Elon Musk as Our First TrillionaireAlthough I spend most of my time online reading alternative websites and listening to alt-podcasters, I always try to balance that out by retaining a solid grounding in the mainstream world.For example, every morning I carefully read the entire print edition of the Wall Street Journal while also often lightly browsing the online New York Times. For decades, reading the print edition of the Times had also been part of my morning ritual but the decline in its quality became so obvious and so irritating that I’d finally abandoned that effort a year or two ago.Another mainstay has been my careful reading of the Economist, certainly the world’s most influential newsweekly. I’ve now been a continuous subscriber for forty-seven years, almost certainly longer than any of the magazine’s own editors or staff writers, and probably stretching back to before many of them were even born.Indeed, when we consider the relatively small subscriber base of the Economist during the late 1970s, a select group that hardly skewed youthful, and combine that with the mortality tables, I’d suspect that there are very few if any extent subscribers who can match my unbroken longevity on that score. Moreover, during the mid-1980s I may have even played some small role in prodding the periodical into further globalizing its coverage.Therefore, when I noticed that the current issue put industrialist Elon Musk on the cover, I took that verdict quite seriously. The provocative text heading was “Should You Be Afraid of Elon Musk?”The obvious reason that Musk received that singular honor had been the recent record-setting IPO of SpaceX, a company that he had founded two dozen years earlier. Within an initial market value of nearly $1.8 trillion, not only did SpaceX rank as the biggest IPO in history, but within days Musk’s own large ownership stake had made him the world’s first trillionaire. Until recently, few had probably ever expected to see that mark set, let alone so quickly.Although Musk had become a prominent figure in the business world many years ago, with his activities regularly mentioned in my newspapers, until the last few years I’d never paid much attention to him. He’d become famous as the CEO of Tesla, the pioneering electric car company. But I’d been skeptical that there was any large market for that product except for affluent trendy liberals lured by massive government tax-credits into saving the world from the menace of greenhouse gases.Indeed, since I’d never watched podcasts on business or technology issues, I’d only discovered a year or so ago that I’d been regularly mispronouncing his first name, using a short “E” when it should have been long.However, a few years ago he’d purchased Twitter and taken it private. The resulting political controversies surrounding his views and activities had caught my attention, leading me to discuss some of them in my articles.And long before he’d become a trillionaire or graced the cover of the Economist, I’d actually somewhat anticipated the latter by publishing a February 2024 article that opened by arguing that Musk had already reached the pinnacle of the Western world.The two most powerful and influential figures in today’s world are surely Chinese President Xi Jinping and Russian President Vladimir Putin. But I think a reasonable case can be made that Elon Musk should be placed third on that global list.Our current Western era is dominated by oligarchic wealth and Musk has ranked as the richest man in the world for much of the last few years. The technology industry carries enormous prestige and influence, and Musk is the owner of Tesla, the pioneering electric vehicle company, whose market value is greater than that of the world’s next five car companies combined. His very innovative SpaceX rocket company has become the central pillar of the West’s entire space program, crucial for American national security, while his equally innovative Starlink satellite company has proven itself absolutely vital to Ukraine in its NATO-backed war with Russia, inspiring imitators in China and other countries. More than a year ago, Musk bought Twitter for $44 billion and took the company private, giving him a media empire far greater than that of any American television network and perhaps as powerful as most of them combined. Meanwhile his own 170 million Twitter Followers provide him a personal megaphone that would be envied by any American president or top Hollywood celebrity.What other world figure could match Musk in such global power and influence? President Joseph Biden is elderly and doddering and widely despised, very much a Brezhnevian figure from the last days of the decaying USSR and obviously someone totally controlled by his nervous aides. Although former President Donald Trump is the all-but-certain 2024 Republican Presidential nominee and stands a better than even chance of recapturing the White