Elon Musk's Net Worth Takes a $20.3 Billion Hit as Tesla Warns of More Price Cuts

 

Elon Musk's Net Worth Takes a $20.3 Billion Hit as Tesla Warns of More Price Cuts



Tesla's Share Plunge Nears Record Decline; Wealth Gap with Bernard Arnault Narrows

July 21, 2023

In a significant setback for Tesla Inc.'s CEO, Elon Musk, his net worth plummeted by $20.3 billion on Thursday after Tesla issued a cautionary statement about the possibility of ongoing price reductions for its electric vehicles. This drastic announcement sent Tesla's shares tumbling and marked the seventh-largest decline in the Bloomberg Billionaires Index.

Musk's current net worth stands at $234.4 billion, which has substantially narrowed the wealth gap between him and Bernard Arnault, the chairman of luxury goods behemoth LVMH and the world's second-richest person. Despite this significant decline, Musk still retains a substantial lead of approximately $33 billion over Arnault.

In June, Elon Musk surpassed Bernard Arnault to claim the title of the world's wealthiest individual, triggered by a 2.6 percent drop in LVMH's shares during Paris trading. Since then, the two billionaires have been engaged in a tight race for the top spot, closely monitored by the Bloomberg Billionaires Index.

However, Musk's misfortune on Thursday was not an isolated incident. Other prominent US technology billionaires, including Jeff Bezos from Amazon.com Inc., Larry Ellison from Oracle Corp., former Microsoft Corp. CEO Steve Ballmer, Mark Zuckerberg from Meta Platforms Inc., and Alphabet Inc.'s co-founders Larry Page and Sergey Brin, also faced a collective decline of $20.8 billion in net worth. This notable drop came as the tech-heavy Nasdaq 100 fell 2.3 percent in the market.

The sharp decline in Tesla's shares, which plummeted 9.7 percent to $262.90 in New York, marked the most significant drop since April 20, due to the company's warning about potential further impacts on its already shrinking profitability. Months of price markdowns have taken a toll on Tesla's automotive gross margin, resulting in a four-year low in the second quarter.

In response to the financial downturn, Musk acknowledged that Tesla may have to continue lowering the prices of its electric vehicles if interest rates continue to rise. The ongoing price cuts have already affected the company's automotive gross margin, adding further pressure on its financial performance.

At 52 years old, Elon Musk's primary wealth comes from his stake in Tesla, as well as his holdings in Space Exploration Technologies and Twitter. Until Thursday's slump, his net worth had surged by about $118 billion this year, benefiting from Tesla's impressive 136 percent surge in the stock market.

Meanwhile, Bernard Arnault, aged 74, has witnessed a remarkable rise of $39 billion in his net worth this year, bringing his total wealth to $201.2 billion. Throughout the year, shares of LVMH, headquartered in Paris, have enjoyed a substantial 26 percent gain.

Thursday's market fluctuations serve as a reminder that even the wealthiest individuals are not immune to the inherent risks of the financial landscape. As global economic conditions remain uncertain, the world's richest will continue to navigate a challenging path to secure their positions atop the Bloomberg Billionaires Index.


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