On Thursday, Elon Musk, the CEO of Tesla faced a setback as his wealth took a hit of $20.3 billion. This decline came after Tesla issued a statement, about price reductions for their electric vehicles, which led to a significant drop in the company stock value.
With this decrease in worth Musk’s fortune now stands at $234.4 billion making it one of the declines ever recorded for an individual, in the Bloomberg Billionaires Index.
It also closes the wealth gap between Musk and Bernard Arnault, chairman of luxury goods maker LVMH and the world’s second-richest person. Despite the decline, Musk still maintains a lead over Arnault by approximately $33 billion.
Interestingly, other prominent US technology billionaires faced a tough day as well. The combined wealth of Jeff Bezos, from Amazon.com Inc. Larry Ellison from Oracle Corp., former CEO Steve Ballmer from Microsoft Corp Mark Zuckerberg from Meta Platforms Inc. And co founders Larry Page and Sergey Brin from Alphabet Inc decreased by $20.8 billion due to a 2.3% decline, in the tech focused Nasdaq 100 index.
The decline in Tesla’s stock price was a significant contributing factor to Musk’s loss in wealth. The shares of Tesla experienced a decline of 9.7% to $262.90, in New York marking the substantial drop since April 20th. The company’s profitability has already been affected by months of markdowns, leading to a four-year low in automotive gross margin in the second quarter. Musk warned that if interest rates continue to rise, Tesla will have to keep lowering prices, potentially impacting the company’s profitability further.
Being a 52 year entrepreneur Musk primarily earns his wealth from his ownership, in Tesla along with his investments, in Space Exploration Technologies and Twitter. Until the recent setback, his wealth had seen an impressive increase of about $118 billion this year, largely due to Tesla’s soaring stock price, which surged by 136% through Wednesday.
The recent drop, in Musk’s fortune underscores the unpredictability and unknowns, within the technology and automotive sectors. Investors will be keenly observing how Tesla and other tech companies handle the obstacles that lie ahead.