Al Root
Lose $100 billion, make $40 billion. It's all a day in the life of Elon Musk.
Monday, Bloomberg reported that Musk's SpaceX was considering a tender offer of stock valuing the company at $350 billion. SpaceX didn't immediately respond to a request for comment, but this looks like a way to provide employees and insiders with some liquidity, rather than a capital raising.
The company's shares aren't listed on an exchange.
Recent valuation estimates were in the range of $250 billion, so selling stock at a valuation of $350 billion would mean the company just got about $100 billion, or 40%, more valuable.
The $350 billion figure extends SpaceX's lead as the most valuable aerospace and defense company on the planet. GE Aerospace has a market value, including cash and debt, of about $210 billion. Lockheed Martin's value is about $140 billion.
The valuation uptick is a also boon for Musk, who still holds an estimated 40%-plus of the SpaceX stock outstanding. It amounts to another $40 billion or so in wealth for the entrepreneur, who is already the world's richest man.
That is a nice boost after Musk theoretically lost $100 billion in wealth on Monday after Delaware Chancery Court Judge Kathaleen McCormick rejected his 2018 pay package as CEO of Tesla for a second time.
The package awarded him some 300 million incentive-laden stock options, but McCormick nullified the award in January, citing inadequate shareholder disclosures. Shareholders voted in favor of the package, including new disclosures, again this year, but that didn't matter for McCormick.
Few on Wall Street believe the decision means Musk's money is gone. Tesla can appeal, and if that isn't successful, the board can design a new pay package. Still, about $100 billion of wealth is -- somewhat -- at risk with the decision.
Including the options and SpaceX, Musk's wealth is rapidly approaching $400 billion. He controls about 20% of Tesla stock, including his options, and owns parts of X, xAI, and other companies.
As for SpaceX, what makes it so valuable? For starters, it is the dominant launch provider globally. Pioneering reusable rockets has driven costs far below competitors. Low launch costs allowed the company to put thousands of lost-cost satellites in orbit, making possible the company's profitable Starlink Wi-Fi business, which has increased its subscriber base by more than 100% a year in recent years. (SpaceX COO Gwynne Shotwell said recently Starlink has some five million subscribers.)
Then there is Starship, SpaceX's largest rocket system and the largest rocket ever built by humans. Size and full reusability mean even lower costs for the space company down the road.
Who knows, SpaceX could even turn out to be as valuable as Tesla. The electric-vehicle maker's market value is roughly $1.1 trillion.
Write to Al Root at allen.root@dowjones.com
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December 03, 2024 08:44 ET (13:44 GMT)
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