Tesla and SpaceX stock, as investors know, have gotten hammered this week, and the drops have costElon Muska boatload of money.
Shares of his rocket and AI company have slid roughly 21% over the past two weeks through Friday trading, while the EV maker’s stock has tumbled about 23%. The selloff has left Musk billions of dollars below his short-lived status as a trillionaire.
Musk didn’t immediately respond to a request for comment.
Tesla stock dropped about 18% this week alone, and earnings disappointment is the main reason. Tesla reported a second-quarter operating profit of about $400 million Wednesday evening, far short of the Wall Street forecast for about $1.7 billion. Shares dropped almost 15% on Thursday, and extended their losses Friday by another 2.1% to trade at $313.03.
SpaceX stock is down for different reasons. For starters, it has had trouble with the 13th test flight of its huge, fully reusable Starship, scrubbing the launch twice. Starship development is very important for the stock. The spacecraft dramatically increases SpaceX’s ability to put things into orbit, while lowering the cost of doing so. Both factors are key for SpaceX’s ambitions to put artificial-intelligence data centers into space.
Investors also appear to be waiting for early investors to be able to sell stock. Early investors are often restricted from selling for up to 180 days after an initial public offering. Large blocks of stock on sale are an overhang for any company, as no one wants to buy ahead of a wave of selling. SpaceX stock fell 2.7% to close at $115.07 on Friday.
SpaceX’s IPO set a record for the amount of money raised, some $86 billion. A more ignominious distinction: At current prices, the stock has performed worse than 90% of U.S. IPOs with market capitalizations of $1 billion or more since July 2009, according to a Barron’s analysis.
Shares are well below their $135 IPO price and are down roughly 50% from an all-time high of almost $226 a share reached on June 16.
No one has been hurt more by the weak performance of both stocks than Musk, the CEO of both companies. From the peak of the SpaceX trade (when Tesla stock was north of $410) through midday trading on Friday, he has lost roughly $650 billion in wealth.
Now, Musk is worth a mere $800 billion. Other news reports have his wealth closer to $700 billion. Stock options, restricted stock, stock loans, and other things can make minor differences, but why quibble over $100 billion or so? Including all the stock he could earn, he’s worth closer to $900 billion (and has lost closer to $750 billion).
These numbers really don’t mean anything to regular people. With that level of wealth, you could buy a Starbucks coffee for you and a million of your friends every day for 400 years or so.
For investors, it’s a reminder that both Tesla and SpaceX are richly valued, but volatile, stocks. Both trade well north of 120 times estimated 2027 earnings, compared with a mere 19 times for the S&P 500. And Tesla shares are two or three times as volatile as other large tech stocks.
Extra volatility also means that big drawdowns are a feature of both shares, not a bug. Risk management steps, such as trimming positions on the stocks’ way up, can be helpful when dealing with volatile shares.
There is no way to avoid all of the pain, though, as Musk surely knows.
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