TEMPO.CO, Jakarta - Elon Musk became the world's first trillionaire on Friday after his SpaceX aerospace and Artificial Intelligence (AI) firm made its stock market debut on Friday, DW reported.
Shares pushed well past their opening price of $135 in the hours after the initial public offering (IPO) on the Nasdaq.
The shares closed up just over 19 percent at around $161 at the end of their first day of trading, valuing SpaceX at around $2.1 trillion and giving Musk an estimated net worth of around $1.1 trillion, according to Forbes magazine.
At one point shortly after 1 p.m. in New York (1700 GMT/UTC), the shares had been hovering around the $173 mark, a rise of almost 28 percent equating to a market capitalization of around $2.26 trillion for the Texas-based space and satellite company, before falling again slightly by the end of the day.
The valuation makes Musk the first person in history to hold a trillion-dollar fortune, at least in paper form — mainly through his stakes in SpaceX and electric carmaker Tesla.
How much did the record IPO raise?
SpaceX sold around 555.6 million shares at the issue price of $135, raising its target of $75 billion in the process.
This was comfortably the most lucrative IPO in history, eclipsing the roughly $29 billion that Saudi Arabian oil giant Aramco raised in 2019.
Musk had joined via videolink from a ceremonial bell-ringing at Starbase, the South Texas home of SpaceX, on Friday, saying the company was going public now because it needed money to fund goals like launching more satellites and even data centers into space.
He reiterated his goal "to make life multi-planetary."
"Not just a few astronauts, I mean literally you," Musk said. "Whoever you are watching this, SpaceX wants to be able to take you to the moon, take you to Mars, and ultimately beyond."
How does SpaceX's market cap match its revenues and profits (or losses)?
Not unlike Musk's other cash cow, Tesla, it's not immediately clear why SpaceX can command such a high valuation from investors.
The South African's own celebrity and success as a hype man, coupled with perceived potential in the company's future performance, play a larger part in the pricing than current fundamentals.
Last year, SpaceX's revenue was $18.7 billion, and it incurred a net loss of $4.9 billion on large investments in AI and other projects.
Friday's market capitalization valuation, therefore, is well over a century of the company's current revenue. By comparison, struggling Volkswagen's market capitalization of 48.46 billion euros represents less than two months' of the carmaker's revenue.
In other words, the Volkswagen Group generates more revenue in a fortnight than SpaceX does in a year — at a profit, not a loss — and yet it is perceived by investors to be worth more than 40 times less.
As for profits, SpaceX has not recorded a net gain in any calendar year. But similar issues did little to slow the stratospheric rise in Tesla's shares in recent years.
SpaceX is now ranked among the most valuable U.S. businesses, behind only Nvidia, Apple, Google parent Alphabet, Microsoft and Amazon. Tesla's value by market capitalization is $1.26 trillion, even though it has finally started turning a regular profit.
Nvidia, boosted by the AI boom, is in a league of its own in the overall nominal valuation league tables currently, valued by investors at almost $5 trillion.
Read: Musk's SpaceX IPO Holds Both Promise and Peril
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