Elsa Sc S on a depressing
reduction in fortune
The charismatic yet idiosyncratic billionaire Elon Musk losing billions faced a tremendous reduction in his wealth particularly after he bought Twitter. To many observers it was shocking to see his fortune dwindling at an uncomfortable and scary fast pace. It is widely held the Musk’s loss of wealth is historic as it is very rare to see wealth diminish so quickly. The main problem arose when his Tesla stock crashed after he bought Twitter. It was reported in 2021 that Musk’s wealth peaked at $340 billion catapulting him to the rank of the richest man in the world. Musk was greatly revered for producing and cashing wonderful entrepreneurial ideas and making lots of money.
It so happened however that over the course of just one year, Musk’s wealth plummeted to just $137 billion before jumping back up to $146.5 billion. This was a ferocious comedown for a fortune that was second to none just sometime before. It was also revealed that the world’s former richest man was the first person in history to lose $200 billion from his personal net worth. This very fact indeed is very unnerving even for someone who is still a billionaire. Many observers and analysts blamed Musk’s Twitter acquisition and subsequent behaviour for such a shocking loss in wealth but there are several factors at play that saw his fortune reduced by such a staggering amount. It is quite obvious that one single decision would not cause such a massive loss of fortune.
It is widely agreed that, despite Musk’s varied business interest, most of his personal wealth is tied up in Tesla stock and the company faced several unique circumstances over the last three years that both increased its value and then decimated it. Tesla and its unique attributes became the main source of producing wealth for Musk and he was duly mindful of this fact. Throughout most of 2021, Tesla certainly benefited from the easy money asset run-up of the early pandemic as in January 2020, Tesla was valued at $117 billion by the stock market but by the end of the year, that figure had skyrocketed to $658.39 billion. Subsequently, Tesla’s stock traversed the distance to a $1 trillion market cap in less than a year reaching that milestone on 25 October, 2021.
Once Tesla reached a $1 trillion market cap it was playing on the same level as Apple, Google, or Amazon, but the fundamentals of the business just weren’t there. This was a fantastic achievement and was widely appreciated. But the rise in his wealth was not free from problems and they were many. Tesla’s products were appealing to consumers and its cars were the top-selling U.S. electric vehicles but the company was not really ready for the competition. It was pointed out that Tesla was a top selling but losing consumer interest. Though it was acknowledged that Tesla is still the top-selling electric vehicle brand but its dominance is eroding as rivals offer a growing number of more affordable models.
Accordingly, it was observed that the value of Tesla as a company was diminishing and with it so has Musk’s wealth. A recent rebate scheme to create more interest from buyers ended up angering investors and decimating Tesla’s stock price in December 2022, resulting in a 37% plunge. Critics have long questioned whether Tesla was ever worth the trillion-dollar valuation it had at the start of 2022 and they were quite relevantly raising such questions as the following events proved. It was noted that while Tesla may have had one of the top valuations for any automaker at the time, the company was only doing a fraction of the sales of its competitors. So a fall of some kind was in the air and, to some, rather inevitable.
It is however pointed out that Musk’s post-Twitter purchase behaviour should not be ignored when considering the eroding position of Tesla as Musk’s dealing with this sale was pretty damaging. While buying Twitter for $44 billion certainly affected Musk’s net worth, it was his behaviour that really did the real damage. His constant tweeting and increasingly erratic behaviour, particularly after taking over as CEO at Twitter angered Tesla investors who wanted Musk to pay more attention to his significantly larger and more valuable company and he was seen not doing so. Musk defended himself against critics, saying he has not missed a major Tesla meeting since taking on responsibility for Twitter but his arguments remain unappreciated. Tesla has been affected by his Twitter purchase and not just in the sphere of public opinion. In October 2022 Musk had pulled at least 50 Autopilot team developers from their jobs at Tesla to work on fixing Twitter’s backend code and it is clear from Musk’s current net worth that his investors are not happy. TW