Recession fears affect almost everyone.
Even the richest man in the world, who has just left the most select club on the planet.
Elon Musk, the CEO of electric vehicle manufacturer Tesla (TSLA) – Get Tesla Inc. Report, remains the richest man in the world, but his fortune has fallen sharply. Since June 13, Musk, who was the only person in the world to possess an estimated fortune above $200 billion, has returned below this bar.
According to the Bloomberg Billionaires Index, his net wealth is currently valued at $197 billion, down $11.9 billion from June 12.
The $200 billion club thus loses its last and only member.
Musk’s fortune, which is largely based on his stake in Tesla and his other company SpaceX, has shrunk by $73.2 billion since January. Musk currently holds 23.5% of Tesla shares, according to a Tesla proxy filing, which is worth more than $171 billion as of June 13’s close.
It’s the second time this year that the tech tycoon has left the $200 billion club.
The first time this happened was in February, but the mogul quickly rebounded as Tesla stock resumed its rally on Wall Street. Investors were convinced that the electric vehicle manufacturer had the keys to dominate the market with the planned inauguration of two new production sites, one near Berlin in Germany and another in Austin, Texas.
But Musk’s April announcement of a $44 billion takeover bid for microblogging website Twitter (TWTR) – Get Twitter Inc. Report and the ensuing saga raised concerns. Many of Tesla’s fans and investors fear that Musk will focus less on the automaker.
Added to this are now glaring economic recession due to the rise in rates by the Federal Reserve to fight against inflation. Musk himself said recently that we were already in a recession even though technically that is not the case yet.
The billionaire also reiterated that recessions weren’t necessarily a bad thing.
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“I think we probably are in a recession and that recession will get worse,” the billionaire said on May 16 during a virtual appearance at the recent All-In Conference held in Miami. “But you know, these things pass and then there will be boom times again.”
Tesla CEO added that the recession will “probably” last 12 to 18 months.
“It is usually the amount of time that it takes for a correction to happen.”
“Recessions are not necessarily a bad thing. I’ve now been through a few of them. And what tends to happen is if you have a boom that goes on for too long, you get misallocation of capital. It starts raining money on fools. Basically, it’s like any damn thing gets money and I’m sure you’ve seen a few of those,” Musk said.
“So somebody gets just out of control. And you just have a misallocation of human capital where people are doing things that are silly and not useful to their fellow human beings,” he continued. “Watch your cash flow and get positive cash flow as soon as you can.”
Musk’s wealth peaked at $340.4 billion on Nov. 4, when Tesla shares reached a record high, according to Fortune.
A few days later, Tesla shares slumped after Musk indicated he could sell around 10% of his stake in the clean-energy carmaker.
He donated more than $5 billion of Tesla stock to charity in November when the stock was well above $1,100, according to regulatory filings.
Musk remains by far the richest man in the world. There is a rift between him and Jeff Bezos, the founder of Amazon (AMZN) – Get Amazon.com Inc. Report, who is the second richest man in the world with a net wealth of $127 billion as of June 13.
Bernard Arnault, chairman and CEO of LVMH (LVMHF) Moet Hennessy, whose net worth totals $121 billion, comes third.
Bill Gates is 4th with an estimated fortune of $114 billion, and Warren Buffett is 5th with a fortune of $103 billion.
Mark Zuckerberg, the CEO of Meta Platforms (META) – Get Meta Platforms Inc. Report, the parent company of Facebook, whose fortune has shrunk by $64.4 billion since January, is only 17th with a net worth of $61.1 billion.