Is it a meme stock? Elon Musk loses trillionaire status
Elon Musk’s SpaceX crashed into the ground.
richest man in the world‘s satellite and rocket and artificial intelligence company launched into the stratosphere last month with the largest IPO in history.
The company’s valuation soared to US$2.5 trillion ($3.6 trillion) in mid-June, boosted by Musk’s celestial promises of data centers in space and a colony of one million people on Mars.
But when SpaceX’s shares briefly fell below its IPO price of $135 on Wednesday, it was a sign that the impetus that briefly made Musk the world’s first trillionaire was slowing.
It was also a sign that investors were starting to price in a more serious reality: one in which SpaceX has lost $13 billion since 2023, and Musk is simply asking them to “trust me” on whether his grand vision for the future will come true.
You’d be forgiven for thinking SpaceX has all the hallmarks of a “meme stock” right now; a company whose share prices are driven by online hype rather than anything tangible.
All the ingredients are there to send SpaceX’s share price soaring to the stars. But Musk’s character makes the whole thing seem very combustible.
The truth is that for all Musk’s astronomical ambition, it is difficult to clearly understand the true value of SpaceX, as his promise is full of contradictions.
Cosmic data centers and Mars colonies seem like the stuff of space opera. But the success of Starlink, SpaceX’s satellite internet business, which is the world’s fastest-growing telecommunications company and accounts for two-thirds of the company’s revenue, is real.
And because much of SpaceX’s excitement is fueled by belief in its role as part of the boom in AI infrastructure, its enduring success depends on whether the technology delivers growth forever or a bubble burst.
But the key to the uncertainty around SpaceX is Musk’s character. It has moved sharply to the far right since the pandemic, confirming all sorts of conspiracy theories, including the belief that “elites” are using immigration to hollow out western civilisation.
While the political bromance with Donald Trump came to an inevitably fractious conclusion last year, Musk, like the president, is an inveterate internet troll who spends inordinate amounts of time fighting on the social media platform he owns, X, and allegedly consumes heroic doses of Ketamine. (Musk said he took Ketamine to treat his depression but denied abusing the drug.)
Like Trump, Musk has essentially turned himself into a reactionary protagonist whose entire personality is so polarizing that objectivity is impossible. Any opinion about Musk is essentially political. In addition, opinions about SpaceX are the same.
It’s no surprise, then, that Australia’s richest person, Gina Rinehart, quickly bought a US$1 billion ($1.4 billion) stake in SpaceX, her biggest investment outside of iron ore, just days after last month’s IPO.
The mining magnate shares Musk’s embrace of far-right politics. And like Musk, he’s rich enough to spend his money on conservative virtue-signalling causes.
Of course, it would be absurd to suggest that SpaceX’s share price is determined solely by the populist right. After all, James Murdoch, the disgrace of the News Corp dynasty, owns an estimated US$7.5 billion worth of SpaceX shares, thanks to three strategic acquisitions he made through his private investment firm in 2019 and 2020.
Murdoch’s younger son’s more progressive policies have been one of the sources of conflict with his father, Rupert, but have not stopped him from remaining friends with Musk and sitting on the board of electric car maker Tesla. After all, Musk has made Murdoch richer than his father ever did.
But the din of noise following Musk is another small twist in SpaceX’s story.
Even if we take politics out of the equation, it may take some time for the market to get a real feel for what SpaceX is worth. Only 4 to 5 percent of the company’s shares are currently tradable, with the rest still locked up among company insiders, a level of scarcity that is driving the share price up.
Recently joined the stock Nasdaq100Being a member of this index, a technology-heavy index for the US stock market, forces funds to follow the index to buy shares, further inflating the price.
The only reason SpaceX is there is because this year Nasdaq changed its rules to effectively speed up the company’s entry into the index. Musk’s companies will continue to boom as long as the world continues to bend to his will.
“[The] Nasdaq rigged it and changed the laws of the land to fit it into the Nasdaq index even though it made no profit,” veteran British investor Jeremy Grantham told a podcast recently.
He also called SpaceX’s float “the craziest IPO in human history.”
The point is, all the ingredients are in place to lift SpaceX’s share price to the stars. But Musk’s character – a flamboyant showman with a volatile personality and a propensity for provocativeness – makes the whole thing seem very combustible.
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Kishor Napier-Raman is senior business writer for The Sydney Morning Herald and The Age. He previously worked as a CBD columnist and reporter in the federal parliament press gallery.Connect with: X or email.
