On a Tuesday in early September 2020, Tesla's shares fell more than a fifth, and with them went roughly $16.3 billion of Elon Musk's fortune, enough to slip him back beneath Mark Zuckerberg and out of the upper ranks of the world's richest people. It is the kind of reversal that reminds us how fragile paper wealth can be when it rests on a single company's valuation, and on the judgments of an index committee whose decisions are rarely explained. Analysts still expect Tesla to find its place in the S&P 500 in time, and a scheduled battery event later in September offers the market a chance to
Musk's Net Worth Drops Below Zuckerberg's as Tesla Plunges and He Exits the Centibillionaire Club
The largest single-day wipeout in the index's history
Mark
A $16.3 billion loss in one day is hard to picture. What actually happened to Musk's money?
Mimi
Most of his wealth is Tesla stock, so when shares fell over 20 percent on Tuesday, his net worth fell with them. Bloomberg puts him at about $82.2 billion now.
Mark
And that cost him his place among the centibillionaires.
Mimi
Yes. He had crossed $100 billion just over a week earlier. Now Zuckerberg, at $103 billion, is back ahead of him, and Arnault and Buffett passed him too.
Luke
Worth noting these are Bloomberg's estimates. They track paper wealth tied to share prices, not cash anyone lost.
Mark
What set off the selloff?
Mimi
CNBC reported investors seemed spooked by Tesla's exclusion from the S&P 500 on September 4, when Etsy, Catalent and Teradyne were added instead.
Luke
"Seemingly spooked" is the key phrase. That is CNBC's reading of investor mood, not a confirmed cause. And the S&P committee's reasoning isn't given here at all.
Mark
Tesla looked like it qualified, didn't it?
Mimi
Four straight profitable quarters, and a value up over 300 percent this year. Baird's Ben Kallo said it met all the criteria and he expects it to be added eventually.
Luke
That's one analyst's expectation. Nothing here says when, or whether, it will happen. The same goes for the million-mile battery talk for September 22. That is speculation.
Il Polso
- Tesla's stock plunged more than 20 percent in a single day, erasing $16.3 billion from Musk's fortune and sending shockwaves through the rich list.
- The sell-off was triggered by Tesla's surprise exclusion from the S&P 500, leaving investors bewildered by a decision that seemed to contradict the company's strong record.
- Musk, who had only days earlier crossed the $100 billion mark, has tumbled out of the top five on the Bloomberg index, a record-setting wipeout for the ranking.
- Tech fortunes wobbled across the board, with Bezos, Gates and Zuckerberg all bleeding billions, while the market waits for signs of stabilization.
- All eyes now turn to Tesla's September 22 battery day, where a rumored 'million mile' battery could be the catalyst for a rebound.
On a Tuesday in early September 2020, Tesla's shares fell more than a fifth, and with them went roughly $16.3 billion of Elon Musk's fortune, enough to slip him back beneath Mark Zuckerberg and out of the upper ranks of the world's richest people. It is the kind of reversal that reminds us how fragile paper wealth can be when it rests on a single company's valuation, and on the judgments of an index committee whose decisions are rarely explained. Analysts still expect Tesla to find its place in the S&P 500 in time, and a scheduled battery event later in September offers the market a chance to reconsider the company's future.
On Tuesday, Tesla's stock dropped by more than twenty percent, and Elon Musk's fortune dropped with it. By Bloomberg's count he lost $16.3 billion in a single day, leaving him worth roughly $82.2 billion and placing him again beneath Facebook's Mark Zuckerberg. The fall came quickly. Only a week earlier Musk had become the fifth person ever to pass $100 billion, a milestone that earned him the title of centibillionaire. Now he sits outside that club and outside the top five of the Bloomberg Billionaires Index, with Bernard Arnault and Warren Buffett ahead of him. Bloomberg called it the largest single-day wipeout in the index's history.
The trigger was Tesla's exclusion from the S&P 500. The index had announced on September 4 that Etsy, Catalent and Teradyne were joining, and Tesla was left out. Many investors had expected otherwise. The company had posted four straight quarters of profit, and its value had climbed more than 300 percent that year. Analyst Ben Kallo of Baird said it was unclear why Tesla had been passed over, though he still believed the stock would eventually be added, since it met every inclusion criterion.
The turbulence reached beyond Musk. Jeff Bezos lost more than $7.9 billion the day before, Bill Gates over $2 billion, and Zuckerberg shed $4.26 billion on Tuesday while remaining among the centibillionaires. Tesla shares had lost about a third of their value in little more than a week, and the company had also completed a $5 billion stock sale following a five-for-one split.
Attention now turns to September 22, when Tesla plans its battery day event. Speculation centers on a "million mile" battery, and many expect the stock may recover on that news.
On Tuesday, Tesla's stock fell by more than 20 percent, and Elon Musk's fortune fell with it. By Bloomberg's count, he lost $16.3 billion in a single day, leaving him worth roughly $82.2 billion and pushing him back below Facebook's Mark Zuckerberg on the rich list.
The reversal came fast. Just over a week earlier, Musk had become the fifth person in the world to pass $100 billion in wealth, a threshold that earned him the label of centibillionaire. Now he is out of that club and out of the top five on the Bloomberg Billionaires Index, the agency's daily ranking of the richest people alive. Bernard Arnault and Warren Buffett moved ahead of him.
Bloomberg described the loss as the largest single-day wipeout in the history of the index.
Musk was not alone in feeling the week's turbulence. The day before, Amazon founder Jeff Bezos lost more than $7.9 billion, and Microsoft co-founder Bill Gates lost over $2 billion. Zuckerberg, who holds third place with $103 billion, also took a hit of $4.26 billion on Tuesday, though it left him still inside the centibillionaire ranks.
CNBC reported that the slide in Tesla shares followed investor disappointment over the company's exclusion from the S&P 500. The index, which tracks the 500 largest publicly traded U.S. companies by market capitalization, announced on September 4 that it was adding the online retailer Etsy, the pharmaceutical firm Catalent and the automation company Teradyne. Tesla was not among them.
Some investors had expected otherwise. Tesla had posted four consecutive quarters of profit, and its value had risen by more than 300 percent this year. Ben Kallo, an analyst at the financial services firm Baird, wrote in a research note, as reported by MarketWatch, that it was unclear why Tesla had been left out of the recent rebalancing. He said Baird still believes the stock will eventually be added, since it has met all the inclusion criteria.
MarketWatch reported on Wednesday that Tesla shares had lost about a third of their value in just over a week. In a regulatory filing published Tuesday, Tesla confirmed it had completed the sale of $5 billion in new stock, which followed a five-to-one stock split.
The next date to watch is September 22, when Tesla is scheduled to hold a "battery day" event promising advances in the technology that powers its vehicles. Speculation holds that Musk will unveil a "million mile" battery, and the report suggests the stock may rise again on that news.
Citazioni salienti
It is unclear why Tesla was not included in the recent rebalancing cycle, though the stock will eventually be added, having fulfilled all inclusion criteria.— Ben Kallo, analyst at Baird (paraphrased from research note)
Vuoi la storia completa?
Leggi l'originale su Newsweek ↗
Economy & Finance