Elon Musk Starts And Ends Thursday As World's Second Richest Person

Note: When U.S. markets closed at 4:00 p.m ET, Musk still ranked as the world’s second richest person, with an estimated net worth of $185 billion—$1.2 billion less than Arnault’s $186.2 billion at the time.

Tesla shares opened trading Thursday down around 1%, following a Bloomberg report Wednesday evening that CEO Elon Musk may replace some of Twitter’s debt with a personal margin loan backed by shares of his electric vehicle maker. That sent Tesla stock down, enough to drop Musk below Bernard Arnault of French luxury conglomerate LVMH on Forbes’ ranking of the world’s wealthiest people for the third time in two days.

“The Tesla margin loan for Twitter remains an albatross over the Tesla story,” said Wedbush analyst Dan Ives.

Arnault was worth an estimated $185.1 billion as of 9:30 a.m ET Thursday, with Musk trailing him by $1 billion, worth an estimated $184.1 billion. The Frenchman–whose LVMH owns brands such as Louis Vuitton, Bulgari and Tiffany & Co.–-previously passed Musk on two occasions Wednesday, but by the time U.S. markets closed at 4 p.m. ET, Musk had regained the lead, with an estimated net worth of $185.4 billion–$700 million more than Arnault’s $184.7 billion at the time.

The potential margin loan is the latest development in the drama surrounding Musk’s $44 billion Twitter takeover, which has weighed heavily on Tesla’s stock since Musk first announced the deal on April 14, before attempting to back out. Tesla shares are down more than 50% this year, with almost all of the drop having occurred since mid-April. The company has also faced supply chain issues, particularly due to China’s zero-Covid policy.

Musk’s initial financing for the takeover included a $6.3 billion personal margin loan, in addition to the $13 billion of debt he ultimately saddled Twitter with, keeping it off his own personal balance sheet. Musk ended up scrapping the personal margin loan, instead financing the rest of the acquisition with his own cash and $8 billion of equity commitments from other investors.

That was likely a relief to Tesla investors, who worried that Musk could face margin calls on his margin loan, forcing him to sell even more shares. He has already sold $19.3 billion (pre-tax) worth of the company’s stock from mid-April to early November, presumably to help finance the acquisition.

But Musk may have renewed interest in a margin loan if the estimated $1 billion of annual interest expense on the $13 billion of debt used to finance the acquisition proves too much for an already struggling Twitter to cover. With tech stocks having crashed since Mid-April, the company is likely now worth far less than the $44 billion Musk agreed to pay. Meanwhile, users and advertisers have reacted negatively to many of the changes to the platform implemented by Musk. Chief among them: charging $8 per month for account verification and relaxing content moderation.

Musk could easily repeat his performance from Wednesday and end the day as the world’s richest man. But this latest development doesn’t look good for him–or Tesla’s investors.

As Wedbush’s Ives puts it: “The nightmare continues for Tesla holders.”

When Bruno Mars stopped at Madison Square Garden last year during his 24K Magic Tour, he didn’t feel the need to dress up—hitting the stage in sneakers, shorts and a pastel baseball jersey with the word “HOOLIGANS” displayed backwards on the front. Periodically, artillery-grade pyrotechnics pummeled the eardrums of the sellout crowd, while those within 200 feet felt flames nearly close enough to singe an eyebrow. As Mars told me the last time I interviewed him: “You gotta be fearless, man.”

The “Uptown Funk” singer—who closed his set in New York with the song whose 3 billion-plus YouTube views place it in the all-time top ten—can do whatever he wants these days. In addition to being one of the biggest stars in the music firmament, Mars is among a handful of high-profile acts who no longer answer to a traditional artist manager, choosing instead to take control of his own career starting two years ago.

For the 32-year-old Mars, the move has paid off. He’s garnered more than 1 billion streaming spins over the past year, grabbed six Grammys and raked in a career-best $100 million pretax—his tour has grossed upwards of $300 million since its 2017 launch—placing him at No. 11 on Forbes' Celebrity 100 list and securing his place as America’s highest-paid musician. Best of all, Mars doesn’t have to hand over as much as 20% to a manager. Instead, he relies on salaried staff, with an estimated cost in the low six figures—a setup that should save him at least $10 million this year alone.

Of course, handing over a cut of income isn’t anathema to all musicians. Many of the industry’s top-paid acts still rely on high-powered managers, from U2 (who are managed by Guy Oseary and earned $118 million last year) to Katy Perry (Martin Kirkup, Bradford Cobb and Steve Jensen, $83 million) to Calvin Harris (Mark Gillespie, $48 million). Given those numbers, some argue that a well-connected guide can prove to be a bargain.

“It depends on whether you see it as giving up 10-20% or whether you see it as somebody that you’re going to bring into your organization that’ll add more than 20% worth of value to your business,” says Gillespie. “If you’re running a large business, you want people to be motivated to grow and build that business, and to be aligned with you. I think the reason why it has worked for us for a long time historically is because it brings that alignment.”