The world’s richest billionaire, Elon Musk, is facing significant pressure following a massive sell-off of shares in the world’s most valuable electric car company last Friday.™
After the unveiling of the robotaxi event, an irony has emerged. While Tesla should be thriving, its stock price has plummeted, and CEO Elon Musk’s enormous wealth has dropped by $15 billion.
Last week, Tesla revealed concepts for the Cybercab and Robovan models. Musk stated that the electric pickup truck could be available before 2027 with a price tag of around $30,000. However, these announcements were not enough to excite Tesla’s shareholders, many of whom wanted more specific details about the car’s development, its launch timeline, and how Tesla plans to make its self-driving technology work.
Following the event, Tesla’s stock began to decline rapidly. During the previous trading session on Friday, analysts reported that Tesla’s stock had dropped by 5%, and by the end of the day, it had fallen by 9%, according to Business Insider.™
Musk’s net worth is partly tied to Tesla, as he holds around 13% of the company’s shares, which rise and fall in value based on the company’s stock. On Friday, Tesla’s stock dropped more than 9%, from $238.77 to $217.80 per share.™
According to Bloomberg’s Billionaire Index, updated after the New York trading session closed, Musk’s net worth dropped by $15 billion. With a total net worth of $240 billion, Musk remains the world’s richest person.
Forbes reported in July that Musk faced a similar financial shock after the “We, Robot” event was postponed from its original August date, causing Tesla’s stock to fall by about 7%.™
Tesla’s stock continued to decline until early August before rebounding in September, bringing Musk’s net worth higher than that of McDonald’s and Pepsi. However, Tesla’s stock has yet to return to its highest point in the year, which occurred in July before the recent sharp decline.
Tesla’s stock is now priced at around $217 per share, compared to the $240 per share value before Musk started announcing his autonomous vehicle innovations. Despite the significant drop in Tesla’s valuation, Musk remains the world’s richest person. According to Forbes, Musk’s net worth is estimated to be more than $245 billion.
Currently, whether Tesla’s stock rises or falls depends on the innovations Musk reveals and how quickly they hit the market.
Especially considering that the Tesla CEO has a history of over-promising and under-delivering when it comes to new products, the real challenge for his management abilities will come if the automaker is able to bring a self-driving car to market by 2027. However, investors clearly still have many concerns.
Musk owns around 13% of Tesla’s shares and holds around 304 million stock options as part of his 2018 compensation package. Tesla is not Musk’s only asset. He also invests in The Boring Company, a tunnel construction company, and the AI startup xAI.
Morgan Stanley analysts believe Musk didn’t make a strong enough case during the event that Tesla is an AI company. Experts point out that Musk remained silent about rumors of a partnership between Tesla and his AI startup xAI, as well as updates to Tesla’s error detection system.
The event was seen as “disappointing expectations in several areas: lack of data on FSD (Full Self Driving) technology change rates, economics of ride-sharing, and market launch strategy.”
Tesla’s competitors are also formidable, especially those offering lower-priced vehicles in China. The company has faced challenges in the past; weak sales in 2022 caused its stock to drop by two-thirds. The automaker has also issued several recalls for its vehicles, including a software recall affecting most cars sold in the U.S. due to Autopilot malfunctions.
Tesla’s brand is also affected by the risks associated with the controversies surrounding Musk over the years. Just a few days ago, Musk deleted a post in which he raised questions related to U.S. political issues.
Musk’s future remains undecided, as he still has the potential to become the world’s first trillionaire, a feat that Informa Connect Academy predicts could be achieved by 2027. According to Informa, Musk is “the most likely candidate” to reach the $1 trillion mark due to his impressive asset growth, with an average annual growth rate of 110%.™
