How to make $150 billion – and lose again The Fed and ECB are sending clear signals – but the stock markets aren’t buying it

Okay, the quote has at least slipped, but it just comes to mind at this point. It comes from Ernst Hemingway, who in his novel “The Sun Also Rises” has a man who gambled away his entire fortune, when asked how he could have gone bankrupt, replies succinctly: “First gradually, then suddenly.”

The amounts that Elon Musk and Gautam Adani have lost in recent months would probably have been unimaginable to Hemingway. However, the procedure is the same. Hundreds of billions have been destroyed in a very short time and the question arises: how could this have happened?

Elon Musk has lost more than $200 billion at one point

Elon Musk lost more than $200 billion at one point. At least that’s what the Bloomber Billionaires Index calculated. Not that you have to cash in for Musk right now. As before, his fortune is likely to be around $150 billion. That’s still enough for second place on the chart of the richest. Incidentally, number one is currently occupied by Bernard Arnault, the chairman of the French luxury group LVMHF.

With the purchase of Twitter, Musk probably not only gambled away about $ 40 billion, he also damaged Tesla’s image. Tesla shares peaked in November 2021. Musk’s fortune at that time was over $300 billion. Then came the techno crash and Tesla shares lost about 70 percent of their value.

The share price of Tesla has recovered slightly in recent days. The question is whether it will soon rise again to the old peak. The image damage Musk has caused by his clumsy behavior on Twitter is too great.

The Indian Gautam Adani was also allowed to boast of being the richest man in the world. But for now, he watches his fortune melt away like a snowball in hell. Unlike Musk, Adani is still little known in this country. So here’s a short biography:

Adani, now 60, grew up in the Indian city of Ahmedabad in Gujarat state. He did not attend high school but initially worked as a diamond merchant in Mumbai. He then returned to his hometown and founded the Adani Exports company. In the 1990s, he started acquiring land around the port of Mundra with this company. Because the sea there is particularly deep, this port is particularly suitable for the huge container ships. Adani entered into a joint venture with Gujarat to develop this port.

Around the turn of the century, a certain Narendra Modi was the strong man in Gujarat. The current Prime Minister of India got along well with Adani. Soon Adani Exports and Gujarat State were conjoined twins. Adani received the most contracts in the public sector. He could buy and expand railroads and airports. All this made him very rich. No wonder, he recently said in a TV interview: “I can proudly say that I have had very good experiences with the Modi government.”

As a result, the Adani Group developed into a confusing conglomerate, under whose roof all kinds of companies converged. From coal imports from Indonesia to data centers, almost everything is covered. In addition, Gautam Adani is a man with a big ego and an even greater willingness to take risks. He once confidently told the Financial Times: “Either you sit on a pile of money or you grow. There is no other way.”

If you stray too far from your core competency, you risk falling. That also happened to Adani, unfortunately with his grand plans in the field of sustainable energy. His plans to turn India into an ecological model state using solar energy and hydrogen have apparently fallen flat on his face. The rating agency Credit Sight therefore concluded last summer that the Adani Group was “deep in debt”.

A short seller strikes

Adani was not deterred by this. On the contrary, he continued to go on the offensive and wanted to raise another $2.4 billion in debt. He now had to abandon this plan because a New York hedge fund named Hindenburg threw a spanner in the works.

The mastermind behind Hindenburg is a man named Nate Anderson. He has made a name for himself as a short seller, meaning he bets that a company’s stock is significantly overvalued and will therefore collapse. This malaise can be remedied by revealing, for example, that the company in question is pretending to be something that does not correspond to reality.

This is exactly what Hindenburg did with Adani. The crimes of the group are detailed in a report of more than 400 pages. Gautam Adani’s brother Vinod set up 38 shell companies on the island of Mauritius with the aim of manipulating the share price and laundering money. The true ownership structure was also covered up and the high debt burden was covered up, among other things, according to the report.

Adani completely rejects the allegations, describing them as a “bunch of lies”. However, he could not prevent the collapse of his shares, which has resulted in a loss of more than $ 100 billion to date. He also had to cancel the planned capital increase yesterday because his reputation as a reliable debtor is in ruins. Banks like CS or Citigroup refuse to accept his securities as collateral.