Bernard Arnault, the French patriarch of luxury goods company LVMH, has surpassed Elon Musk as the richest man in the world. This is due to the latter's impressive January gain of $200 billion in market value from Tesla. The decline is indicative of the EV manufacturer's string of misfortunes throughout the month which witnessed a 26% decline in the price of its shares. Consequently, Musk's net worth has decreased from a height of $320 billion in November 2021 to an estimated $205 billion by Forbes.
Initially, In the fourth quarter, China's BYD overthrew Tesla as the top EV maker. Subsequent official statistics indicated that Tesla was facing systemic issues in the biggest auto market in Europe, and the U.S.'s bitter cold created a flurry of uncertainty about the overall dependability of electric vehicles (EVs) outside of California's mild climate. The Wall Street Journal also reported allegations that Elon Musk was misusing a variety of drugs and that Tesla's board was aware of this.
After relying on his other directors for a compensation package that might quadruple his ownership to 25%—lest he pursue his aspirations for robots and AI elsewhere—the Tesla CEO further exacerbated the company's issues. Last but not least, Tesla's Q4 statements last week descended into a stock market meltdown after it declined to clarify a vague warning that car sales will increase at a “notably lower” rate than in 2023, the year it slashed prices and sacrificed profits to boost demand.
In 2023, sales reached a record $97 billion, up 5% from the previous year, while free cash flow and profitability fell everywhere. Beyond the huge $5.9 billion accounting gain made in the fourth quarter, investors are now examining the annual 10-K file released on Monday in search of any further warning signs.
The only thing that saved Tesla was Musk's suggestion that an affordable entry-level model, priced at $25,000, would be released in the second half of 2019. This is although investors have not even seen an official design depiction as of yet. Musk's future currently largely depends on one decision: should Tesla be valued at a multiple far lower than that of a cyclical products manufacturer, as the CEO maintains it should be, or should it be priced more like an AI firm, in which case 2024's weak growth is only an anomaly?
In contrast, the French luxury goods conglomerate LVMH is soaring in Q4 revenues which defied the industry's general trend. CEO Bernard Arnault's net worth has increased to $208 billion, as reported by Forbes, following Friday's 12% increase in share price. Musk and Arnault may still readily be reached by hand.
Bernard Arnault,
However, his fortune might decline significantly if investors conclude Tesla is not a tech firm at all and is instead only an automaker that briefly benefited from a first-mover advantage. Leading the way in the Chinese EV market, BYD provides a warning in that regard. Musk believes the carmaker could destroy the competition globally, but its valuation is only $70 billion. That's a lot less than the 13% that Musk owns in Tesla, so should his automaker be related, there might be a lot more damage.
