Elon Musk out of 200 Billion Dollar club. Blame Putin
If you ever had to explain and give an example of how macro-economic factors influence the money in your bank account, Elon Musk would be the first to jump and say, "No one can teach you this better than me."
Here’s why.
Elon Musk’s wealth was about $200 billion when this week began. But as Ukraine-Russia tensions escalated, and Vladimir Putin announced a 'military operation' in Ukraine, the global stock markets witnessed a raging bloodbath as markets fell with the momentum. Obviously, as the share prices of all stocks fell, so did Tesla’s share prices.
When the markets opened on February 22, Tesla’s share prices were approximately $834.5 (i.e Rs 62,831), which dropped to $831.39 on February 23, and though US Stock exchange is yet to open for February 24; at the time of writing this, the share price stands at $764.04 (i.e Rs 57,526, which is a drop of about $70 per share. That means a loss of Rs 5,200/share.).
WHY DOES ELON MUSK'S INCOME FLUCTUATE SO MUCH?
Since Elon Musk is the owner of Tesla, he naturally owns a lot of shares in the company. Musk holds about 175 million shares of Tesla stock, even though he is in the news most of the times because of his decisions to sell his shares. Why?
Elon Musk, unlike the common man who is paid a salary, is paid in shares. Elon like most businessmen, sells these shares to receive cash as per his convenience and that is when he has to pay tax. Since he is also entitled to ESOPs, he receives more shares every few years and well, that’s one reason for the large number of shares that end up staying with him, despite him selling his personal shares. He has also held on to about 1.3 million shares every time he’s exercised one of his stock option tranches.
Given that he has a huge amount of shares, a fall of $70 per share is going to hurt his overall wealth during times like these.
The recent price change from $834 to $764 caused his wealth to fall from $211 billion to $ 198 billion.
Though he remains the richest person in the world as per the Bloomberg Index, about $71.7 billion has been wiped out from his fortune so far this year.
You might remember how his wealth peaked at $340.4 billion on November 4, when Tesla shares reached a record high. Some days later, he asked his Twitter followers if he should sell part of his stake. This sparked the biggest decline in the company’s stock that erased $35 billion from his net worth in a day. He eventually sold stock worth more than $16 billion and also donated $5.7 billion of shares to charity.