Elon Musk Lost His Trillionaire Status as SpaceX Shares Dropped 26%. Are Tesla and SpaceX Stock Still a Buy?
Key Points
Elon Musk owns a substantial percentage of both companies, and they're both sliding right now.
Tesla has been a fabulous performer over time, but it's expensive right now as profits shrink.
Elon Musk has majority voting rights at SpaceX.
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Elon Musk has been the wealthiest man in the world since 2024, and he reached trillionaire status for the first time when Space Exploration Technologies (NASDAQ: SPCX) stock briefly topped $200 a share in its first week of trading. However, SpaceX stock is now 26% off its highs, and Elon Musk is no longer a trillionaire.
What does that mean for his companies, SpaceX and Tesla (NASDAQ: TSLA), and for shareholders?
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Elon Musk and ownership
Many of the world's billionaires have their wealth tied up in stock, usually as executives of their companies. Elon Musk heads two of the world's top-15 most valuable companies, and he owns a substantial stake in each. As of July, he owns 717.1 million Tesla shares, or 15.7% of the company, which is worth about $282.4 billion at today's price. He also owns about 46% of SpaceX stock, with more that could come his way based on performance measures. At today's prices, that's $704.5 billion worth, and together, his net worth is $987 billion, just shy of $1 trillion.
Both of these stocks have been sliding lately, although they're both trillion-dollar companies. SpaceX is the seventh-most-valuable company in the U.S., worth $1.94 trillion, while Tesla is 11th and worth $1.48 trillion. Tesla stock is down 12.4% this year. At $148 a share, SpaceX stock is still over its IPO price of $135, but it's dropped below its market open price of $150.
What about other shareholders?
Tesla shareholders have been well-rewarded over time. It's up more than 24,640% since it went public and has almost certainly minted some millionaires, even retail investors who aren't company insiders. However, like SpaceX, it has attracted investors based on hype and Elon Musk fandom. It's a growing company, but there's accelerating competition in the electric vehicle space, and there are worries about lower profits and a high valuation -- based on its shrinking net income, the stock currently trades at 368 times trailing 12-month earnings.
SpaceX is even more expensive, trading at 110 times sales, and it's reporting high net losses. It's even clearer that the investing thesis is based on confidence in Elon Musk's vision.
Both of these are risky stocks, but SpaceX has an added risk tied to Elon Musk's ownership, and that's his 82.3% voting rights. That means other shareholders have no recourse if they're unhappy with his leadership or in making any other decisions about the company and its direction.
Right now, neither one of these companies looks like a great bargain on the dip.
Should you buy stock in Space Exploration Technologies right now?
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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