Elon Musk did not lose $600 billion from a bank account. The decline was tied to the structure of his wealth, most of which is held in shares. After SpaceX (NASDAQ: SPCX) rose following its public listing, the value of Musk’s stake lifted his estimated net worth above $1.3 trillion.

That increase proved to be a paper gain. When SpaceX shares later fell by half from their peak, the value attributed to Musk’s holding dropped with them. His estimated net worth fell to about $725 billion, leaving his period as the first trillionaire at only a few weeks. Such wealth estimates can change quickly when a founder’s holdings are concentrated in publicly traded stock, because they are typically marked to the latest market price rather than to realized cash proceeds.

SpaceX began trading on June 12 after pricing its offering at $135 per share. The first trade took place at $150, and the stock closed its opening session at $161. Four days later, shares reached $225.64.

At that level, SpaceX’s market value was close to $3 trillion. By late July, the stock was trading near $113, about 16% below the offering price. On July 24, Musk posted, “(Former) trillionaire.”

SpaceX’s small public float drove a sharp rise and fall in Musk’s paper wealth

The SpaceX listing raised $85.7 billion after banks exercised the extra-share option attached to the deal. That made the offering much larger than Saudi Aramco’s (TADAWUL: 2222) 2019 listing. SpaceX entered the deal with an initial valuation of about $1.75 trillion.

The company had 13.2 billion shares outstanding, but public buyers received only about 4.9% of them. By comparison, most large companies in major indexes have close to 80% of their stock available for normal trading, according to data from Nasdaq Inc. (NASDAQ: NDAQ).

Because SpaceX came to market with limited public supply, strong demand was able to push the share price well above the IPO level. Once traders began selling, the stock moved down quickly. A small float can amplify moves in either direction because fewer shares are available for buyers and sellers to trade, especially in the first weeks after a large listing.

SpaceX closed at $118.24 on July 23 and $115.07 on July 24. By Friday, the company’s market value was about $1.5 trillion, nearly half the valuation reached at its June high.

Short sellers benefited from the decline. Ortex Technologies estimated that bearish traders had about $15.5 billion in unrealized gains. Short positions represented nearly 56% of the public float, equal to roughly 360 million shares.

Musk warned on social media that firms maintaining very large short positions against SpaceX for an extended period had a very small chance of surviving.

The stock also performed poorly compared with other large U.S. listings. Barron’s ranked SpaceX in the bottom 10% of American IPOs valued above $1 billion since July 2009.

In its first 27 trading days, SpaceX fell 23% from its $161 first-day closing price. A group of 955 similar IPOs recorded an average gain of 0.8% over the same period.

Additional share supply and Tesla’s results added pressure to Musk’s fortune

Early SpaceX investors and employees may begin selling up to 911.5 million shares on August 6, two days after the company reports its first quarterly results as a public company. That timing makes the company’s first public earnings report and the next lockup release important reference points for investors assessing both financial performance and available share supply.

According to CNBC’s calculation, that block alone would increase the company’s tradable share portion from about 4.9% to roughly 12%.

Additional locked shares are scheduled to become available in September, November, and December as the 180-day lockup period expires in stages. Goldman Sachs (NYSE: GS), which led the offering, can also permit some investors to sell earlier. Musk’s own SpaceX shares will remain locked until June 2027.

The SpaceX decline coincided with Tesla’s (NASDAQ: TSLA) worst week since 2022. Tesla shares fell 18% after the company’s second-quarter results missed Wall Street estimates. Revenue was $28.2 billion, while adjusted earnings were $0.33 per share, below the $0.50 expected by analysts.

Tesla also reported negative free cash flow for the first time in two years. The company spent money on robotaxis, Optimus, a humanoid machine, and large factories designed to produce artificial-intelligence chips.

That added another drag on Musk’s wealth because Tesla is one of his largest listed assets. While SpaceX shares were already falling, Tesla’s report reduced the value assigned to another major part of his holdings. Since wealth estimates are based on current market prices for his stakes, Tesla’s 18% weekly share decline also lowered the value attributed to that position.