Elon Musk has suffered an unprecedented wealth loss in just over a year. Lay his estimated fortune aloud “Bloomberg”
from about $340 billion in November 2021, it has since melted down to $137 billion — no one before him has lost that much money over such a period, the report says.
The main reason for the enormous loss is the crash of the Tesla-Share; it has lost 65 percent of its value in the past year. Musk previously divested numerous shares in the automaker in order to buy the social network for $44 billion Twitter finance.
Nevertheless, Musk is still in second place “Bloomberg Rich List”
. Just this month, he was overtaken by the family of French entrepreneur Bernard Arnault, who are worth $162 billion. Arnault is the head of the group LVMH, which includes 70 luxury brands such as Louis Vuitton, Moët & Chandon and Bulgari.
The cash machine Tesla neglected
Tesla was worth more than $1.1 trillion 13 months ago and is currently worth around $385 billion on the stock market. After several years of steep price rises, Tesla from a high flyer and stock market darling to a problem paper for investors developed. Investors are concerned not only about weaker growth and weakening demand. Elon Musk’s dual role as head of Tesla and Twitter was also criticized: Instead of concentrating on the growth of the Tesla cash machine, Musk spent much of his time on the Twitter restructuring case, criticized for example Tesla investor Leo Koguan.
The announcement before Christmas that he would probably not be selling any more Tesla shares for the next two years and that he would relinquish control of Twitter as soon as he had found a suitable successor did little to appease investors.
Investment banks are rowing back, valuations remain high
And despite the fall in prices, Tesla is still valued higher on the stock exchange than the three German car manufacturers Volkswagen, bmw and Mercedes-Benz together. There can be no question of a “bargain” at Tesla even with the current valuation.
Tesla is still reliably increasing profits: In the third quarter of 2022 alone, profits more than doubled compared to the same period last year. Nevertheless, the market leader feels the growing pressure from the competition. Between 2018 and 2020, Tesla dominated the electric car market with a market share of around 80 percent. This market share fell to 71 percent in 2021, as the data supplier S&P announced. By 2022, Tesla’s market share is likely to have fallen below the 70 percent threshold. The US electric car manufacturer is still the market leader by a wide margin. However, the problem is not the market position, but the extremely high valuation of the company.
For his part, the Tesla boss dismissed concerns about Tesla, most recently reiterating on Twitter his criticism of the US Federal Reserve for raising interest rates at the fastest pace in a generation. “Tesla is running better than ever!” Musk wrote on Twitter on Dec. 16. “We have no control over the Federal Reserve. That’s the real problem.”
Musk, who has borrowed heavily for his Tesla stake in the past, has recently warned of the dangers of borrowing money in panicked markets. “My advice to people in a volatile stock market is not to take on margin debt and from a cash standpoint to keep the powder dry,” Musk said on a recent podcast, according to Bloomberg. “You can see some extreme things in a down market.”
Meanwhile, the major US investment banks are rushing to gradually adjust their high price targets for Tesla shares to reality. The US investment bank Morgan Stanley, for example, lowered the price target for Tesla shares by around 25 percent from $330 to $250. But even with the significantly reduced target price, Morgan Stanley is still well above the current price of just under 123 US dollars. The Tesla share would have to more than double to reach the new price target of the so-called experts.
The expectations of the carmaker and Elon Musk remain high – the drop remains the same.