Tesla Inc., the pioneering electric vehicle manufacturer, delivered a jolt to its investors and founder Elon Musk as it warned of potential price cuts for its electric vehicles, sending its shares tumbling and causing Musk’s wealth to slump by a staggering $20.3 billion on Thursday. This drop in net worth, which now stands at $234.4 billion, ranks as the seventh-largest decline ever among billionaires listed on the prestigious Bloomberg Billionaires Index. The market’s response to Tesla’s warning not only impacted Musk but also brought him closer to Bernard Arnault, the chairman of luxury goods maker LVMH, who ranks as one of the world’s richest people.
Following the slump, Musk’s fortune still comfortably exceeds that of Bernard Arnault, with a substantial margin of around $33 billion. However, Arnault’s steady rise in net worth has placed him in a competitive position for the top spot in the Bloomberg Billionaires Index throughout this year. Earlier in June, Elon Musk surpassed Bernard Arnault to become the world’s wealthiest person when LVMH’s shares experienced a decline of 2.6 percent in Paris trading.
Elon Musk’s fortune primarily derives from his stakes in Tesla, the EV manufacturer, along with his holdings in Space Exploration Technologies and Twitter. Notably, his wealth soared by an impressive $118 billion this year up until Wednesday, a surge fueled by Tesla’s remarkable stock performance, which climbed an astonishing 136%.
Despite the recent setback, Musk’s net worth still outpaces that of many notable tech billionaires, including Amazon.com Inc.’s Jeff Bezos, Oracle Corp.’s Larry Ellison, former Microsoft Corp. CEO Steve Ballmer, Meta Platforms Inc.’s Mark Zuckerberg, and Alphabet Inc. co-founders Larry Page and Sergey Brin. These tech tycoons collectively shed $20.8 billion in net worth amid a broader 2.3 percent decline in the tech-heavy Nasdaq 100 index.
Shares of Tesla, headquartered in Austin, Texas, experienced a significant drop of 9.7% to $262.90 in New York, marking the most substantial dip since April 20. This decline comes as Tesla warned of potential further hits to its profitability, with months of markdowns already impacting automotive gross margins, which fell to a four-year low in the second quarter.
Also Read: Netflix Stock Update: Quarterly Earnings Report Leaves Investors Underwhelmed, Shares Decline Over 9%
Musk’s concerns about the impact of rising interest rates on Tesla’s electric vehicle sales may have contributed to the company’s decision to lower prices to stay competitive. The ongoing markdowns have been taking a toll on Tesla’s automotive gross margin, necessitating adjustments to maintain a strong market presence.
As the competition between Elon Musk and Bernard Arnault for the title of the world’s richest person continues, investors and market analysts will closely monitor Tesla’s performance and strategic decisions. The EV manufacturer’s ability to navigate the dynamic market landscape and maintain profitability will play a significant role in shaping Musk’s future net worth.
Tesla’s share price tumble and its impact on Elon Musk’s net worth illustrate the inherent volatility of the stock market, particularly in the tech sector. As major players in the industry, such as Musk and Arnault, face challenges and market fluctuations, their actions and decisions will continue to be under the spotlight. Investors worldwide eagerly await further developments and decisions from Tesla’s visionary CEO, as they have a significant bearing on both the company’s future and the fortunes of the world’s wealthiest individuals.
In conclusion, the recent decline in Tesla’s share price has prompted Elon Musk’s wealth to tumble significantly, raising concerns and challenges for the visionary entrepreneur. As the competition for the top spot in the Bloomberg Billionaires Index intensifies between Musk and Bernard Arnault, investors and market observers will closely monitor Tesla’s performance and its ability to adapt to changing market conditions. With both Musk and Arnault striving for success and wealth, their every move will undoubtedly influence the trajectory of their fortunes and make headlines worldwide.
