Sometimes the numbers are the story.
The absolute value of Elon Musk's wealth and the recent changes in that wealth are something to behold, and tell investors something about expectation, optimism, and stock market volatility.
Tesla and SpaceX shares, the main source of Musk's wealth, just won't stop going down. Tesla shares were off 1.8% at $303.67 shortly after the market opened Tuesday, while S&P 500 futures were up 0.1%. SpaceX stock was down 5.3% at $107.25.
Coming into Tuesday trading, Tesla stock was down 17% since the company reported weaker-than-expected second-quarter results on July 22. SpaceX stock was down 45% from its record closing high reached days after its June record-setting IPO.
Barron's noted recently that Musk's wealth was down by roughly $650 billion since SpaceX hit its June high. He lost another $10 billion or so on Monday.
Musk has lost roughly as much wealth as the next three mega-billionaires, Larry Page, Sergey Brin, and Jeff Bezos, are worth combined.
Musk is still worth more than $700 billion. Or about 45 times what China's Zhu Yiming is worth following the blockbuster IPO of CXMT. The memory chip company jumped 466% on the first day of trading this past week. (It still takes about 22 Chinese billionaires to equal one Musk.)
To be sure, Musk is still very, very rich. He could buy all the Ferraris ever produced five times over.
Musk is also used to wealth volatility. It's inevitable with a fortune that is founded on promises of future earnings. Tesla stock trades for 175 times estimated 2026 earnings. The rest of the so-called Magnificent Seven megacap stocks trade for about 24 times. SpaceX, despite its recent declines, still trades for just under 40 times estimated 2026 sales.
Of course, SpaceX sales are supposed to grow 16-fold by 2031. Wall Street projects 2031 sales of roughly $650 billion, up from about $40 billion this year. And Tesla earnings -- after three years of annual declines -- are supposed to hit $10 a share in 2031, up from an estimated $1.70 in 2026.
Large stock valuations tied to big growth expectations are always more subject to the whims of investor sentiment. Take SpaceX: Morgan Stanley analyst Adam Jonas rates shares Buy and has a $300 price target; his bear case, however, is $75 dollars. That scenario assumes, among other things, SpaceX can't get its huge, fully reusable rocket Starship right until 2029.
Starship's lower costs are key to SpaceX's plans to put low-cost AI data centers into orbit. The rocket completed a successful 13th test flight this past week.
The difference in Jonas' base- and bear-cases is about $3 trillion in market value, or twice what SpaceX is worth today. That's a lot.
To put it in a financially nerdy way, Tesla and SpaceX stocks are both long-duration investments.
Duration is a term borrowed from bond investors that essentially tells an investor when they get their money back -- including coupon payments. A 30-year bond has a longer duration than a one-year bond. Longer-duration bonds are more sensitive to interest rate swings.
Stocks are inherently long-duration investments, but growth stocks are longer-duration than most. SpaceX and Tesla earnings over the coming few years are a small fraction of the current stock prices, which means that most of their value is tied to earnings far down the road. Longer-duration stocks are sensitive to rates, like bonds -- they are also sensitive to anything that materially changes the outlook.
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