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Thursday, May 23, 2024

Elon Musk loses $20B in 1 day after Tesla price-cutting remark

Elon Musk, the world’s wealthiest man, experienced a significant financial setback, losing a staggering $20 billion overnight. This substantial loss occurred after he stated that Tesla would continue cutting prices despite facing “turbulent times.” As of July 21, both Forbes and Bloomberg’s real-time billionaires’ lists ranked Musk as the biggest loser.

Despite this setback, Musk still holds the title of the richest person on the planet, although his net worth plummeted by $20.3 billion to $234 billion in just one day, according to the Bloomberg Billionaires Index. Forbes’ list also showed a loss of $18.4 billion, leaving his wealth at $238.4 billion, recorded at 5 pm EST (1 am UAE time) the day before.

As a result of this significant financial hit, the gap between Musk and the second richest individual in the world, Bernard Arnault, chairman of luxury goods maker LVMH, narrowed. Arnault’s net worth increased by $952 million to $235.2 billion, as reported by Forbes’ real-time list.

Musk’s substantial loss came as Tesla’s shares plummeted by 9.74 percent, marking its most significant one-day percentage drop since April 20. This occurred after the electric-vehicle maker reported a decline in its second-quarter gross margins, reaching a four-year low. Despite Musk’s announcement of potential price cuts to stimulate sales, it did not prove to be beneficial.

During Wednesday’s announcement, the Tesla CEO indicated that he would further reduce prices on electric vehicles, intensifying the company’s ongoing price war with rival automakers and straining its own profit margins.

In response to increasing competition and economic uncertainties, Tesla had been lowering prices and offering various incentives since late last year, all in an effort to manage inventory and maintain a competitive edge. Musk expressed his frustration during an analyst call, saying, “One day it seems like the world economy is falling apart, next day it’s fine. I don’t know what the hell is going on. We’re in, I would call it, turbulent times.

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