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The past week proved challenging for Elon Musk, as both of his flagship companies, Tesla and SpaceX, experienced significant market downturns, casting a shadow over his recent ascent to trillionaire status.
Tesla shares plunged 18% over the course of the week, closing Friday at $313.03—a weekly slump not seen since 2022. This steep decline significantly impacted Musk’s net worth, following his celebrated milestone as the world’s first trillionaire. Acknowledging the shift, Musk posted on X, “(Former) trillionaire.”
The electric vehicle giant’s financial performance was the primary catalyst for the stock’s nosedive. Tesla reported second-quarter earnings that fell short of expectations, revealing a negative cash flow primarily driven by substantial investments in ambitious, long-term projects. These include the development of autonomous robotaxis, humanoid robots, and a cutting-edge chip fabrication facility.
Analysts at Argus Research noted in a report that these aggressive investments are expected to exert pressure on free cash flow and potentially delay earnings growth, without offering immediate returns to shareholders. “We believe it will be nearly impossible for Tesla to generate any consistency in profit growth in the near-term,” the firm stated, maintaining a “hold” rating on the stock. Year-to-date, Tesla’s stock has now fallen 30%, making it the poorest performer among the technology sector’s megacap companies.
Concurrently, SpaceX has seen its stock price on a consistent downward trajectory over the past month, a reversal from its initial post-IPO surge. The company’s shares have declined in four of the last five weeks, now trading approximately 43% below their record high closing price on June 16.
The company is poised to attempt the 13th test flight of its Starship rocket, the most powerful ever constructed, on Friday evening. This iteration, Starship V3, is scheduled for launch from SpaceX’s operational hub in Starbase, Texas. The success of this fully reusable rocket is considered paramount to SpaceX’s strategy of significantly expanding its Starlink satellite constellation in the near future.
SpaceX had previously postponed Thursday’s planned test flight due to adverse weather conditions. A prior attempt was aborted when the rocket’s booster experienced an issue that initiated an engine shutdown just as ignition was commencing, according to an employee during the live stream of the event.
A successful launch of Starship V3 would mark a significant milestone for SpaceX, representing its first successful test flight of the upgraded rocket since its initial public offering. The Starship program is a cornerstone of SpaceX’s long-term vision, aiming to facilitate the return of U.S. astronauts to the lunar surface and eventually power manned missions to Mars.
Musk also made a notable public appearance this week, participating in a highly publicized interview with The Economist. During the conversation, The Economist’s Editor-in-Chief, Zanny Minton Beddoes, pressed Musk on his endorsements of populist and far-right political movements in various countries, including his support for former President Donald Trump and his expressed admiration for parties such as Germany’s AfD and the UK’s Restore Britain. Musk defended his stance, characterizing his supporters as “just normal people” and criticizing what he described as an “absurd characterization” of these movements by traditional media.
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