Mohit Oberoi
SpaceX is raising $750 million in a new funding round that values the company at $137 billion. The company was co-founded by Elon Musk whose net worth dived in 2022.
CNBC reported that Andreessen Horowitz, popularly known as a16z would be the lead investor in the funding round. SpaceX raised $2 billion in 2022 and at a May funding round it was valued at $127 billion.
While several startup companies including Stripe, Ant Financial, ByteDance, and Klarna have taken a haircut in their valuations, SpaceX’s valuation is higher as compared to the last year.
Even Tesla’s valuation plummeted in 2022 and the stock lost 65% in the year. It was the worst year ever for Tesla and the company lost $675 billion in market cap last year.
Tesla was the fifth worst-performing S&P 500 stock last year. Among others, Musk’s Twitter antics took a toll on Tesla stock in 2022.
Tesla’s Market Cap Plummeted in 2022
Apple lost $846 billion in market cap in 2022 and was the biggest loser in terms of market cap. Amazon was a close second and lost $834 billion in market cap. However, from its 2021 peak, Amazon has lost over $1 trillion.
Amazon is the only company to lose over $1 trillion in market cap. Apple too risked falling below the $2 trillion market cap and briefly lost its position as the world’s largest company to Saudi Aramco.
In 2021, Musk’s net worth surpassed $300 billion and he became the first person ever to achieve that feat. However, 2022 was a different ballgame for Musk and he lost his position as the world’s richest person to Bernard Arnault. Musk also became the first person ever to lose $200 billion in net worth.
SpaceX Valuation Rises Even as Musk’s Net Worth Plummeted
Also, for the first time ever, Tesla did not account for the bulk of Musk’s net worth. SpaceX overtook Tesla in terms to contribution to Musk’s net worth. Incidentally, Morgan Stanley analyst Adam Jonas, who has a buy rating on Tesla stock, last year predicted that SpaceX could become more valuable than Tesla.
He said SpaceX is “challenging any preconceived notion of what was possible and the timeframe possible, in terms of rockets, launch vehicles and supporting infrastructure.”
In his note, Jonas said, “The majority of our clients (by survey and client discussions) believe SpaceX could ultimately command a higher valuation and significance than even Tesla.”
Jonas added, “More than one client has told us if Elon Musk were to become the first trillionaire … it won’t be because of Tesla. Others have said SpaceX may eventually be the most highly valued company in the world – in any industry.”
SpaceX Now Contributes More to Musk’s Net Worth than Tesla
Jonas’ predictions about SpaceX almost came true. However, more than a spike in SpaceX’s valuation, it is due to the crash in Tesla stock. While Tesla stock soared towards the end of 2022, it is trading lower in premarket price action today after missing Q4 2022 delivery estimates.
As demand for Tesla’s higher-priced models has slowed down, the company is reportedly looking to launch lower-priced models.
Meanwhile, the high valuation that SpaceX managed in the funding round looks encouraging.
Startup Valuations Came Down Sharply in 2022
The turmoil in the stock market is also manifesting in startup companies. Given the turmoil in public markets, valuations of private startup companies have also come down.
Instacart which was among the most widely awaited IPOs of 2022 reportedly scrapped its listing plans amid the turmoil in the broader market. The US IPO market was virtually dead in 2022 amid the pessimism toward growth stocks.
The US IPO market sagged last year as investors have been cold to new listings due to the mayhem in growth stocks. However, there is still investor interest in companies like SpaceX. We have a list of some of the upcoming IPOs.
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This article was written for Business 2 Community by Mohit Oberoi.
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