From briefly being the richest person on Earth in 2021, Elon Musk has entered the Guinness Book of World Records for the biggest loss in personal wealth in 2023.
According to data, the Tesla CEO suffered a startling $200 billion decline in wealth throughout 2022. On the contrary, Forbes placed his losses at $183 billion. Along with Amazon CEO Jeff Bezos, Elon Musk is the second person in the world to have amassed over $200 billion. However, Musk is the only individual whose net wealth has decreased by the same magnitude. Before Musk, Masayoshi Son, the founder of Softbank, held the previous record. However, Son’s decline was far smaller at $58.6 billion.
How did Elon Musk lose $200 billion?
On November 4, 2021, Musk reached his peak fortune of $340 billion, making him the richest person in the world at that time. The feat lasted until LVMH founder Bernard Arnault overtook him.
Musk’s declining net worth was primarily caused by declining Tesla stock. However, the 2022 cryptocurrency meltdown also contributed to Musk’s loss. The decline in cryptocurrency valuation is responsible for 0.088% of the tech CEO’s losses. Although 0.088% may seem little, the losses amassed up to $176 million.
Surprisingly, Bitcoin’s (BTC) performance has been correlated with Tesla shares. By the middle of December, the price of Bitcoin (BTC) dropped by around 60%, while the price of Tesla shares declined by around 58%.
Tesla’s declining value is due to several factors, some of which are more significant than others. The only company with more Bitcoins than the electric car maker is Microstrategy, which has 132,500 BTC as of December 2022.
Tesla purchased 43,200 BTC in February 2021. In April, a few months later, it sold 10% of its Bitcoin (BTC). Additionally, during the second quarter of 2022, the company sold an additional 75% of the initial cryptocurrency.
The majority of Elon Musk’s fortune is tied up in Tesla stock, the value of which plummeted 65% in 2022.
This alarming decline accelerated in October after Musk bought Twitter for roughly $44 billion (£37B; €42B).
The tumultuous takeover, coupled with Musk’s polarizing behaviour on the platform, sparked the biggest Tesla stock sell-off since the company went public in 2010.
Despite the plunge in prosperity, Tesla remain the most valuable car company in the world, with a market cap over $100 billion larger than their closest competitor, Toyota.
And don’t worry, even though Musk has lost more money than any human in history, he won't be going hungry any time soon - he’s still the world’s second-richest person.
Elon also still seems to be in high spirits; he in fact recently flew to Qatar where he was able to watch Messi lift the World Cup trophy.
The net worth of billionaires is much more volatile and variable than the net worth of someone who earns an average income.
This is because the bulk of a billionaire’s fortune typically takes the form of shares and investments. As the market valuation of these investments fluctuates, so too does their owner’s apparent wealth.
This is doubly true of ‘self-made’ billionaires such as Musk or former record holder Masayoshi Son because their net worth is usually derived almost entirely from the market valuation of the company they founded (although Musk wasn’t actually an original founder of Tesla; he was an early investor).
If their company’s share price tumbles, so does their net worth.
In the case of Masayoshi Son, whose net worth declined from a peak of $78 billion in February 2000 to $19.4 billion in July of the same year, the value of his tech conglomerate, Softbank, was wiped out by the dot-com crash.
In 2000 the situation at Softbank was so volatile that Son’s net worth sometimes shifted by as much as $5 billion in a day.
Fortunately for Masayoshi Son, Softbank would go from strength to strength in the following years, acquiring several US & British tech companies.
As Elon Musk continues to build his own tech conglomerate, we won’t be surprised to see him bounce back too at some point in the future.
