How the World’s Richest People Can Lose Billions in a Single Day
The world’s richest man is Jeff Bezos, worth some $111.9 billion as of this writing, even after losing $38 billion in his divorce. But the phrase “as of this writing” is pretty crucial because his net worth fluctuates daily. That’s because Bezos is among a class of billionaires who have almost all of their net worth in shares of a single public company. Instead of a Scrooge McDuck-style vault of gold, about 95 percent of Bezos’ net worth is tied up in his nearly 80 million shares of Amazon — about 16 percent of the company. And given how volatile stock markets can be, Bezos is always just one bad trading day from having billions of dollars shaved off of his net worth.
For the average investor, this should serve as an important cautionary tale about the importance of a diverse portfolio: when you have all your eggs in one basket, you live and die with that basket. This is why any financial advisor worth their salt will tell you it’s so important to use mutual funds and/or ETFs to spread your investments out across hundreds — even thousands – of different stocks in addition to investing in bonds and other types of securities as well. Here’s a look at billionaires whose net worths have taken a massive tumble in a single day all because theirs was one of the company stocks that plummeted.
Last updated Nov 24, 2018.
Jeff Bezos
Date: Oct. 24, 2018
Company: Amazon, Inc.
Percent Drop for Company Stock: 5.9 percent
Loss to Net Worth: $8.2 billion
Oct. 24 was a rough day for markets across the board, with the S&P 500 plunging 3.2 percent that day. But Amazon was hit harder than most with a loss of nearly 6 percent that day. And when you own 16 percent of the company, that translates to over $8 billion, meaning Bezos lost just shy of the entire net worth of George Soros in a single day.
Mark Zuckerberg
Date: July 26, 2018
Company: Facebook, Inc.
Percent Drop for Company Stock: 19 percent
Loss to Net Worth: $15 billion
The reaction to Facebook’s disappointing Q2 earnings report — that showed unsatisfying revenue and sluggish user growth — prompted an entirely unprecedented loss for a company of its size — or any size. Its $100 billion-plus loss was the largest loss of market value in a single day for any company in history. Zuckerberg, whose over 350 million shares of the company’s stock make up about 97 percent of his net worth, ended up losing $15 billion in just eight hours — or, to put it another way, more than the annual GDP of Jamaica.
Warren Buffett
Date: Oct. 10, 2018
Company: Berkshire Hathaway, Inc.
Percent Drop for Company Stock: 4.9 percent
Loss to Net Worth: $4.5 billion
On Oct. 10, Warren Buffett owned a mere 270,644 shares of Berkshire Hathaway’s class A stock. However, with a share price well north of $300,000, that amount comprises the vast majority of his total net worth. And on Oct. 10, Berkshire took a stumble of nearly 5 percent. It wasn’t alone — the S&P 500 tumbled 3.3 percent on that same day — but that doesn’t change the fact that the Oracle of Omaha ended the trading day worth $4.5 billion less than he was that morning.
Sergey Brin
Date: Oct. 24, 2018
Company: Alphabet, Inc.
Percent Drop for Company Stock: 5.2 percent
Loss to Net Worth: $1.1 billion
October’s market tumbles hit plenty of high-flying tech firms hard, and Google was no exception. The company’s shares tumbled by more than 5 percent on Oct. 24. And although that no doubt hurt plenty of investors, there’s probably not many who felt the sting quite like the company’s co-founder Sergey Brin. Brin’s managed to diversify a little bit better than some of his contemporaries, though. His 19 million-plus shares of Alphabet constitute a “mere” 42.9 percent of his net worth.
Larry Page
Date: Oct. 24, 2018
Company: Alphabet, Inc.
Percent Drop for Company Stock: 5.2 percent
Loss to Net Worth: $1.2 billion
Of course, Brin had it easy compared to his other co-founder, Larry Page. Page, who owns about 600,000 more shares than Brin, ended up losing about $1.2 billion during Google’s big tumble.
The Waltons
Date: Feb. 20, 2018
Company: Walmart, Inc.
Percent Drop for Company Stock: 10.2 percent
Loss to Net Worth: $14.8 billion
When Walmart reported its earnings for Q4 of 2017 in late February, it showed a sharp decline in digital sales growth that spooked investors and prompted a major sell off, leaving shares down 10.2 percent by the end of the day. That meant that a whole subclass of billionaires — the children of Sam Walton, the company’s founder — really took a hit.
Although each sibling would have been affected differently, the family trust — Walton Enterprises, LLC — lost a staggering $14.8 billion of value from the 1.4 billion shares it holds.
Jack Ma
Date: June 25, 2018
Company: Alibaba, Inc.
Percent Drop for Company Stock: 5.3 percent
Loss to Net Worth: $1.9 billion
Chinese e-commerce site Alibaba had a very bad, no-good, terrible day for investors on June 25 when shares plunged about $10 per share during a single trading day. That wasn’t good news for any shareholders, but the company’s founder Jack Ma — who owns 7 percent of the company — ended up leaving the day with a nearly $2 billion haircut to his net worth.
Steve Ballmer
Date: Oct. 24, 2018
Company: Microsoft, Inc.
Percent Drop for Company Stock: 5.3 percent
Loss to Net Worth: $1.9 billion
Even more established tech firms like Microsoft got caught up in the October swoon, with Microsoft shedding just over 5 percent on the same day that Google and Amazon went into a free fall. The biggest loser? Steve Ballmer, the man who followed Bill Gates as Microsoft’s CEO. He’s had the same 333.3 million shares of the company’s common stock since leaving that role in 2014 — constituting about 85 percent of his $41.9 billion net worth — which translated to a loss of nearly $2 billion on the day. But don’t shed a tear for Ballmer — shares rebounded the next day with his stake gaining $2 billion in the process.
Phil Knight
Date: Oct. 10, 2018
Company: Nike, Inc.
Percent Drop for Company Stock: 6.8 percent
Loss to Net Worth: $115.4 million
Most companies were caught up in the major selloff on Oct. 10, but Nike nearly doubled the 3.3 percent loss of the S&P 500 that day. And the one person who took the biggest hit on that stock was Phil Knight, the company’s co-founder and long-time president. A 6.8 percent decline translated to a loss of $115.4 million from his net worth.
Larry Ellison
Date: March 20, 2018
Company: Oracle, Inc.
Percent Drop for Company Stock: 9.4 percent
Loss to Net Worth: $5.5 billion
Shares of tech company Oracle took a real beating on March 20 after the company reported disappointing results for its cloud-software business, sending shares down 9.4 percent. That meant that founder and CEO Larry Ellison — whose over 1 billion shares make up 94 percent of his net worth — saw his total holdings lose about $5.5 billion in six and a half hours.
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Last updated Nov 24, 2018.
This article originally appeared on GOBankingRates.com: How the World’s Richest People Can Lose Billions in a Single Day
