When Tesla CEO Elon Musk surpassed Amazon founder Jeff Bezos to become the world’s richest man for the first time last September, Musk told Forbes that he would “send a giant ‘2’ statue to Bezos, along with a silver medal “. Almost eight months later, neither man is in the mood for jokes.
The fall of the American stock market this year took care of that, removing a huge part of the values of their companies. With inflation soaring and interest rates rising throughout the first half of 2022, stock markets are facing some of the worst starts in their history. The S&P 500 just recorded its seventh consecutive week of losses, its biggest decline since March 2001, while the Nasdaq had its worst month (April) since October 2008.
The fortunes of the 50 richest people on the planet (worth a total of $ 2.9 trillion at the close of last Friday) have shrunk by more than half a trillion. dollars since the beginning of the year, according to Forbes estimates. No one has lost more than Musk and Bezos, whose net worth has fallen by a total of $ 123.6 billion from December 31 to Friday, May 20.
Bezos, valued at $ 133.3 billion (last Friday), is $ 59.3 billion poorer than it was on December 31. Amazon shares fell 35% during that period, surpassing the Nasdaq’s 27% drop over the same period.
But compared to his rival, Bezos, who resigned as CEO of Amazon to become chief executive officer last July, may be more of a victim of less controlling circumstances in the fall of his fortune.
“Amazon is a model for working from home and the stock has crumbled as the average consumer now buys at a smoother pace than in recent years,” said Wedbush analyst Dan Ives. “In this risk-off market, Amazon, along with other tech stocks, has come under a lot of pressure.”
That does not mean Bezos, who is now the third richest man in the world after Bernard Arnault of the French luxury goods empire LVMH (worth $ 142.3 billion on Friday, after falling $ 57.2 billion from 31 December), sits idle as his fortune decreases. In fact, the usually reserved president of Amazon made a move from the “manual” of Musk, entering Twitter to criticize the Biden government on inflation.
Musk, who briefly became the first person to have a fortune of $ 300 billion when Tesla’s market capitalization exceeded $ 1 trillion. dollars twice in November and January, has also faced problems that are not under its control, for example, production problems in China due to Covid’s last rounddown lockdown in the country.
But it has also played a more active role in dropping tens of billions to $ 207.3 billion. His fortune has fallen by $ 113 billion from a record high on November 4 and by $ 64.3 billion since the end of December.
Most of the 37% drop in Tesla’s stock so far this year through May 20 has been in the last six weeks. Shares of the electric vehicle maker have fallen 35 percent since April 13, the day before Musk announced the $ 44 billion acquisition of Twitter.
That’s double the Nasdaq’s 17% loss over the same period. The acquisition has overshadowed the record revenue and profits announced by Tesla for its most recent quarter on April 20.
Wedbush’s Ives summed up Tesla investors’ concerns about the acquisition of Twitter, talking about “concerns about Musk selling Tesla shares to pay for the Twitter deal and distractions.”
The deal to buy Twitter has definitely caught his attention. Tesla investors rejoiced briefly on May 13 when Musk wrote on Twitter that the acquisition was delayed due to concerns about the number of junk and fake accounts on the social networking platform, leading many to speculate that he was looking for a way out because the shares technology had collapsed since it made the $ 44 billion bid.
But the festivities ended quickly when Twitter’s board responded to the New York Times last Tuesday by announcing that it intended to “close the deal and enforce the merger agreement” between the company and Musk, hinting that there was a possibility litigation.
Tesla investors are still faced with the question of how Musk will finance his $ 27.3 billion stake in Twitter’s board, with just over $ 8 billion in cash, according to estimates. of Forbes.
It has pledged not to sell any more Tesla shares after selling shares worth more than $ 8 billion (before taxes) last month, but may have no choice. Given the limited free cash flow of Twitter and the fall in the value of Tesla’s share that would probably be required as collateral, Musk bankers may be reluctant to lend him more money (he had already pledged more than half of his stake in Tesla as guarantee for other loans before expressing interest in Twitter). Following allegations of sexual harassment (which Musk denied on Twitter), foreign investors may be reluctant to contribute their money to a deal that will be forcibly concluded. Musk did not respond to a request for comment.
According to Columbia University law professor John Coffee, Musk “could be forced to sell many of his shares to Tesla, which is his only real estate. This will drive down prices and some shareholders expecting such actions leave early “. Forbes estimates that Musk owns a 47% stake in $ 42.7 billion worth of SpaceX rocket maker.
Source: Capital
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