Musk lost $21B in hours: What hit his trillion-dollar fortune?
What's the story
Elon Musk, the world's richest trillionaire, saw his net worth plummet by over $21 billion on Wednesday. The sharp decline was due to a fall in SpaceX shares after news broke that the company is looking to raise $40 billion in debt for purchasing NVIDIA AI chips. As of 11:35am EDT on Wednesday, Musk's fortune was estimated at around $1.03 trillion, down 2.04% for the day, according to Forbes's Real-Time Billionaires tracker.
Financing details
SpaceX seeks $40 billion in financing to buy NVIDIA chips
The decline in SpaceX shares comes as the company is reportedly looking for up to $40 billion in financing to buy NVIDIA chips as it expands spending on AI infrastructure.
The proposed financing plan includes $10 billion in bank loans and $30 billion in investment-grade debt, the Financial Times reported.
Private capital group Apollo is likely to lead this financing effort, while bond manager Pimco has also been approached by lenders about possible participation.
Market reaction
SpaceX's debt market takes hit
The news of SpaceX's financing plan also affected its debt market.
The company's five-year credit-default swap spread, a measure of the cost of insuring its debt against default, hit an intraday high of around 197.6 basis points on Wednesday.
Meanwhile, SpaceX bonds weakened with the spread on its bonds due in 2056 over comparable US Treasuries widening by 0.09% point to 2.36% points on Wednesday.
IPO details
Proposed fundraising comes months after IPO
The proposed fundraising comes months after SpaceX raised funds through equity and debt markets following its public listing.
The company priced its initial public offering (IPO) at $135 a share in June, trading on Nasdaq under the ticker SPCX from June 12.
It sold some 638.9 million shares after underwriters exercised their overallotment option, generating about $85.7 billion in proceeds, according to regulatory filings.