Elon didn’t lose $600 billion from a bank account. The number disappeared because most of his wealth was in stocks. When SpaceX ( NASDAQ:SPCX ) jumped after its public listing, the value of his stake pushed his estimated wealth past $1.3 trillion.
When the stock later fell by half from its high price, this paper gain disappeared. His net worth fell to about $725 billion, and his run as the first trillionaire lasted only a few weeks.
The stock began trading on June 12 after the company priced its offering at $135 per share. Buyers paid $150 for the first trade, and the session ended at $161. Four days later, the price reached $225.64.
This gave SpaceX a market value approaching $3 trillion. By late July, shares were near $113, about 16% below the offer price. On July 24, Elon posted the phrase “(former) trillionaire.”
SpaceX’s small public offering caused Elon’s paper wealth to rise sharply and then fall
The listing raised $85.7 billion after the banks exercised the additional stock option attached to the deal. This made it much larger than the listing of Saudi Aramco in 2019 (Tadawul: 2222). The SpaceX deal started with a valuation of about $1.75 trillion.
The company had 13.2 billion shares, but public buyers only acquired about 4.9% of them. Most of the largest companies in the major indexes have roughly 80% of their shares available for regular trading, based on data from Nasdaq Inc. (NASDAQ: NDAQ).
SpaceX entered the market with very few supplies, so even a rush of new orders could push the price well above its IPO level.
Once traders started selling, the stock fell quickly. It closed at $118.24 on July 23 and $115.07 on July 24. By Friday, SpaceX was worth about $1.5 trillion, nearly half its value at its peak in June.
Short sellers benefited from the decline. Ortex Technologies estimated that bearish traders made unrealized gains of about $15.5 billion. Selling positions covered approximately 56% of the total public offering, equivalent to about 360 million shares.
Elon warned on social media that companies that hold very large short-term bets against SpaceX for a long time have very little chance of survival.
The stock is also poorly rated compared to other major US listings. Barron’s has placed SpaceX in the bottom 10% of US IPOs worth more than $1 billion since July 2009.
Over the first 27 trading days, SpaceX shares fell 23% from the first day’s close of $161. A group of 955 similar IPOs achieved an average gain of 0.8% over the same period.
The new stock offering and Tesla’s earnings loss put pressure on Elon’s wealth
To make matters worse, SpaceX’s early investors and employees could begin selling up to 911.5 million shares on August 6, two days after the company reports its first quarterly results as a public company.
This block alone would raise the tradable portion of the company from about 4.9% to about 12%, according to CNBC calculations.
More locked shares will become available in September, November and December as the 180-day lock-up period expires in phases. Goldman Sachs (NYSE:GS), which led the deal, could also allow some investors to sell early. Elon’s SpaceX shares will remain locked up until June 2027.
SpaceX’s decline came during Tesla’s (NASDAQ: TSLA ) worst week since 2022. Tesla shares fell 18% after second-quarter results fell short of Wall Street estimates. Revenue was $28.2 billion, while adjusted earnings were $0.33 per share, less than the $0.50 that analysts had expected.
Tesla also recorded negative free cash flow for the first time in two years. It has spent money on robot taxis, a human-like machine called Optimus, and giant factories to make artificial intelligence chips. This was another blow to Elon’s fortune, as Tesla was one of his largest listed assets.
So the Tesla report hit Elon from a second direction, while SpaceX was already falling. His wealth estimate includes shares at current market prices, so the 18% weekly loss in Tesla shares also lowered the value assigned to that share that week.
