Elon Musk loses $30 billion in one day amid Wall Street’s tech wipeout

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Elon Musk’s fortune slumped $US20.3 billion ($29.5 billion) after Tesla warned it may have to keep cutting the prices of its electric vehicles, sending shares tumbling.

The drop in net worth to $US234.4 billion is the seventh-largest decline ever among those in the Bloomberg Billionaires Index, and further narrows the wealth gap between Musk and Bernard Arnault, the world’s two richest people. Musk’s fortune still exceeds that of Arnault, chairman of luxury goods maker LVMH, by about $US33 billion.

Tesla’s 10 per cent fall has taken a big chunk out of Elon Musk’s net worth. Credit: Bloomberg

Musk wasn’t the only US technology billionaire having a tough day. Amazon.com’ s Jeff Bezos, Oracle Corp.’s Larry Ellison, former Microsoft CEO Steve Ballmer, Meta’s Mark Zuckerberg and Alphabet co-founders Larry Page and Sergey Brin shed a collective $US20.8 billion in net worth as the tech-heavy Nasdaq 100 fell 2.3 per cent.

Shares of Tesla slid 9.7 per cent to $US262.90 in New York, the most since April 20, after the company warned of more hits to its already-shrinking profitability. Months of markdowns have taken a toll on automotive gross margin, which fell to a four-year low in the second quarter. Musk, the company’s CEO, said Tesla will have to keep lowering prices if interest rates continue to rise.

In addition to potentially having to budge further on pricing, Tesla is pouring money into new models, including the behind-schedule Cybertruck, plus Dojo, the in-house supercomputer Musk plans to spend at least $US1 billion on by the end of next year. While Tesla remains on track to produce around 1.8 million vehicles in 2023, output will dip this quarter due to factory upgrades.

“It does make sense to sacrifice margins in favour of making more vehicles, because we think in the not-too-distant future they will have a dramatic valuation increase,” Musk said, referring to his belief Tesla will eventually offer autonomous-driving capability that will make already-sold cars worth more.

Tesla shares have been on atear this year but were savaged on Thursday in New York, with analysts saying investors may be concerned about how profitable the electric vehicle maker will be after cutting prices.Credit: Bloomberg

Adding to Tesla’s challenges is its growing inventory of cars. The company said it now has 16 days’ worth of supply globally, up from 15 days last quarter and just four days a year ago. Inventory continued to build despite steep discounts on Tesla’s best-selling models, and perks including free charging that the carmaker offered consumers.

Musk, 52, derives his wealth primarily from his stake in the EV manufacturer, as well as his holdings in Space Exploration Technologies and Twitter. His wealth had increased about $US118 billion this year through Wednesday, as shares of Tesla climbed 136 per cent.

Arnault, 74, has seen his net worth rise by $US39 billion this year to $US201.2 billion. Shares of Paris-based LVMH have gained 26 per cent in 2023.


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