World's richest man lost $11bn in one day: Here's why
What's the story
Bernard Arnault, the 74-year-old chairman, and CEO of LVMH, is the first European to climb to the top of the world's richest list.
The French tycoon, however, suffered a multi-billion dollar setback. The man who is responsible for Louis Vuitton bags, Cristian Dior couture, and Tiffany jewelry saw his fortune dip by $11.2 billion in a single day.
Let's see what led to this.
Context
Why does this story matter?
Arnault's fortune has ballooned over the past year. The increase in demand for luxury goods during the pandemic saw companies like LVMH making big gains.
The growth continued despite the economic uncertainties in the post-pandemic world. LVMH's 2022 full-year result is a testament to that.
The company recorded a revenue of $79.2 billion in 2022. The same rise was reflected in Arnault's wealth.
Fall
Luxury stocks saw a $30 billion wipeout
The multi-billion dollar hit Arnault's wealth took is courtesy of a fall in luxury stocks across Europe. On Tuesday, LVMH's shares fell 5% to €834.2.
The booming luxury sector, which has been a standout in Europe amid economic ups and downs, saw about $30 billion wiped out.
Gucci owner Kering SA's shares declined by 2%.
Reason
Slowdown in the US might affect demand for luxury goods
The luxury sector's growth this year has been primarily driven by the reopening of the Chinese economy. According to Deutsche Bank AG analysts, the fall, however, is related to a slowdown in the US.
The analysts said there might be a fall in demand for luxury goods as aspirational customers start feeling the pain of economic uncertainties.
Arnault
Arnault is still the richest man in the world
Despite the massive fall in his fortune, Arnault remains the richest man in the world with a net worth of $192 billion. Before Tuesday, he was worth over $200 billion.
He was only the third man to cross the $200 billion barrier after Jeff Bezos and Elon Musk. Arnault is currently $12 billion richer than Musk.
Information
LVMH is trading in the red today
Today, LVMH started trading at €825. The company's shares have fallen since then and are currently at €815.90. This means Tuesday wasn't a one-off. Is this a sign of changing fortunes for the luxury industry? We will have to wait and see.