Tesla stock’s epic fall has hit Musk’s wealth hard. The worry for investors.
Source: Live Mint
than $600 billion in market value has evaporated in Tesla stock since mid-December. That decline has shaved some $140 billion of Elon Musk’s net worth.
Tesla stock’s epic fall has wiped out more than $600 billion market value since mid-December highs.
The decline has cost CEO Elon Musk some $140 billion in net worth. He should be OK. He’s still worth some $420 billion, according to Barron’s math. Investors might want to pay attention to the changing distribution of his wealth, though.
After Tesla stock’s roughly 20% fall over the past five days leading into Thursday trading, Musk’s stakes in rocket maker SpaceX, artificial intelligence company xAI, and social-media platform X now look to be worth a little more than his stake in the electric vehicle maker. In the past, Tesla stock typically represented the lion’s share of Musk’s wealth.
Measuring wealth, of course, is more art than science. Musk doesn’t have $420 billion in the bank. His net worth is an estimate based on the undiscounted value of his Tesla stock and the value of his stakes in privately held companies.
Valuations for those change when his companies raise money—so can Musk’s stakes—and they can change base on pricing data from platforms designed to trade shares in private firms. Sometimes wealth estimates will discount his private stakes, which can’t easily be converted for cash. Sometimes estimates try to include any potential liabilities Musk might have.
There is no one true number for Musk’s net worth. Based on recent data, SpaceX is worth some $350 billion, xAI is worth $75 billion, and X is worth $44 billion. Musk’s stakes in those three is worth up to $220 billion. The value of Musk’s Tesla stock is down to about $200 billion.
What, if anything, the changing distribution means for investors is hard to say. Investors, in the past, have been comforted by the fact that most of Musk’s wealth derived from his car company. The emergence of xAI and gains in SpaceX have changed things.
Changes could make it more difficult to determine Musk’s priorities.
That has never been easy, however. Musk has said he isn’t always motivated by money. He famously told CNBC’s David Faber a story about The Princess Bride when Faber pressed Musk about the risk of turning off Tesla buyers with his social media habits.
The movie, from 1987, has a scene in which the swordsman Inigo Montoya, played by Mandy Patinkin, catches up to the man who had killed his father. “Montoya says: ‘Offer me money. Offer me power. I don’t care,’” said Musk, paraphrasing the movie. “I’ll say what I want to say, and if the consequence of that is losing money, so be it,” the Tesla CEO added.
Now, Musk has more of a cushion. If he loses money on Tesla, he has several other companies providing ballast for his bank balance.
Tesla stock was rising 1.2% in premarket trading at $294.30, while S&P 500 and Dow Jones Industrial Average futures were up 0.5% and 0.3%, respectively.