House, he is facing 91 felony charges in court and is detested by nearly half the American population, including an overwhelming majority of our elites; his likely victory this November would be almost entirely due to Biden’s unpopularity. Indeed, given such glaring weakness at the top of the American political hierarchy, some shrewd observers have argued that Israeli President Benjamin Netanyahu probably commands greater influence in our own Congress than either Biden or Trump; but in his own country, Netanyahu’s support is at 15%, and he faces a sea of corruption charges, so he might easily end his life in a prison cell.In our deeply polarized society, nearly all our other politicians are admired by small devoted followings, but usually despised by many, many more, and I can’t think of any private citizen who can remotely match Musk’s wealth, technological prestige, and media reach.Meanwhile, traditional spiritual authorities have been reduced to mere shadows of their predecessors. Some nine hundred years ago, Pope Gregory VII humbled a German emperor and even a generation or two ago, Pope John Paul II wielded great international authority, but these days our current Pope Francis only commands a tiny sliver of such influence, and no other religious leader of greater weight comes to mind. So perhaps by default, I think Musk is the most powerful figure in the Western world…Elon Musk Goes to CanossaRon Unz • The Unz Review • February 12, 2024 • 5,400 WordsThe SpaceX IPO and Its Subsequent CollapseNo hint of this major financial setback came in the interview, so either the Economist editor was notably polite or it had been conducted some time before its Wednesday release on YouTube.Obviously, stock prices go up and down, and in his discussion Musk emphasized that he was building a company for the future, deliberately insulated from the transitory pressure of impatient investors. But unless his stock price soon recovers, there may be broader economic consequences for other companies.As SpaceX was preparing for its IPO, media accounts regularly bracketed it with OpenAI and Anthropic, two other money-burning companies aiming at trillion-dollar IPOs.These other two start-ups were leaders in AI, and despite its name, most of SpaceX’s perceived future value fell into that same category.So as the SpaceX price began to falter, OpenAI declared that it was postponing its IPO to 2027. Given the continuing slide in Musk’s company, I expect that Anthropic will ultimately be forced to do the same. But both these companies are burning their venture-capital at an astonishing rate, so such delays might put them at considerable risk.Furthermore, there are reasons to believe that the decline in SpaceX stock will continue and might even accelerate. Although its IPO was valued at nearly $1.8 trillion, only 5% of the stock was initially available for trading, and over the next few months large additional tranches will come on the market. We can assume that many suddenly wealthy SpaceX employees will be eager to sell some of their holdings and buy cars, houses, and private planes after so many years of self-denial, while venture capitalists will want to lock in some of their enormous capital gains before the stock might further decline. And even relatively small sales along those lines might lead to a downward spiral.Prior to the Dotcom boom of the late 1990s, companies were usually required to demonstrate three consecutive years of profitability before going public, but despite the resulting disaster that rule was never restored. SpaceX would have emphatically failed that test, losing $5 billion in its most recent year with red ink projected as far as the eye can see. Moreover, its revenues were just $19 billion per year, so its IPO price was almost 100 times greater, about as extreme a valuation as anyone had ever seen.There were also longstanding rules that a company’s shares needed to have been traded for at least several months before it could be added to a major market index. This protected passive American investors, including insurance companies and pension funds, from being automatically stuffed with a newly issued and volatile stock. But SpaceX was too special for that, so NASDAQ changed that rule as did others and they have now suffered the consequences of the SpaceX collapse.Financial gravity finally caught up with SpaceX, and we will soon see just how hard the landing might ultimately become.On these developments, I can look back with some satisfaction. Shortly before the IPO I had published an article entitled “American Pravda: Looming Market Crashes” with SpaceX constituting one of the major sections. A trillion dollars of market value has now evaporated in just the last few weeks, thus currently ranking SpaceX as the most disastrous IPO of all time, so I think it’s worth revisiting what I’d written at the beginning of June:For many years, Zuckerberg had probably been the