America’s top billionaires lost more than $10 billion collectively Monday after major changes in Meta’s stock holdings.
Why It Matters
Meta executive Mark Zuckerberg alongside Tesla and SpaceX leader Elon Musk and Amazon CEO Jeff Bezos saw shifts in their net worth, as the losses could indicate market volatility and a potential decrease in investor confidence.
STR/JIJI Press/AFP via Getty Images
What To Know
Zuckerberg sold shares of Meta—parent company of Facebook and Instagram—that were valued around $8 million on January 10. Meta is worth $1.54 trillion and has shown a return of 63 percent over the past year.
While Zuckerberg conducted the sale through a preestablished trading plan by the Chan Zuckerberg Initiative, he still maintains substantial holdings in the company. His net worth now rests at roughly $204 billion, according to Forbes.
On Monday, Zuckerberg’s net worth was down by $5.8 billion.
But other billionaires saw their net worth dip at the same time, mainly due to shifts in their own company stock.
Musk lost $3.5 billion, bringing his net worth down 0.83 percent to around $417 billion, whereas Bezos saw a decline of $1.4 billion, bringing his net worth to $231 billion.
What People Are Saying
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “When discussing the losses these billionaires gathered in recent days, it’s important to note these amounts were tied to company stock from entities like Meta and Tesla that were hovering around all-time highs. The postelection boom in these stocks has started to cool as inflation data in recent weeks isn’t as optimistic as most economists expected. Any time the NASDAQ has a substantial sell-off or a CEO sells shares, it’s going to gather attention. However, in this situation, I think it’s more about the projected economic outlook more than any other social or political factor at play.”
Kevin Thompson, finance expert and founder/CEO of 9i Capital Group, told Newsweek: “The primary driver of these losses has been rising interest rates. Simply put, as rates increase, the discount rate also rises, pushing up yields along the risk-free curve. This makes higher-risk assets more expensive to hold since investors can earn better returns from risk-free alternatives. As a result, the required return on equities increases, leading to lower valuations.”
What Happens Next
If the Supreme Court winds up approving the ban of social media platform TikTok in the U.S., there could be significant consequences for social media companies like Meta, which would then take up a heftier market share within the sector.
But in Zuckerberg’s recent Meta stock sale, it likely came down to tax implications, Thompson said.
“With tax season approaching, individuals often need liquidity to cover their tax liabilities, and selling stock is a common way to generate the necessary cash,” Thompson said. “Beyond the immediate decline in investor confidence, there aren’t significant consequences in the short term. However, if interest rates continue to rise, growth stocks could face more pressure, as higher rates typically reduce risk appetite and make speculative investments less attractive.”
