Update at 4:57 p.m. ET: Officials now say they believe the boy might not have ascended with the balloon and is hiding near his home.
"At this point, we are thinking that he did not fall out of the balloon and is somewhere on the ground," said Larimer County Sheriff's Office spokeswoman Eloise Campanella. "The basket itself was not breached. It does not look like he fell out of it, but again, this is all conjecture."
"I'm very confident we will find him. I think it's a matter of him being a little scared," she said. "Maybe he's not ready to be found."