While Tesla remains the market leader in booming Asian EV markets, innovative Chinese start-ups could soon threaten this position
(Bloomberg) -- Elon Musk set records last year for one of the fastest streaks of wealth accumulation in history. The reversal is underway, and it’s steep.The Tesla Inc. chief executive officer lost $27 billion since Monday as shares of the automaker tumbled in the selloff of tech stocks. His $156.9 billion net worth still places him No. 2 on the Bloomberg Billionaires Index, but he’s now almost $20 billion behind Jeff Bezos, who he topped just last week as world’s richest person.Musk’s tumble only underscores the hard-to-fathom velocity of his ascent. Tesla shares soared 743% in 2020, boosting the value of his stake and unlocking billions of dollars in options through his historic “moonshot” compensation package.His gains accelerated into the new year. In January, he unseated Bezos as the world’s richest person. Musk’s fortune peaked later that month at $210 billion, according to the index, a ranking of the world’s 500 wealthiest people.Consistent quarterly profits, the election of President Joe Biden with his embrace of clean technologies and enthusiasm from retail investors fueled the company’s rise, but for some, its swelling valuation was emblematic of an unsustainable frothiness in tech. The Nasdaq 100 Index fell for the third straight week on Friday, its longest streak of declines since September.Bitcoin InvestmentMusk’s fortune hasn’t been solely subject to the forces buffeting the tech industry. His net worth has risen and slumped recently in tandem with the price of Bitcoin. Tesla disclosed last month it had added $1.5 billion of the cryptocurrency to its balance sheet. Musk’s fortune took a $15 billion hit two weeks later after he mused on twitter that the prices of Bitcoin and other cryptocurrencies “do seem high.”Extreme volatility has roiled many of the world’s biggest fortunes this year. Asia’s once-richest person, Chinese bottled-water tycoon Zhong Shanshan, relinquished the title to Indian billionaire Mukesh Ambani last month after losing more than $22 billion in a matter of days.Read more: Ambani Again Richest Asian as China’s Zhong Down $22 BillionQuicken Loans Inc. Chairman Dan Gilbert’s net worth surged by $25 billion on Monday after his mortgage lender Rocket Cos. was said to be the next target of Reddit day traders. His fortune has since fallen by almost $24 billion. Alphabet Inc. co-founders Sergey Brin and Larry Page are among the biggest gainers on the index this year. They’ve each added more than $13 billion to their fortunes since Jan. 1.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Tesla Inc.’s plunge has cost its shareholders about $300 billion in 2021 but the toll it is taking on speculative sentiment throughout the market has been much greater.Elon Musk’s electric carmaker is down more than 30% since its January high, brutalizing anything associated with it -- most notably Cathie Wood’s flagship exchange-traded fund, the Ark Innovation ETF (ticker ARKK). At one point on Friday, every one of the 54 U.S.-based ETFs that have assets under management exceeding $1 billion and more than 1% invested in Tesla had fallen.While Tesla is the most prominent example of the turnaround in high-flying stocks, large funds holding comparable amounts of quarantine favorites such as Zoom Video Communications Inc. have also been hit. All but one of the 12 funds with sizable stakes in the video conferencing company fell in early trading Friday.The shock rippling through markets from a single stock’s plunge is a testament to how quickly things can go haywire when risk takers crowd into the same once soaring names.“Any fund that holds a large weight in a single stock, if there is selling of that fund, it will pressure the stock, and vice versa -- especially on down days when bids tend to disappear,” said Mohit Bajaj, director of ETFs for WallachBeth Capital. “We are seeing heavy pressure in some of these names that had such a huge run last year.”The Invesco Wilderhill Clean Energy ETF, First Trust NASDAQ Clean Edge Green Energy Index Fund, Ark Next Generation Internet ETF and the Ark Innovation ETF were all down more than 6% as of noon in New York, though they pared losses by the market close. “High-flying stocks are great to own when there’s still wind beneath them,” said James Pillow, managing director at Moors & Cabot Inc. “But when that breadth thrust is withdrawn because of liquidity, they often fall much faster than they rose. Holding such high fliers is a significant risk to concentrated portfolios, and frankly it’s a risk for the confidence in the entire stock market.”Arthur Hogan, chief market strategist at National Securities Corp., said that “Tesla is the poster child for betting on a dream.”“When you start looking at things and saying, ‘This is going to be the greatest fill-in-the-blank ever,’ and then running up its valuation,” he added, “you have to understand, there are no one-way trades. Trees don’t grow to the sky. So when something goes parabolic, it tends to come back down to Earth at some juncture.”(Updates with closing prices)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.