- Elon Musk’s fortune shrank by $10 billion on Friday as Tesla stock plummeted, according to Bloomberg.
- Tesla’s stock price fell after a report that SpaceX had settled a sexual misconduct lawsuit against it.
- One analyst said Tesla’s supporters fear “key man risk” and “perception is reality for [Wall] Street.”
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Tesla founder and CEO Elon Musk lost $10 billion in just one day after allegations of sexual misconduct surfaced against him.
He was worth around $212 billion as of Thursday, according to the Bloomberg Billionaires Index. After news of the allegations broke on Thursday evening, his fortune dropped to around $201 billion, the index showed.
According to the Insider report, SpaceX, the aerospace company Musk founded, paid a flight attendant $250,000 in 2018 to settle a sexual misconduct lawsuit against Musk. Musk has denied the lawsuit.
Musk owns around 47% of SpaceX. Last week, the company was valued at $125 billion. But it’s a privately held company, and as such, its valuation doesn’t change from day to day.
Tesla’s stock performance in the public markets has the biggest impact on Musk’s net worth. According to the BBC, Musk owns about 15% of the company. After news of the allegations broke, Tesla’s share price plummeted 6.4%.
But Musk’s news of sexual misconduct and its associated financial fallout is just the latest in a protracted wealth slump since earlier this year. According to Bloomberg’s estimate, he is more than $69 billion poorer since the beginning of the year. That’s partly because Tesla’s share price was dragged down amid a global stock market sell-off as investors worried about the health of the global economy.
But it’s also likely that Tesla’s investors have been thinking about “key man risk,” or how the harm one person is exposed to could negatively impact an entire organization. “The risks of distraction for Musk (perception is reality) are hard to ignore,” says Wedbush analyst Dan Ives tweeted on Thursday, referring to Musk’s divided attention to Tesla and its upcoming Twitter acquisition.
Tesla’s stock price decline has gathered momentum since Musk announced he would privatize Twitter for $44 billion in April. A day after that announcement, Tesla stock plummeted more than 12% as shareholders questioned how he would fund his Twitter acquisition, Insider reported.
In the past week alone, the automaker’s stock has fallen 14%, shedding about $110 billion of its market valuation, Bloomberg reported. “As long as the Twitter deal is out there and Tesla stock is falling, people worry that Musk will have to sell more stock and get distracted and not pay as much attention to Tesla as he should,” Gary Black said. Founder and Managing Partner of actively managed ETF Future Fund LLC, to Bloomberg.
Musk will likely see his wealth continue to shrink as bad news continues to plague Tesla. A new documentary, “Elon Musk’s Crash Course,” premiered Friday, which looks at Musk’s reaction to car crashes allegedly caused by the improperly functioning Autopilot feature in Tesla’s cars.
Musk said on Twitter that same day, without referencing the inside story or documentation, that he was building a “hardcore litigation department” at Tesla that would report directly to him. He was looking for candidates who were aggressive and would not back down.
“There will be blood,” he tweeted.