Elon Musk’s journey to changing into the world’s first trillionaire will seemingly be powered by rockets relatively than automobiles, as SpaceX now accounts for almost two-thirds of the Tesla CEO’s wealth.
Musk grew to become the primary individual ever to high the $800 billion mark this week, together with his internet price now round $845 billion, in accordance to Forbes. He is price greater than the following three richest folks – Google co-founders Larry Web page and Sergey Brin and Meta CEO Mark Zuckerberg – mixed.
The tech magnate’s unprecedented wealth surged after his aerospace and protection firm, SpaceX, acquired his synthetic intelligence and social media firm, xAI, this week in a deal that valued the merged entity at $1.25 trillion, in accordance to monetary paperwork reviewed by CNBC.
With Musk’s possession estimated at round 43% within the mixed firm, his stake would be valued at over $530 billion, marking a speedy shift in his fortunes.
Musk’s priorities are additionally seemingly shifting his focus extra to SpaceX than Tesla, a actuality that the EV firm acknowledged in its newest proxy submitting, the place it famous that “a majority of Mr. Musk’s wealth is now derived from different enterprise ventures.”
Final yr, Musk confirmed he wants to take SpaceX public in 2026, which might make Tesla a much less prevalent element of his liquid wealth. However he nonetheless has to get buy-in from public market traders, who may be reluctant to pay up for a firm that mixes a protection contractor and satellite tv for pc enterprise with a cash-burning AI mannequin developer that is attempting to tackle Google, OpenAI and Anthropic.
SpaceX has obtained greater than $20 billion from contracts with the federal authorities, in accordance to analysis from FedScout, with extra profitable contracts on the way in which, and Musk has framed the acquisition as the following step in the direction of “orbital information facilities.”
“You have muddied up your story a little bit as a pure-play SpaceX shareholder, however the alternative has gotten a lot larger,” mentioned Greg Martin, managing director at Rainmaker Securities, which works on transactions for pre-IPO corporations. “It is smart for them to entry a a lot bigger capital market, particularly with xAI, which does have insatiable want for capital.”
XAI is at present being investigated by authorities in Europe, Asia, Australia and California, after the corporate’s Grok picture generator let customers create and share “deepfake” express photographs of youngsters and girls.
It is not clear whether or not Musk’s merger would require any regulatory evaluate. Democratic senators this week known as for the Pentagon to examine SpaceX over undisclosed Chinese language traders within the firm.
Musk nonetheless has a main incentive to keep targeted on Tesla. Late final yr, shareholders voted to approve a new pay bundle that would be price $1 trillion, paid out in 12 tranches, if Tesla hits sure milestones, together with market cap beneficial properties and operational achievements, over the following decade. The primary tranche of inventory will get paid out if Tesla hits a market cap of $2 trillion, about $460 billion greater than the present valuation.
Tesla mentioned within the proxy submitting detailing the plan that the construction goals to “forestall him from prioritizing these different ventures.”
Nonetheless, Columbia Legislation professor Dorothy Lund, a company and securities legislation skilled, advised CNBC in an electronic mail that the technique may not work.
Musk is now “negotiating comp packages at every firm, with every board attempting to induce him to listen by way of comp,” Lund wrote. “If SpaceX/xAI provides him extra money and a larger share, that Tesla bundle may look much less interesting.”
Earlier than the xAI acquisition, Musk owned about 42% of SpaceX and managed 80% of the votes, in accordance to FCC experiences. His present possession in Tesla is between 11% and 15% of shares excellent, relying on what’s included in his stake, in accordance to public filings.
With Tesla’s model worth and core auto gross sales in decline, and its long-promised robotaxis and humanoid robots nonetheless in improvement, the corporate’s inventory value is down about 9% this yr.
Based mostly on Musk’s possession in SpaceX, and assuming Tesla shares are flat, the rocket and AI firm would have to attain a valuation of about $1.6 trillion for the world’s richest individual to attain trillionaire standing.
Ross Gerber, CEO of funding agency Gerber Kawasaki, is betting that Musk will not ever need to take SpaceX public as a standalone entity. Somewhat, he expects to see a merger of SpaceX and Tesla, and he speculated this week it will record on the New York Inventory Change beneath ticker image X, which previously belonged to U.S. Metal.
Gerber is a long-time Tesla investor and now holds shares in SpaceX after his agency beforehand backed Musk’s leveraged buyout of Twitter in 2022. Musk rebranded Twitter as X, and merged the social community with xAI final yr.
Consolidating his empire is smart, Gerber mentioned, as a result of it will permit Musk to fulfill his dream of working one massive firm beneath the model identify X. Following Alphabet’s announcement this week that it’s going to spend up to $185 billion on capex this yr, Gerber mentioned Musk goes to have to be ready to usher in huge sums of money.
“This enormous entity would make it simpler for them to elevate cash and borrow,” he mentioned. “How else is Musk supposed to compete and turn into a main AI participant?”
Musk did not reply to a request for remark.
WATCH: SpaceX acquires xAI
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