The collapse of Tesla, the purchase of Twitter, the interest to be paid. So Elon Musk lost 200 billion in one year

Entrepreneur Elon Musk has become the first person in the world to lose 200 billion dollars from his own assets. The new patron of Twitter has been making a loss for months, so much so that only a few weeks ago the real-time ranking of Forbes he had certified that the billionaire was no longer the richest man in the world, surpassed by the entrepreneur Bernard ArnaultCEO of the luxury group LVM extension. Ironically, the Tesla owner himself had been the second person in the world to accumulate a assets of more than $200 billion in January of 2021, after rival Jeff Bezos. In November of the same year, his luck reached its highest peak, touching i 340 billion of dollars. Now, according to the ranking of BloombergMusk’s net worth dropped significantly to 137 billion dollars. But how did the billionaire go from being the richest man on the planet to losing more than half of his net worth in just one year? It has to do with the collapse of Tesla, the purchase of Twitter and the increase in interest rates.

The “easy money” during the pandemic

The collapse of the last few months is only the other side of the coin of the exponential growth of Musk’s capital during what Bloomberg defines «the era of easy money» during the pandemic. In the toughest months of the lockdown, tech companies like Tesla, but also Google, Amazon, Apple and Microsoft have seen their earnings skyrocket. Specifically, the electric car brand has touched i trillion capitalization in October 2021. Growth was led by lower costs that many tech companies have had to support during the pandemic, from marketing to physical stores. In the case of online stores and virtual stores, the volume of business has grown tremendously, allowing companies to reinvest and increase its listing on the stock exchange. Investors therefore found themselves with much more money at their disposal, which they in turn used to focus on promising companies, including Tesla. Thus a virtuous circle was established.

The end of the dream and the purchase of Twitter

Now that the inertia of this phenomenon has ended, companies are once again bearing the costs associated with the post-pandemic world. In the case of Tesla, all this is added to by Elon Musk’s purchase of Twitter at the end of October. The entrepreneur has sold billions in shares of his electric vehicle brand to buy the social network, which Tesla no longer represents his assets principal. The company has lost 65% of its value in 2022and the markets have been destabilized by the continuation push and pull with the previous administration of Twitter, which also reduced the value of the microblogging platform. In essence, Musk’s move succeeded, but it sold a lot to buy Twitter at more than its true value.

The increase in interest rates

Added to this are the massive loans Musk has resorted to to complete his big financial deals of 2022. With theinterest rate increase by the Federal Reserve aimed at containing inflation, repaying them has become more difficult, and, above all, more expensive, further reducing the billionaire’s assets. «Tesla has never done so well, Musk had reassuringly tweeted last December 16, adding: We cannot control the Federal Reserve. That’s the real problem here.”