Gerry Palmers Tech 11.11.2021 00:Nov AM EST

Why Did Elon Musk's Net Worth Fall by $50 Billion in 2 Days?

Tesla CEO Elon Musk shed a total of $50 billion from his fortune this week after the automaker's shares fell 16 percent in two days.

This enormous plunge was due to news affecting Tesla, tweets Musk himself posted, and a separate tweet from a popular short-seller, according to a Business Insider report.

Tesla Stocks Plunge After Elon Musk's Twitter Poll on Selling Shares

Musk asked his 63.2 million Twitter followers in a poll on Saturday if he should sell 10 percent of his Tesla stock to pay taxes. Results showed that 57.9 percent of respondents answered in the affirmative, which led to Tesla stock dropping around seven percent at Monday's close.

Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.

Do you support this?
— Elon Musk (@elonmusk) November 6, 2021

On Tuesday, Tesla shares took another hit, tanking around 12 percent, after the famous short-seller Michael Burry suggested in a now-deleted tweet that Musk may want to sell his shares to pay for those personal debts.

Tesla's freefall has also been caused by news that Musk's cousin and Tesla director Kimbal Musk sold more than $100 million in Tesla stocks the previous week.

The decline can also be attributed to Musk's tweet last week divulging that Tesla has yet to receive a formal order from Hertz after the car rental company disclosed it's adding 100,000 Teslas to its fleet. It was the springboard for Tesla to reach its trillion-dollar valuation.

However, even with this massive drop, Musk remains as the richest person in the world, having a net worth of $288 billion--still overshadowing second-placer Amazon and Blue Origin founder Jeff Bezos by $82 billion, according to the Bloomberg Billionaires Index.

Tesla shares still are up 40 percent year-to-date even with the sharp decline. Musk's wealth has also soared by 70 percent this year, owing to the automaker's exceptional delivery figures and profit numbers, and the increasing value of his aerospace company, SpaceX.

Tesla likewise retained its slot in the "trillion dollar club" with Apple, Microsoft, Amazon and Alphabet (Google parent company), having more than $1 trillion in market capitalization. It reached this milestone after the announcement of the Hertz deal and the company's declaration that its third-quarter earnings had exceeded forecasts.

Elon Musk Sells $1.1 Billion in Tesla Shares to Settle Tax Obligations

Meanwhile, to address a multiday sell-off, Musk revealed in filings on Wednesday that he has sold $1.1 billion worth of Tesla shares to pay for these tax obligations, Reuters reported. He exercised options to get about 2.2 million shares of Tesla then sold around 934,000 shares, which are about five percent of his Tesla holdings.

The action allowed Musk to settle the tax bill linked to exercising his stock options, as his wealth is tied to his Tesla stake. This would also free Musk from capital gains tax obligations he needed to settle if he sold his shares if he did not couple their divestment with the exercising of the options.

As a result, Tesla closed 4.34 percent higher on Wednesday, at $1,067.95 per share.