U.S. New Energy Stocks Crash: Tesla Down 37%, Musk's Wealth Drops $360B This Year

01, Musk's Wealth Plummets

In early April of this year, Tesla CEO Elon Musk topped the list of global billionaires, but with the continuous decline of the US stock market, his personal fortune has suffered significant losses, especially as Tesla's stock price has been falling consistently over this period.

On May 11th, Tesla's stock price fell by 8.25%. Based on Musk's previous personal assets of $216 billion, approximately $16 billion was wiped out in a single day. The total loss for that day alone exceeded the combined losses of the other nine tycoons on the list, highlighting the severity of Musk's losses.

Due to the varied performance of stocks in the US and Europe over the past week, among the top-ranked billionaires, only three saw their wealth increase, while the majority experienced a substantial reduction in their fortunes. Jeff Bezos and Bill Gates each saw their wealth decrease by $3.53 billion and $1.02 billion in a single day, respectively.

As is well-known, Musk is the CEO of Tesla, and thus most of his personal wealth comes from his Tesla shares. Musk sold over 9.6 million Tesla shares within three days after accepting his acquisition offer at the Twitter board meeting two weeks ago. After this sale, which was seen as a way to finance the acquisition, Musk held approximately 163 million Tesla shares, nearly 16% of the company's total shares. Musk, as Tesla's CEO, has indicated that he has no plans to sell further Tesla shares after this.

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Since the beginning of 2022, Tesla's stock price has experienced two significant drops. There was a rapid rebound in mid-March, with a high of $1,149.91 on April 4th, followed by a swift decline to the current price of $728, meaning that the stock has fallen by 36.7% in just the last month.

In just one month, the value of Musk's Tesla shares has shrunk by more than one-third.

II. Continued Decline in US Stocks

Given the current situation of the US stock market, there is a possibility that it will continue to decline, and Tesla's stock price will follow suit, leading to further reduction in Musk's net worth.

The US inflation data was worse than expected, and the Federal Reserve is expected to raise interest rates by at least 50 basis points in the June meeting, which is very bad news for the US stock market. For the new energy sector, past increases were mainly due to rising valuations, but with the current continuous interest rate hikes, valuations are falling, and the outlook for the entire new energy vehicle sector is not optimistic in the future.Goldman Sachs has already lowered its year-end target for the S&P 500 index twice this year, and even in a very pessimistic forecast, in extreme cases, economic contraction could bring the S&P 500 down to 3,600 points.

Strategists at Bank of America also believe that the market will continue to decline. Data from Bank of America shows that the performance of the S&P 500 index in the first four months of this year is the worst annual start since 1939, and the market sell-off is still ongoing.

However, some analysts are starting to turn optimistic. Although there is still room for further adjustments in the stock markets of the United States and Europe, and the sharp decline in U.S. stocks has not ended, concerns about economic growth slowing down are intensifying, so there will be some improvements later on. Currently, investors' negative sentiment mainly comes from conflicts in Europe, worries about inflation, and uncertainty about U.S. central bank policies. But after gradually digesting these negative sentiments, U.S. stocks after the plunge actually have good buying opportunities.

Some people are also looking at next year, believing that U.S. stocks have not reflected the expectation of economic growth slowing down from the current level. It is expected that the S&P 500 index will fall in the near term, and then rise to 3,900 points in the spring of next year, which is about 2.5% lower than the current level.

Third, can it still rise?

Some time ago, there were market rumors that Tesla would apply to build its second and third factories in China, and even the candidate cities had already listed a list, but recently Musk said that there are no plans to build a second factory in the short term, only intending to expand the factory gate of the Shanghai factory, and focusing on the factories in Berlin and Texas.

This news came out, breaking the market rumors and causing the stock price to fall further.

While Musk's net worth and Tesla's market value are shrinking, Musk still invested a lot of energy in preparing for the acquisition of Twitter.

Musk has submitted a plan, which details some plans for the future of Twitter. He plans to increase annual revenue to $26.4 billion, more than four times the current level. At the same time, the number of users is expected to exceed 900 million, while currently only 200 million.

All of these plans are under the same premise, that is, Musk must successfully acquire Twitter. However, Tesla's stock price has continued to fall, which has seriously affected Musk's wealth, and this has also cast a shadow over the acquisition.