Starting with that wonderful name - worthy of a Bond villain, or a porn-stache men’s “fragrance” from the 1980’s (All my men wear Elon Musk, or they wear nothing at all), right down through PayPal, Tesla and SpaceX, I find Elon Musk pretty darned interesting.
So I was pretty darned interested when I saw on Bloomberg last week that, at least on paper, he lost $779 million.
Now Musk is a billionaire many times over, so he may not even notice the loss. It’s not quite a rounding error – his fortune is estimated at $8.3 billion – and most of us would be hurting if our wealth dropped by nearly 10 percent, even if only on paper. (Anyone with a 401K likely has had this experience at one point or another, and the only way to avoid the hurt is to resist the temptation to go online and look at what happened to your 401K on a day the market takes a turn. You’ve just got to close your eyes and assume that, in the long run, it’ll all work out. Or the world will be in such a state of collapse that it won’t matter. Or we can always fall back on John Maynard Keynes: “In the long run, we are all dead.”) But a paper loss of the Musk magnitude ain’t nothing. In fact, it was large enough for a prominent mention on Bloomberg.
The paper fall from economic grace happened because of drops in the respective stock prices of Tesla and SolarCity (which may or may not merge with Tesla; Musk holds major positions in both), and as a result of his having:
…put up an additional $489 million of his Tesla and SolarCity stock as collateral to secure personal borrowings. The pledged shares are stripped out of his total net worth calculation because they’re not immediately available to him. The borrowing is for personal liquidity; he doesn’t even accept the $37,584 minimum-wage salary Tesla is required to pay him. (Source: Bloomberg)
$489 million in personal liquidity. Wow. Didn’t I read a few months back that the average American doesn’t have $400 on hand to cover an emergency situation. (Guess that’s what GoFundMe’s for.)
I guess if your idea of personal liquidity is $489 million, it wouldn’t really matter one way or another whether your were hauling in a $37.5K salary.
Anyhow, both SolarCity and Tesla have been burning through cash:
In a regulatory filing Wednesday, Tesla said that in the first six months of the year, it burned through $611 million in cash, and SolarCity went through $433 million. .
And cash isn’t the only thing that’s been burning.
An explosion destroyed a Falcon 9 rocket belonging to Elon Musk's SpaceX and its cargo during preparations for a routine test firing at Cape Canaveral in Florida on Thursday, two days before it had been due to blast off and place a satellite in orbit…Musk set up SpaceX with the goal of slashing launch costs to make travel to Mars affordable. The company plans to fly its first unmanned spacecraft to Mars in 2018 and to send humans to the red planet as early as 2024. (Source: Reuters)
What was going to be launched, by the way, was a satellite that Facebook was going to use to increase Internet access in Africa. So this crash and burn is a bit of a bummer for Mark Zuckerberg, too. (Oh, boohoo.)
All in all, between the paper loss of $779 million, and that rocket’s red glare thing, last week was pretty darned interesting – and pretty darned crappy – for Elon Musk.
And there you were last week, sitting around ruing the end of summer. No comparison.