highest-profile Tech CEO, but during the 2020s he was dethroned by Tesla CEO Elon Musk. The latter’s trail-blazing EV company captured the imagination of the world, while becoming roughly as valuable as every other auto company combined. Musk’s other company SpaceX is now on the verge of going public, at an expected market value of perhaps $1.5 trillion or more, representing the largest IPO in our national history.Musk had founded SpaceX in 2002, and after many years of losses—and numerous brushes with bankruptcy—he successfully made it the world’s overwhelmingly dominant launch provider. His very innovative use of recoverable booster stages drastically reduced the cost per kilogram of getting items into low earth orbit.Amazon founder Jeff Bezos had also established his own private space technology company Blue Origin a couple of years earlier, but it largely stagnated over time and completely fell behind its plucky Musk rival despite its owner’s vastly greater financial resources. Bezos has more recently made a major effort to catch up, but his latest rocket suffered a massive explosion a few days ago, destroying the 48 Amazon satellites it was carrying as well as the launchpad. This probably set the company back at least many months and will almost certainly cause it to miss its FCC deadline for deployment. This mishap demonstrated that space travel was far from easy and underscored the magnitude of Musk’s achievement.Meanwhile, over the years Musk’s Starlink satellite division had become sufficiently profitable to move his entire company into the black.But Musk is a notorious financial daredevil, and apparently running a newly profitable company was not to his taste. So in the months leading up to his planned IPO, he merged the now-profitable SpaceX with xAI, another of his companies, itself created by the merger of his new AI start-up with X, the renamed version of social media giant Twitter. The vast capital expenditures necessary for AI development have now restored the combined entity to its usual state of massive annual financial losses as far as the eye can see, and indeed those tremendous capital requirements were apparently a major reason for the IPO.Despite these large projected losses, Musk’s IPO seems likely to draw huge support from his fervent fan-base of retail investors.However, major media outlets and the experts they consulted have turned a far more skeptical eye. For example, a few days ago, the Journal published a column appropriately entitled “SpaceX’s IPO Is a Bet Gravity Doesn’t Apply to Elon Musk”.That Journal article had opened with the following paragraphs:The SpaceX IPO filing is full of so many red flags that it would have scuttled other launches.But the laws of gravity don’t apply here, in part because of years of work by Elon Musk to build his business empire with the eager assistance of everyday investors. He’s tapped into a collective social-media psyche that runs on vibes and enthusiasm and hope for a better future that he has become so masterful at selling.His sales pitch has gained credibility with the success of Tesla, where he is also CEO, and SpaceX, which has reinvented the space industry and became the top launcher of satellites in the world. Its Starlink business, which is a big driver of revenue, has extended internet connectivity globally and helped to extend Musk’s geopolitical clout while also helping make him the world’s richest man.And in launching what is likely to be the biggest IPO ever, Musk is yet again leaning in to a message of hope.“Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars,” the company wrote in filings made public this past week.That phrase—“light of consciousness”—was mentioned almost a dozen times throughout the prospectus. There was also an artist’s rendering of life on Mars that could easily have been a scene from the current season of Apple TV’s sci-fi drama “For All Mankind.” And the dense paperwork included an out-of-this-world projected total addressable market for SpaceX at $28.5 trillion, just a few trillion dollars shy of the entire U.S. gross domestic product.If it wasn’t clear enough, the filing noted: “We believe that space represents the largest economic frontier in human history.”Then there were troublesome bits. More than $1 billion in related transactions between Musk companies, including $131 million of Cybertrucks purchased by SpaceX. The amount of red ink surprised some—a situation made worse by Musk’s decision to buy another one of his startups, xAI. The merged companies—a rocket maker/satellite company/AI lab—had a loss of almost $5 billion last year on $19 billion of revenue.Thus, the company is expected to be valued at something approaching 100 times its annual revenue of $19 billion, despite losing $5 billion per year, quite remarkable financials for a record-setting IPO.Read the Whole ArticleThe post Elon Musk, Our First Trillionaire appeared first on LewRockwell.