SpaceX & xAI: Musk’s Trillion-Dollar Trajectory

Elon Musk’s Ascent: SpaceX Fuels Historic Wealth Surge, Overtaking Tesla in Financial Dominance

Elon Musk’s trajectory toward becoming the world’s first trillionaire appears to be increasingly powered by rockets, as his stake in SpaceX now represents a substantial majority of the Tesla CEO’s net worth. This past week, Musk shattered the $800 billion wealth milestone, with his net worth reaching an estimated $845 billion, according to Forbes. This figure surpasses the combined net worth of the next three wealthiest individuals: Google co-founders Larry Page and Sergey Brin, and Meta CEO Mark Zuckerberg.

The unprecedented surge in Musk’s wealth is largely attributable to the recent acquisition of his artificial intelligence and social media company, xAI, by his aerospace and defense giant, SpaceX. This strategic merger, valued at $1.25 trillion according to recently reviewed financial documents, has dramatically reshaped Musk’s financial landscape. With an estimated 43% ownership in the combined entity, Musk’s stake is now valued at over $530 billion.

This significant financial recalibration signals a potential shift in Musk’s operational focus. Tesla, in its latest proxy filing, acknowledged this by stating that “a majority of Mr. Musk’s wealth is now derived from other business ventures.” This aligns with Musk’s previously stated intention to take SpaceX public in 2026, which would diversify his liquid wealth away from a sole reliance on Tesla.

However, the path to a successful SpaceX IPO presents its own set of challenges. Securing buy-in from public market investors may prove difficult, given the company’s multifaceted nature, encompassing defense contracting, satellite operations, and a capital-intensive AI development arm vying against established players like Google, OpenAI, and Anthropic. SpaceX’s strong ties to government contracts, including over $20 billion secured from the federal government according to FedScout, coupled with Musk’s vision of “orbital data centers,” could appeal to certain investor segments, but the integration of xAI introduces complexities.

“You’ve muddied up your story a little bit as a pure-play SpaceX shareholder, but the opportunity has gotten a lot bigger,” commented Greg Martin, managing director at Rainmaker Securities, a firm specializing in pre-IPO transactions. “It makes sense for them to access a much larger capital market, especially with xAI, which does have an insatiable need for capital.”

Adding to the complexities surrounding the merged entity are ongoing investigations into xAI. Authorities in Europe, Asia, Australia, and California are examining the company’s Grok image generator following its alleged misuse in creating and disseminating explicit “deepfake” imagery. Furthermore, concerns have been raised by U.S. senators regarding potential undisclosed Chinese ownership within SpaceX, prompting calls for a Pentagon investigation. The implications of these regulatory and governmental probes on the SpaceX-xAI merger and potential IPO remain to be seen.

Despite the burgeoning influence of SpaceX, Musk retains substantial incentives to remain engaged with Tesla. Shareholders approved a lucrative compensation package last year, potentially worth up to $1 trillion over a decade, contingent on Tesla achieving specific market capitalization and operational milestones. The initial tranche of this package vests upon Tesla reaching a $2 trillion market cap, a significant increase from its current valuation. Tesla’s proxy filing suggests this structure is designed to “prevent him from prioritizing those other ventures.”

However, corporate and securities law expert Dorothy Lund from Columbia Law, cautions that this strategy may not be foolproof. “Musk is now negotiating compensation packages at each company, with each board trying to induce him to pay attention via compensation,” Lund explained. “If SpaceX/xAI offers him more money and a larger stake, that Tesla package may look less appealing.”

Prior to the xAI acquisition, Musk commanded approximately 42% of SpaceX with 80% of the voting control, according to FCC reports. His current ownership in Tesla falls between 11% and 15% of outstanding shares. With Tesla’s brand value and core auto sales showing signs of decline, and its highly anticipated robotaxis and humanoid robots still in development, the company’s stock has seen a nearly 9% dip this year. For Musk to reach trillionaire status solely through his SpaceX stake, assuming Tesla’s performance remains stable, the rocket and AI company would need to achieve a valuation of approximately $1.6 trillion.

Meanwhile, industry observers like Ross Gerber, CEO of Gerber Kawasaki, propose an alternative future scenario: a merger between SpaceX and Tesla. Gerber speculates this combined entity could eventually list on the New York Stock Exchange under the ticker symbol X, a move he believes would consolidate Musk’s empire and align with his ambition to operate under a unified “X” brand. Following Alphabet’s substantial $185 billion capital expenditure announcement, Gerber argues that such a consolidated entity would enhance Musk’s ability to raise capital and secure financing, essential for competing in the AI arena. “This huge entity would make it easier for them to raise money and borrow,” he stated. “How else is Musk supposed to compete and become a major AI player?”