From 'Future Architect' to 'Villain'... The Fall of Musk

The World's First Asset Surpasses $300 Billion... $109 Billion Lost This Year Alone

[Image source=AP Yonhap News]

[Asia Economy Reporter Yujin Cho] 'Architect of the Future,' '21st Century Innovator,' 'The First Person in Human History to Surpass $300 Billion in Personal Assets'

Elon Musk, hailed as the most innovative entrepreneur since the late Steve Jobs, is falling from grace. Starting with founding PayPal, the world's largest online payment company, he built a vast empire in cutting-edge scientific fields such as electric vehicles, space exploration, solar power, and artificial intelligence. However, with his core electric vehicle business struggling, he has rapidly lost market trust following his aggressive acquisition of Twitter. Wall Street has criticized Tesla's stock collapse as an 'owner risk,' bluntly stating, "Musk has gone from Tesla's hero to its villain."

On the 14th (local time), after the market closed, Musk disclosed to the U.S. Securities and Exchange Commission (SEC) that he sold $3.58 billion (approximately 4.6587 trillion KRW) worth of Tesla shares. The shares sold over three days from the 12th to the 14th totaled 22 million shares. Earlier, in April, Musk sold about $8.5 billion worth of shares and pledged via tweet that he would not sell more, but he continued to sell Tesla shares worth $6.9 billion in August and $3.95 billion in November.

As of now, Bloomberg reported on the 15th (local time) that the cash Musk has secured from Tesla stock sales since the end of last year totals $40 billion. This amount is close to the $44 billion used to acquire Twitter. Bloomberg analyzed that Musk's recent persistent stock sales indicate increasing financial pressure on Twitter.

Bloomberg diagnosed, "Despite repeatedly affirming that the Tesla stock sales were over, Musk has persistently continued selling, reflecting growing financial pressure on Twitter." It also pointed out, "Musk's capricious and impulsive approach to social media management has driven advertisers away."

Criticism has arisen that Musk's privatization of Twitter, combined with inconsistent tyranny and various irresponsible behaviors, has become a risk factor in Twitter's management. In particular, his managerial decision to introduce a new service (Twitter Blue) aiming to increase revenue has backfired, causing more controversy.

When acquiring Twitter, Musk used a leveraged buyout (LBO) method, saddling Twitter with a substantial amount of high-interest debt. Bloomberg reported that Twitter's debt ballooned from $1.7 billion to $13 billion, more than seven times, with annual interest payments nearing $1.2 billion. The bigger problem is that half of this debt carries a variable interest rate, meaning interest payments could increase further depending on market conditions. Recently, Musk hinted at this risk via Twitter, stating, "In a turbulent macroeconomic environment where the Federal Reserve (Fed) is raising interest rates, we must be cautious about debt."

This owner risk has been a major negative factor for Tesla's stock price. Market concerns about Musk potentially selling more shares have spread, severely damaging investor sentiment.

At the beginning of the year, Tesla's stock price hovered around $400 but has since plunged nearly 60%. Most of the decline occurred after news of the Twitter acquisition broke. Since the end of September, when the Twitter acquisition news became public, Tesla's stock price has dropped by 41%. During this period, the S&P 500 index rose 11%, and the Nasdaq 100 index increased by 7%. Tesla's market capitalization shrank to $497.9 billion (based on the closing price that day), returning to levels seen two years ago.

Due to the stock price decline, Musk has also lost his position as the world's richest person. Once the first individual to surpass $300 billion in personal assets, his net worth has been rapidly decreasing day by day. According to the Bloomberg Billionaires Index, as of that day, his net worth was $161 billion, down $2.7 billion from the previous day. Over the entire year, $109 billion (approximately 144 trillion KRW) has evaporated, marking the largest asset decline among billionaires tracked by Bloomberg this year.

This content was produced with the assistance of AI translation services.