Elon Musk Returns to the $200 Billion Club

Billionaire Elon Musk is the world's richest man again with more than $200 billion in net worth.

Musk, who serves as CEO of Tesla and acquired Twitter last year, has seen his fortune rise by $2.65 billion during the last day. 

In April, he was the second richest man in the world because his fortune fell well behind the French tycoon Bernard Arnault, whose net wealth was estimated at $211 billion at the time and now has fallen to $187 billion.

DON'T MISS: The Value of Elon Musk's Twitter Plummets

Musk's wealth has increased by $67.7 billion year-to-date as of June 5, according to the Bloomberg Billionaires Index. 

Shares of Tesla  (TSLA) - Get Free Report have risen by 30.71% during the past month, giving Musk's fortune a boost. 

In April, Musk's net worth had fallen after suffering two major blows because his two flagship companies, Tesla and SpaceX, experienced two monumental failures. His net wealth is tied to these two firms, which are leaders in their respective industries.

Tesla's Net Profit Shrunk

Tesla's first quarter results, which were released on April 19, showed that net profit decreased 24% to $2.5 billion even though its revenue rose by 24% to $23.3 billion compared to the first quarter of 2022. 

Investors were mindful of the gross margin linked to its automotive operations.

Tesla's automotive gross margin, which excludes sales of regulatory credits to other carmakers, fell to 19.3% in the first quarter, below the 20% threshold the group targeted. Three months ago, CFO Zach Kirkhorn had indicated that Tesla wanted a margin above 20% this year.

But Tesla, which has already lowered its prices six times in the U.S. in 2023, would continue along this path, Musk suggeste. He gave the impression that the margin would continue to decrease and that Tesla was perhaps not in a position of strength.

"We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin," Musk told analysts and investors.

The statements sent Tesla’s shares down 9.75% to $162.99 in the first session after the earnings release. This tumble represents approximately $56 billion of market value wiped out in 24 hours.

Unsurprisingly, Musk's net wealth suffered. His personal fortune fell by $12.6 billion to $164 billion on April 20, according to the Bloomberg Billionaires Index. The techno king lost nearly $13 billion in net wealth in 24 hours, as his fortune is closely linked to his stake in Tesla and the stock market performance of the carmaker.

Overpaid for Twitter Acquisition

But Musk's purchase of Twitter has quickly become a financial disaster for the billionaire who had no experience running a social media company.

The social media company's valuation has dropped by at least half and the appointment of a new CEO, Linda Yaccarino, who is a seasoned advertising executive, has not allayed many concerns.

In a Twitter Spaces on June 5, Musk admitted to the company's severe financial challenges. “Half of our advertising disappeared overnight because we’re insisting on free speech… they’re literally trying to drive Twitter bankrupt,” he said.

It appears that Musk may have buyer's remorse.

In a Twitter Spaces on June 5, Musk admitted to the company's severe financial challenges. “Half of our advertising disappeared overnight because we’re insisting on free speech… they’re literally trying to drive Twitter bankrupt,” he said.

Advertising revenue accounted for over 91% of Twitter's revenue in the second quarter of 2022, the last period for which data are available.

But Musk fails to take responsibility for driving advertisers away. After he acquired the company in 2022, the billionaire not only slashed the company's headcount by a whopping 69%, he also reinstated accounts that Twitter had previously banned because they posted racist, anti-Semitic, hateful and misogynistic comments.

The company has allowed offensive tweets to remain, drawing ire from users of the platform.

Advertisers have extremely unhappy with the recent changes made to Twitter. They have fled in droves, fed up with the problems that multiplied after Musk took over the company. 

The company's ad revenue continues to plummet. From April 1 to the first week of May, Twitter generated only $88 million in ad sales, a large decline of 59% from the same period in 2022, according to The New York Times.

Ad sales at Twitter each week often miss what executives have projected - the declines tally up to 30%, the NY Times said.

Both former and current employees at Twitter said they do not believe revenue will rise soon since advertisers may not like the increase of ads containing cannabis products and online gambling as well as more pornography and hate speech in tweets, according to the report.

The world's richest man took Twitter private by paying $44 billion, including $33.5 billion that was in equity. Some major shareholders of Twitter 1.0 helped him finance the acquisition by rolling their stakes into Twitter 2.0.

Before the acquisition last October, retirement provider Fidelity Investments held a stake equivalent to about $20 million in Twitter.

At the end of March, Musk acknowledged that Twitter's value had been more than halved. In effect, the tech mogul offered new equity grants to employees based on a $20 billion valuation.

But only a month later, Fidelity assessed this valuation at much less. Last November Fidelity had marked down its stake to $8.6 million. As of Jan. 31, the stake was valued at $7.8 million. 

Fidelity continues to write down the value of its investment in Twitter, now known as X Holdings in official documents. As of April 28, Fidelity Blue Chip Growth Fund's stake in Twitter 2.0 is valued at just $6.55 million, according to a new filing.

Given this new move by Fidelity, Musk's Twitter valuation is now just $14.41 billion. Basically, the social media platform lost $29.6 billion in market value in seven months.

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