenuity in automotive engineering,” said Bob Lutz, a former General Motors vice chairman.
JPMorgan Chase CEO Jamie Dimon said during a recent conversation with Musk: “Elon is the Edison of our time,” later hailing Musk as “our Einstein.”
