Elon Musk’s net worth has declined by approximately $684 billion from its peak, falling to $684 billion as shares of his flagship companies, Tesla Inc. and Space Exploration Technologies Corp. (SpaceX), retreated amid swirling merger speculation and broader market skepticism. This erosion of wealth, which now exceeds the combined net worth of Larry Page and Jeff Bezos ($549 billion), reflects intensifying pressure on high-growth tech valuations. The decline is primarily attributed to steep drops in the market capitalizations of Tesla and SpaceX, with investors reassessing growth prospects against rising operational costs and competitive threats.

SpaceX Valuation and Merger Speculation

SpaceX stock dropped to $108 on Friday, down sharply from an all-time high of $225. Its market capitalization has plunged from over $3 trillion to $1.4 trillion. Investors are closely watching ahead of SpaceX’s upcoming earnings report, expected next Tuesday. Estimates suggest second-quarter revenue rose to over $6.8 billion, driven by data center revenue from clients including Reflection AI, Alphabet Inc., and Anthropic.

The valuation retreat coincides with reports that Musk is considering merging SpaceX with Tesla, a move that would create one of the largest conglomerates in the US. According to The Wall Street Journal, Musk is reportedly considering selling or spinning off Tesla’s Chinese operations to facilitate the deal. This follows a pattern of consolidation under Musk, who merged X with xAI last year and SpaceX with xAI earlier this year. Additionally, Terafab, a multibillion-dollar semiconductor project in Austin, Texas, is being developed jointly by Tesla, SpaceX, and xAI, with Intel Corp. joining to assist with chip fabrication.

Tesla Margin Compression and Cash Burn

Tesla Inc. shares have plunged 37% from their highest point this year. The sell-off continued after its recent earnings report, which revealed that cash burn accelerated in the second quarter due to ongoing artificial intelligence investments. Gross margins also came short of expectations. Despite double-digit revenue growth reported previously, the company faces narrowing margins and negative free cash flow, raising concerns about liquidity without external financing.

What the Numbers Show

The divergence between revenue growth and profitability metrics highlights the strain on capital-intensive tech models. While SpaceX’s estimated $6.8 billion quarterly revenue indicates strong demand for its data center services, the 38x forward price-to-sales multiple suggests investors are pricing in substantial future growth that faces challenges from competitors like Rocket Lab USA Inc., which recently secured a $266 million Pentagon deal. Similarly, Tesla’s accelerated cash burn despite revenue growth signals that current operations are not generating sufficient liquidity to cover heavy capital expenditures, such as the expected $25 billion in capex for the year. The combined drop in Musk’s net worth underscores the market’s cautious stance on conglomerate structures, contrasting with investor preference for separated entities like General Electric’s recent split into GE Aerospace, GE Healthcare, and GE Vernova.

Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk plans to spend between $100 million and $120 million backing Republican candidates in the upcoming midterm elections, according to a report by The New York Times. The funds will be deployed through America PAC, Musk’s Super Political Action Committee, targeting Senate races in Alaska, Ohio, Iowa, Maine, and Michigan, as well as House races in California, Wisconsin, and Washington. This substantial financial commitment underscores Musk’s continued deepening ties with conservative politics, even as relations with the Trump administration previously soured following his brief tenure leading the non-governmental Department of Government Efficiency (DOGE).

The political push comes amid ongoing scrutiny regarding the impact of Musk’s public political activities on Tesla’s brand equity and sales performance. During the 2024 presidential election cycle, Musk spent close to $250 million endorsing Donald Trump, a move that coincided with a decline in Tesla sales across multiple global markets last year. While Tesla has since seen a rebound, with its Model Y emerging as a top-selling vehicle in markets including China and Europe, investors such as Cathie Wood of ARK Invest and Ross Gerber of Gerber Kawasaki have explicitly linked Musk’s political engagements to brand damage. The company has also faced reports of vandalism targeting its vehicles and infrastructure.

Election Targets and Funding Strategy

America PAC is focusing its resources on competitive swing states where electoral outcomes could shift significantly. The committee is actively engaging with candidates in Senate races across five key states and House races in three others. Talks are also underway for potential support in Texas, Georgia, and North Carolina Senate contests. The New York Times reported that while the $100 million to $120 million figure is current, it remains subject to change. Neither Musk, America PAC, nor the Republican Party immediately responded to requests for comment from Benzinga regarding the specific allocation strategies or candidate selections.

Market Implications and Competitive Landscape

The financial stakes for Tesla extend beyond direct campaign contributions. In California, one of the largest electric vehicle markets in the U.S., Tesla faces intensified competition from rivals Rivian Automotive Inc. (NASDAQ: RIVN) and Lucid Group Inc. (NASDAQ: LCID). Both competitors have confirmed participation in Governor Gavin Newsom’s MyFirstEV program, which offers discounts of up to $3,000 on new EVs and $1,750 on used ones for vehicles priced below $50,000. Tesla has not yet confirmed whether it will participate in this state-sponsored incentive program, potentially ceding market share to rivals who align more closely with local regulatory incentives.

What the Numbers Show

Despite the political headwinds, Tesla’s operational metrics have shown resilience. The Model Y’s resurgence as a best-selling vehicle in China and Europe suggests that product strength can temporarily offset brand-related friction. However, the divergence between Tesla’s recent sales recovery and the escalation of Musk’s political spending highlights a strategic risk: increased political polarization may alienate moderate EV buyers, particularly in blue states like California and Washington, where targeted House races are located. Meanwhile, Chinese rival BYD Co. Ltd. (OTC: BYDDY) continues to gain ground in Europe, capitalizing on global demand shifts that Tesla must navigate alongside its founder’s high-profile political endeavors.