Elon Musk became the world’s first trillionaire — for a little bit, at least.
On June 12, the SpaceX and Tesla CEO was officially worth $1.1 trillion US, according to the Bloomberg Billionaire Index.
Since then, Musk has lost his trillionaire status.
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We’ll get to why that happened, but first, let’s try to get a sense of what a trillion dollars even looks like.
One trillionaire is one million millionaires
If you’re having trouble imagining what a trillion dollars looks like, you’re not alone.
To get a sense of it, we asked kids across Canada what they’d do with a trillion dollars.
Godswill Opera, 15, left, and Yasbirra Derege, 14, told CBC Kids News what they would do with a trillion dollars.
(Image credit: Jamie McMahon/CBC)
After most said they’d give a big chunk to charity, they had ideas for what they could buy.
Let’s take a look at how much of those things they could actually get with a trillion bucks.
As you can see, it’s a lot of money.
A ‘phantom’ trillionaire
Just because Musk is a trillionaire, that doesn’t mean he has a trillion dollars in his pocket or bank account.
“ [Musk] is a phantom trillionaire, as we call it,” said Barry Schwartz, the president of Baskin Wealth Management in Toronto.
That means Musk’s wealth doesn’t just include what he has in his bank account.
His total wealth — called net worth — is also made up of the value of his companies along with his houses, vehicles and other valuables.
Watch this video by former Kids News contributor Raef Saba to find out more about Elon Musk:
For example, you might add up the value of all the money in your wallet, your Lego collection, your rare Pokemon card and your game console.
From there, if you have any debt — like the $20 you owe your parents for that squishy you wanted — you’d subtract that value.
The final number is your net worth.
Why he lost trillionaire status
The thing that pushed Musk’s net worth into trillionaire territory is something called an initial public offering, or IPO.
An IPO is when a company sells its shares to the public for the first time.
When people buy shares, it lets them own a certain percentage of the company.
Stephen Foerster is a finance professor at Ivey Business School in London, Ontario.
He compared it to this lemonade stand scenario:
Let’s say you spent some of your savings on opening a lemonade stand.
You bought the table, the ingredients, and you’ve been making some sales so far.
But now, you’d like more money to help you keep running your business.
Elon Musk, the CEO of SpaceX, spoke before launching the company’s initial public offering on June 12.
(Image credit: Timothy A.
Clary/AFP/Getty Images)
So, for the first time, you make your friends and family an offer: If each person gives you $5, they’ll have part ownership of your business, and you’ll give them a bit of the profits you make.
Thanks to the extra money, you’ll be able to buy more ingredients, and maybe even a bigger table.
On a much bigger scale, that’s what happened with Musk’s company, SpaceX, on June 12.
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For the first time, people could pay for SpaceX shares, which gave them ownership of a small part of the company.
However, the price of a share can go up and down.
That’s why Musk lost his trillionaire status on June 23 — the share value of SpaceX went down shortly after the IPO.
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Schwartz said many things can affect the value of a share, including:
- How well the company is doing.
- The company’s reputation.
- World news.
- Whether the company is important in today’s society and will continue to be in the future.
As of June 30, Musk regained his trillionaire status.
By the next day, he lost it again.
And his status could keep switching back and forth, depending on how the value of SpaceX shares change.
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With files from Reuters.
TOP IMAGE CREDIT: Brendan Smialowski/AFP/Getty Images, Shutterstock, with graphic design by Philip Street/CBC
