Elon Musk, once worth as much as US$340-billion (R5.9-trillion at the time of writing), has been displaced as the world’s richest person by Bernard Arnault.
Musk, 51, has seen his fortune tumble by more than $100-billion since January to $168.5-billion, according to the Bloomberg Billionaires Index, less than the $172.9-billion net worth of Arnault, 73, whose wealth largely derives from his 48% ownership of fashion giant LVMH.
Musk’s fall from atop the rankings — the first time that’s happened since he was number 2 in September 2021 — caps a tumultuous year for the frenetic billionaire. He shocked the world in April with his offer to take Twitter private for $44-billion, in a brazen display of how the wealthiest individuals could wield their massive fortunes.
But his agreement coincided with the US Federal Reserve and other central banks embarking on their most aggressive round of monetary tightening in a generation, slashing the valuations of high-flying companies like Musk’s Tesla. The electric car maker’s stock is down more than 50% this year.
Musk tried for months to get out of the Twitter deal, but failed. He offloaded more than $15-billion in Tesla shares — about $8.5-billion in April, then another $6.9-billion in August — to raise enough cash to fund the purchase.
Once he finalised the Twitter acquisition in October, the Bloomberg wealth index knocked $10-billion from his fortune, reflecting that shares of similar businesses have slumped since he made his bid.
Challenges
Musk has pledged to turn around the social media platform, but he faces several challenges — some of his own making. He blasted Apple and threatened to withhold Twitter from its App Store at a time when other companies were already pulling their advertising from the site.
Meanwhile, Twitter is poised to face annual interest costs that exceed a measure of its earnings for all of 2021. Musk’s bankers are considering providing him with new margin loans backed by Tesla stock to replace some of the high-interest debt he layered on Twitter.
Arnault, the new richest person in the world, is drama-free in comparison to Musk.
Arnault has long been a mainstay near the top of the wealth rankings, but his fortune never grew at the exponential pace of US tech billionaires. Now his empire is holding up while Mark Zuckerberg, Jeff Bezos and Alphabet’s Larry Page and Sergey Brin see their wealth hammered by rising interest rates.
Paris-based LVMH Moet Hennessy Louis Vuitton’s designer apparel, fine wines and retail business have benefited from pent-up demand unleashed when Covid-related shopping and travel restrictions were lifted in most countries. Arnault’s brands cater to the affluent — from Christian Dior and Fendi to jewellers Bulgari and Tiffany & Co, and champagne house Moet & Chandon. — Tara Patel and Angelina Rascouet, (c) 2022 Bloomberg LP
