How has Elon Musk lost $200 billion in 2022?
The world’s richest man became the fastest loser in 2022, shedding $200 billion in just 12 months.
Elon Musk enjoyed an eventful 2022 but he ended it in a far worse financial position than he started. The entrepreneur is now installed as the CEO of Tesla, SpaceX and Twitter and is worth a cool $137 billion, according to the Bloomberg Billionaires Index, but his net worth has shrunk dramatically.
But while he began the year as the richest man on the planet he has suffered an astonishing decline in net worth which saw him become the first person to ever lose $200 billion in wealth.
That sharp fall saw him dislodged from the top of the World’s Richest list, with LVMH Chairman Bernard Arnault taking his place.
How did Elon Musk lose so much money?
Most of Musk’s wealth is tied up in electric vehicle manufacturer Tesla, the company with which he is most intrinsically linked. Musk began investing in the firm in 2004 and increased his share to assume control of the company in 2008.
Since then the value of Tesla has soared as EVs become increasingly popular and investment has poured in. However with so much of his wealth tied up in Tesla, Musk’s fortune is very dependent on the stock’s performance.
In 20222 Tesla stock (TSLA) plummeted by around 65% as the company missed a number of growth targets and was forced to scale back production in China.
As EVs have become increasingly common a number of major rivals have threatened Tesla’s supremacy, particularly those coming from established auto companies. For the first time ever Tesla is suffering from a shortage of demand and in December offered a rare sale event to help shift some unwanted inventory.
This, it seems, spooked investors and the value of the stock fell by 37% in December alone. Experts had begun to question whether Tesla, which only holds a fairly minor share of the automobile industry, was worth its lofty valuation. At its peak in November 2021, Tesla was worth more than the 12 largest automobile manufacturers in the world, combined.
Twitter investment yet to pay dividends
While Tesla is responsible for the bulk of Musk’s wealth, Twitter is also now a significant part of his finances after a $44 billion purchase last year. But with so much of his wealth tied up in Tesla he was forced to sell off around $23 billion of shares in the company to fund the deal.
This huge sell-off served to devalue the price of the stock and further reduced his worth.
Since taking over at Twitter his often erratic behaviour and trigger-happy nature has done little to convince the markets that he is the man to make Twitter more profitable and recoup his investment.