8 September 2020 saw the biggest wealth drop ever recorded on the Bloomberg Billionaires Index as Tesla and SpaceX CEO Elon Musk lost an unprecedented $16.3bn on Tuesday. His personal fortune dropped to about $82.3bn after the dip, which made Musk, 49, the sixth richest person in the world, down from fourth place.
Tesla shares plunged 21% in New York on 8 September, the most they have ever fallen in a single day since the electric car manufacturer’s stock market debut in 2010. Musk owns about 20% of his company’s shares. Shares closed at $330.21, a three-week low. They rose slightly by 6% the next day.
The slide comes amid news of a partnership between Tesla’s competitors Nikola Corp and General Motors Co. Tesla’s misfortune is part of a wider sell-off that started when the electric-vehicle giant failed to be included in the S&P 500 at the start of the month, shocking Wall Street and ruining Tesla’s hopes of joining the blue-chip index despite meeting the eligibility criteria by turning a consistent profit. The index added three smaller companies instead. The subsequent sell-off wiped out nearly 30% of Tesla’s market capitalisation and hit tech stocks the hardest. Tesla was the worst performer of any Nasdaq 100 component on 8 September.
Tesla’s value has surged nearly six-fold since the start of the year
Shares of other tech giants like Apple and Microsoft went down as well, falling 6.7% and 5.4% respectively. The decline in tech shares led to the S&P 500 overall slipping 2.8%. The slide pushed the index to its biggest three-day decline since June this year, when a surge of coronavirus cases in the US shook financial markets.
Tesla is the sixth-largest component of the Nasdaq Composite index and the only large company in the tech industry benchmark that is not a member of the wider S&P 500. The company’s market capitalisation is more than 100 times the smallest company in the S&P 500. Tesla is currently worth $463bn and its shares are trading at $426 after a 5-for-1 stock split. Just a month previously, its share price had shot up to over $1800, increasing by 11.2% in a single day and more than 30% in a four-day period for the eighth time in 2020. At one point, shares were over $2000 a piece. Tesla shares, which traded below $200 as recently as June last year, took off in October 2019, when it posted a surprise third-quarter profit. It then charged higher in January this year after reporting stronger than expected fourth quarter results and accelerating the timetable for the release of its new Model Y crossover SUV. Tesla’s value has surged nearly six-fold since the start of the year, at one point being worth more than Toyota, the world’s next most valuable carmaker, and overtaking ExxonMobil and Walmart. It has since fallen back 34%.
The wealth of the world’s top 1% has swung widely since the coronavirus pandemic began, depending largely on U.S. equity markets
Musk briefly joined the rare centi-billionaire club last month. His net worth rose to $115bn by 31 August, following a massive pay package and the monumental rally in Tesla shares from January this year to the end of August. In March, when the stock market reached its lowest point, the Tesla chief’s net worth was $24.5 billion.
The wealth of the world’s top 1% has swung widely since the coronavirus pandemic began, depending largely on US equity markets. Amazon’s Jeff Bezos, the world’s richest man, lost $7.9 billion on 8 September. Zhong Shanshan, founder of China’s largest bottled-water company Nongfu Spring Co., added more than $30 billion to his fortune after shares of his company surged following an initial public offering, making him the third-richest person in China. Musk’s loss and Zhong’s gain are the largest moves in the history of the Bloomberg Billionaires index, excluding net worth revisions for divorce, redistribution, and inheritances.