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Tuesday, June 6, 2023

Elon Musk may lose title as world’s richest person as Tesla’s value nearly halves

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Tesla has lost almost half of its market value since founder Elon Musk bought Twitter in April, slashing its net worth by about $70 billion and jeopardizing its position as the world’s richest person.

Shares of the electric car company traded for $340.79 on April 13, which Twitter reported in its securities report said the billionaire would buy the social media company for $43.4 billion. It was the day before it revealed that it had made a hostile bid Since then, Tesla’s shares have fallen 49% to $173.44 (£141.29) amid concerns over disruptions at one of its factories in Shanghai.

Tesla’s boss has sold $20 billion worth of Tesla stock since April to finance the acquisition. He currently owns 445 million shares, according to Reuters, and the decline has reduced the value of his holdings from $151 billion to $77 billion.

This means his claim to be the planet’s wealthiest person is under threat, with France’s Bernard Arnault, chief executive of the luxury group LVMH, snapping at his heels. On Wednesday, share movements meant Arnault briefly took the top spot.

Musk has said of his Twitter takeover:
“Having a public platform that is massively trusted and broadly inclusive is extremely important to the future of civilization.”

However, Tesla shareholders worry about how he is dividing his time between the social media site and his many other ventures such as the rocket company SpaceX, and that running Twitter is too much of a distraction.

Adding to those concerns, Musk’s bankers are considering replacing some of the $13bn high-interest debt that he used to buy the platform in October with margin loans backed by Tesla stock, Bloomberg reported.

However, the billionaire tweeted:
“When there are macroeconomic risks, it is generally wise to avoid using margin loans on any company, as stocks may move in ways that are decoupled from their long-term potential.”

He is under pressure to turn around Twitter, which was already struggling before he bought it, making a $221m net loss last year. Since the acquisition, Musk has laid off about half of Twitter’s workforce, about 3,700 employees, and hundreds more have since resigned. The company has faced numerous lawsuits over layoffs and other issues. This week, it was investigated by city officials in San Francisco after a complaint was filed that the company turned rooms at its headquarters into dormitories.

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