One tweet costs heavy for Elon Musk as he losses $15 billion and also the world’s richest title following his comment on Bitcoin’s high valuation!
In today’s fast-paced world where social media platforms play a huge role in making or breaking has shown its teeth as Elon Musk’s comments over the weekend have cost him heavy as he mentioned that the prices of Bitcoins and smaller rival Ether “do seem high,” his message on his favorite platform Twitter sent some serious waves of correction in the Bitcoin market.
Bitcoin, the world’s largest cryptocurrency, showed an immediate correction. It slid as much as 12.5% to $48,071 on Tuesday after a spell of volatility that broke the token’s impressive rally and highlighted doubts about the token’s durability.
Close to his tweet, as Bitcoin slid from its highs, it wiped Tesla Inc’s shares that slid 8.6 percent on Monday, wiping an enormous chunk of US$15.2 billion of Elon Musk’s kitty.
The erosion in his wealth has resulted in Elon Musk’s downgrade from the world’s wealthiest person to a close second on the Bloomberg’s Billionaires Index of the world’s 500 richest people, a net worth of US$183.4 billion.
The world’s richest tag now goes back to Amazon.com founder Jeff Bezos whose fortunes have too fallen lately by US$74 billion to US$186.3 billion.
The exciting bit is that the two billionaires have been playing a merry–go–round for the title of the world’s wealthiest for most of this year as Tesla Inc’s value fluctuated.
The fall in the bitcoin has come after it had witnessed a massive rally after Tesla announced it had added $1.5 billion in Bitcoin to its balance sheet.
Another trigger that led to the slide in Tesla’s value is because earlier on Monday, Musk also tweeted that the company’s Model Y Standard Range SUV would still be available “off the menu,” supporting reports from electric vehicle news site Electrek that the model had been removed from its online configurator, which had a direct impact on the Tesla Inc’s shares.
Tesla Inc’s record run
Even as Elon Musk’s personal wealth increased like no other’s, increasing by more than $100 earlier this year, Tesla Inc, however, witnessed a game of ping pong.
Investors had shorted Tesla stock on the premise that the share prices would go down but hold your breath, they couldn’t have imagined that this move cost them a record loss of $40.1 billion in betting against Elon Musk, who, mind you laughed all the way to the bank!
The battle of words has been an ongoing affair even as critics with whom Musk has had very well-publicized harsh words over the years stood at a chance of making a very healthy return if Tesla shared dropped in value but also at the same time risked colossal loss in case the stock rose.
And well did the critics have to eat their words, as the stocks of Tesla rose a spectacular 743% during the course of the year.
The losses incurred by investors shorting Tesla stocks were unlike any incurred by shorting for any other company. The beauty is that the losses incurred by shorting Tesla were more than the short losses for the following nine companies – combined!
The major critique against Tesla is that the investors maintain it is an overhyped niche player that larger, more established automakers will soon overtake.
Another point to be noted is that Tesla has been a favorite play for short investors, who, in fact, controlled about 19 % of the shares as 2020 began.
In the end, many of the shorts were forced to concede defeat; however, the year still ended with short investors holding approximately 5% of Tesla shares which roughly equates to a$31 billion bet against the company’s future prospects.
Musk has periodically engaged with short sellers in this game, taking full advantage of Twitter, his favorite social media tool, to engage in full-on battle with the short-sellers.
During this time, his own personal gains rose – Musk’s stake of 170 billion shares increased in value to $106 billion in 2020, and this is just a portion of the profits he earned from Tesla’s performance.
Musk was also inline to soon control enough options to buy substantial shares of Tesla.
For now, the result of Musk’s Twitter admission of Bitcoin’s higher valuation has resulted in an erosion of his wealth, by far an innocent admission but heavy enough to have a cascading effect on his wealth.
Business today is not just negotiations in board rooms but also heavily influenced by innocent comments that have the potential to cause significant and massive repercussions, as is the example set by an innocent Twitter tweet.