On Thursday, Elon Musk’s wealth experienced a substantial drop of $20.3 billion following a warning from Tesla Inc. about potential price cuts on its electric vehicles, which in turn caused the company’s shares to tumble. This decline brought his net worth to $234.4 billion, making it the seventh-largest drop ever recorded in the Bloomberg Billionaires Index. Moreover, the plunge in wealth further narrowed the gap between Elon Musk and Bernard Arnault, currently the world’s two wealthiest individuals.
The Wealth Gap Narrows, but Musk Still Holds the Lead
Despite the significant slump, Elon Musk’s fortune remains ahead of Bernard Arnault’s by approximately $33 billion. It is worth noting that Arnault serves as the chairman of the renowned luxury goods maker LVMH.
Musk Secures the Top Spot in June
In June, Elon Musk surpassed Bernard Arnault to become the world’s richest person, thanks to a 2.6 percent decline in LVMH shares during Paris trading. Since then, both Musk and Arnault have been neck-and-neck in the race for the top spot in the Bloomberg Billionaires Index.
A Tough Day for US Technology Billionaires
Elon Musk wasn’t the only US technology billionaire facing challenges on that particular day. Other tech giants, such as Jeff Bezos of Amazon.com Inc., Larry Ellison of Oracle Corp., Steve Ballmer, former CEO of Microsoft Corp., Mark Zuckerberg of Meta Platforms Inc., and Larry Page and Sergey Brin, co-founders of Alphabet Inc., collectively lost $20.8 billion in net worth as the tech-heavy Nasdaq 100 experienced a 2.3 percent fall. Among them, Tesla’s shares based in Austin took a hit, sliding 9.7 percent to $262.90 in New York, marking the sharpest decline since April 20. The company warned of more hits to its already-shrinking profitability, with months of markdowns taking a toll on its automotive gross margin, which fell to a four-year low in the second quarter.
Musk’s Concerns about Electric Vehicle Prices
Elon Musk highlighted that if interest rates continue to rise, Tesla will have no choice but to continue lowering the prices of its electric vehicles. Already, months of markdowns have had a negative impact on the automotive gross margin, which hit a four-year low in the second quarter. It appears that the company is facing challenges in maintaining profitability amidst pricing pressures.
A Look at Musk’s Sources of Wealth
Elon Musk, aged 52, primarily accumulates his wealth through his stake in the EV manufacturer, Tesla, as well as his holdings in Space Exploration Technologies and Twitter. This year, his wealth had surged by approximately $118 billion until Wednesday, owing to the remarkable 136 percent climb in Tesla’s shares.
Arnault’s Steady Rise in Net Worth
In contrast, Bernard Arnault, aged 74, has experienced a $39 billion increase in net worth this year, amounting to $201.2 billion. LVMH, the Paris-based luxury goods company of which he is chairman, has witnessed a notable 26 percent gain in 2023.
In conclusion, Elon Musk’s wealth took a significant hit due to Tesla’s warning about potential price cuts. Nevertheless, he remains one of the world’s richest individuals, leading ahead of Bernard Arnault. With the dynamic nature of the market and the technology sector, it will be fascinating to observe how these rankings evolve in the future.
