Elon Musk, the CEO of Tesla, is having a bad week. He just made history by becoming the first billionaire to lose $50 billion in just two days. According to Bloomberg, the second day of his eye-watering net worth dive is the largest single-day drop since Jeff Bezos’ $36 billion loss in 2019. In Bezos’ case, the shortfall came from his divorce to MacKenzie Scott.
Tesla Stock Falters
For Musk, the loss is much less personal. His wealth is comprised almost entirely of his shareholdings. Shares of Tesla company have crumpled over the past two days, with investor sentiment turning sour over an errant Tweet from Musk. Over the weekend, Musk asked his followers on Twitter whether he should sell ten percent of his Tesla shares. The poll concluded with Musk’s followers voting in favor of selling, causing Tesla stock to fall by 7% on Monday.
After the poll concluded, the news broke that Musk’s brother, Kimbal, sold $109 million worth of Tesla stock on Friday. This sale occurred before Musk sent the tweet that rocked the company’s share price. Kimbal Musk also donated 25,000 shares to charity Friday, the same number he sold. He’s not the first member of Tesla’s board of directors to cash in on the company’s astronomical rise, either.
At the end of October, three directors, Robyn Denholm, Ira Ehrenpreis, and Antonio Gracias, sold Tesla shares worth hundreds of millions of dollars. This comes as no surprise: the electric car manufacturer has seen a 1600% rise in share prices over the last two years. Even with the stock down to $1,025 per share Wednesday morning, Musk is still the wealthiest person on the planet.
Sell-off Cuts Into Musk’s Net Worth
Even after losing $50 billion in two days, Musk is still worth $83 billion more than the next-wealthiest person on the planet, Amazon CEO Jeff Bezos. The two are so far ahead of other billionaires that the gap between their wealth has occasionally grown larger than the net worth of Bill Gates, the fourth-wealthiest person on the planet. Before Tesla’s recent price plunge, Musk was over $143 billion wealthier than Bezos.
Gates has a net worth of just over $138 billion.
Tuesday’s sell-off stung investors other than Musk, too. Larry Ellison, the founder of Oracle Corp, holds the second-largest individual stake in Tesla. Ellison lost a staggering $2.1 billion on Tuesday. Likewise, ARK Investment Management saw $750 million erased over a single day of trading yesterday.
Even with this dramatic drop, Tesla continues to enjoy a market capitalization above $1 trillion. This market cap is due to its unbelievable rise over the past year. The company’s revenue beat expectations throughout 2021, and delivery numbers showed shareholders that the EV’s manufacturing issues are behind them. This, combined with a higher valuation for Musk’s company SpaceX, has kept Musk’s fortune up 70% since January of this year.
Tesla could have more competition waiting to strike. Lucid Group, the company behind a gorgeous electric concept car called the Lucid Air, has finally manufactured and delivered a few vehicles to customers. Investor sentiment in the company has been positive for the past year, with the stock enjoying 317% growth this year alone. When Lucid announced that it delivered a few vehicles, investor confidence skyrocketed, as did share prices. On Wednesday morning, shares of the upstart automaker were trading around $42.
One of Lucid’s critical selling points among investors is its management team. Unlike some startups, the company boasts management with automotive industry experience. Tesla’s former chief engineer for the Model S, Peter Rawlinson, is the company’s CEO. Likewise, Lucid Air’s designer is longtime industry veteran Derek Jenkins. This talented staff has investors cautiously optimistic that Lucid could be a challenger to Tesla’s EV dominance.
Another competitor, Rivian, has recently made headlines, too. On Tuesday, the Amazon-backed automaker completed its initial public offering. It drummed up almost $12 billion while selling shares at $78 apiece. That eye-opening IPO makes it one of the top ten initial offerings in US history, pushing Rivian to the forefront of investors’ minds.
Rivian isn’t a newcomer to the industry, though. It was founded in 2009 and has already made delivery of thousands of R1T electric pickup trucks. Amazon has a 20% stake in the American automaker, from whom it ordered 100,000 electric delivery vans. The company will begin public trading Wednesday under the ticker RIVN.
The Future Is Electric
Some investors argue that the market overvalues shares of EV manufacturers. Bullish stakeholders contend that the market is the future of the automotive industry. Even conventional manufacturers are building up significant production of EVs to keep up with the explosion in demand. All signs point to an electric future for vehicles. The only question now is which automaker will come out on top in the battle for market dominance.