Elon Musk has become the world's first trillionaire following the record stock market debut of his space company SpaceX, with shares closing up just over 19% at around $161 on their first day of trading, giving Musk an estimated net worth of around $1.1 trillion, according to Forbes magazine.
Musk is the founder and chief executive of SpaceX and holds a stake of around 40%. At Friday's prices, his SpaceX holding alone is worth more than $800 billion, making it the largest part of his fortune.
His shares and options in electric carmaker Tesla, which he also leads, push him above the trillion-dollar mark.
However, this is entirely paper wealth in the form of equity holdings, which is subject to market fluctuations and cannot easily be converted into cash.
Largest IPO to date
SpaceX, known among other things for its Starlink satellite internet service, sold around 555.6 million shares at the issue price of $135, raising $75 billion in the process.
The previous record for the largest initial public offering (IPO) was held by Saudi Arabian oil company Aramco, which raised just over $29 billion in 2019.
At the issue price alone, SpaceX was already valued at $1.77 trillion, more than Facebook parent company Meta. Shares opened 11% higher at $150, and by the close of trading SpaceX was worth around $2.1 trillion.
The company now ranks among the most valuable US firms, behind only Nvidia, Apple, Google parent Alphabet, Microsoft and Amazon.
Nvidia, boosted by the AI boom, holds the top spot with a current valuation of just under $5 trillion.
Billions in losses on SpaceX's balance sheet
SpaceX's underlying business figures stand in stark contrast to its market valuation, with investors paying largely for the hope of future success. Last year, the company posted losses of around $4.94 billion on revenue of $18.67 billion.
In the future, artificial intelligence is set to be SpaceX's biggest business, including through data centres in space. The idea is that the sun can supply abundant energy there. Sceptics, however, point to challenges such as the considerable construction costs, difficult cooling despite the low temperatures in space and radiation that could damage circuitry.
In its prospectus, SpaceX estimated the future total market for artificial intelligence including infrastructure at more than $26 trillion, citing this as one justification for its high valuation.
New York economics professor Aswath Damodaran, known as a valuation expert, was sharply critical. He said that when he read the figure, he thought Musk's chatbot Grok had written the prospectus.
"This is a hallucination,” Damodaran told US broadcaster CNBC. “I would be embarrassed to even put that number out.”
Musk in charge
Musk will retain full control of SpaceX after the IPO, with a voting stake of more than 80%, based on shares carrying enhanced voting rights. Musk said at the trading debut that he had given SpaceX a 10% chance of success when he founded it.
In the first quarter of this year, SpaceX posted a loss of $4.28 billion on revenue of around $4.7 billion. One reason for the red figures is the high development costs of the large Starship rocket.
SpaceX has invested a total of more than $15 billion in Starship. The company expects the rocket to begin commercial flights in the second half of the year, once all tests are complete. It is intended to significantly reduce the cost of reaching space.
Starship is also set to carry Starlink satellites into orbit that will enable internet from space to be used directly on smartphones.
Starlink is SpaceX's main revenue driver, generating $3.26 billion in revenue in the first quarter. The satellite internet service now has around 10.3 million customers in 164 countries.
