Musk Down $100 Billion in 2022 as Tesla Tanks

He sold some $19 billion in stock this year; Twitter and China haven't helped

Tesla Motors Inc. Chief Executive Officer Elon Musk Speaks At StartmeupHK Venture Forum

How do you end up with a personal net worth of $169.8 billion in a bear market? If you're Tesla Inc. (TSLA) CEO and Twitter owner Elon Musk, you start the year with $270.3 billion and then let gravity do its thing.

Key Takeaways

  • Elon Musk's personal wealth was down more than $100 billion in 2022 as of Monday.
  • The losses are the result of a sharp drop in Tesla's share price, which is down 52% this year.
  • Musk owns a 23% stake in Tesla via stock and vested stock options despite selling shares worth $19 billion this year.
  • Vested Tesla options accounting for some $50 billion of his wealth are at issue in a Delaware trial.

Musk has already used a variation of this joke in reference to his recent $44 billion acquisition of Twitter, after previously acknowledging he overpaid for the social network. Yet Musk's loss of more than $100 billion in personal wealth since the start of 2022 is largely the result of his almost 23% stake in Tesla, the leading manufacturer of electric vehicles.

Tesla shares were down 52% year-to-date as of Monday's close, outstripping a drop of 29% for the Nasdaq-100 index and a 17% decline in the S&P 500 index.

Tesla vs. the Nasdaq-100 and S&P 500 in 2022
Vertical lines denote Musk share sales. Source: TradingView.

Investor faith in Musk's claims about Tesla's dazzling future has been dented by the COVID-19 outbreaks and the accompanying economic slowdown in China, as well as the distraction Twitter has become for Tesla's CEO and self-styled "technoking."

Rising U.S. interest rates have been another factor, curbing investors' risk appetite and deflating many of the most expensive U.S. stocks. Tesla still trades at nearly 8 times sales and 31 times forward earnings.

Musk has contributed to the decline by selling Tesla shares worth some $19 billion this year, most recently unloading stock worth valued at $4 billion on Nov. 8 after saying on two prior occasions he planned no further stock sales in 2022. Musk sold another $22 billion of Tesla stock in 2021, cashing out near the top of a 50% rally in the stock last year.

The latest share sale left Musk with Tesla stock amounting to about 14% of shares outstanding. He also owns vested options equivalent to a stake of about 9%. Between the Tesla stock and vested options, Musk's Tesla stake is worth about $122 billion. That means he gains or loses $1.2 billion or so, at least on paper, for every 1% move in Tesla's share price.

This year's reversal of fortune left Musk a mere $23 billion ahead of the nearest challenger to his bragging rights as the richest human, as of Nov. 21. He could lose that title if a Delaware judge sides with a shareholder challenging the legality of Tesla's 2018 options grants to Musk accounting for the vested options he now holds.

Musk could also get dethroned if Tesla shares continue to drop. His nearest challenger is Bernard Arnault, chair of France's LVMH luxury goods conglomerate, worth $157 billion as of Nov. 21. Arnault is also down big this year, while India ports and coal mogul Gautam Adani has added $53 billion this year to move into third place with a fortune estimated at $130 billion.

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