Bill Gates, a pioneer in revolutionizing the tech industry especially in the personal computer sector became the richest person on earth since he co founded Microsoft Corporation. The company went public in 1986 with Gates owning 45% stake after the IPO offering. By 1999 Microsoft hit a market cap of $500 billion and Gates reduced his stake to 20%. But still he topped the list of wealthiest billionaires on earth for many years to come. That is now a far cry from the present day where is constantly getting shoved down the list even though he holds a colossal amount of wealth with a valuation of $128 billion according to Forbes, taking the 7th place among the top billionaires. Here we will get to know how his wealth growth took a hit.
Investment Strategies
As of now Microsoft Corporation has a market cap of $3.2 Trillion. The company enjoyed steady growth due to the initiatives taken to stay on top of the competitive tech world. Even though Gates co-founded the Microsoft Corporation and held a 20% stake in the company he reduced his stake over time by selling his share to the point that in 2024 he holds a mere 1.38% of the share. So with the growth of Microsoft Bill Gates lost his valuation as he reduced his stake in the company. Had he held on to the initial stake of 45% after his company went public he would have a valuation of nearly $1.3 trillion.
By selling his shares of Microsoft Gates diversified his investment strategies. He started his own investment firm Cascade Investment that invests in real estate and various industries. Moreover he has nearly 20.28% stake in Berkshire Hathaway Inc. through public holding companies. These investments didn’t pay off as much, had he invested in S&P 500 he would have gotten a better return. Even more so if he kept his take in Microsoft.
Moreover, Bill Gates betted against electric vehicles, especially Tesla. Gates speculated the demand for EV would plummet and there would be a surplus supply of EVs. So he started to short Tesla stocks back in 2020. He invested almost $3 billion into shorting Tesla stocks. But it didn’t work out as he hoped as he lost almost half of it reportedly $1.5 billion in the process. Add to that Gates didn’t actively invest in the AI boom making him lose out on a very high return from investing in stocks such as Nvidia.
Costly Divorce
Back in 2021 Gates’ wealth took a huge hit as he settled his divorce case with Melinda. This case was the most expensive divorce settlement in history. The divorce cost him $76 billion which is a substantial amount of wealth that contributed to his dip in net worth.
Philanthropic Activities
Founded in 2000 Bill & Melinda Gates Foundation has raised a significant amount of wealth to contribute to global development. It is the third largest charitable foundation on earth. The foundation has a value of $75.2 billion as of 2023. Gates has donated $59.5 billion alone to the foundation since its inception. In 2023 he donated $7.7 billion to the foundation to help the needy people around the world with his innovative initiatives. He plans to donate all of his wealth gradually throughout his lifetime. These philanthropic activities also have contributed to the decline of his net worth in general.
The factors that contributed to a decline in Bill Gates’ fortune include not being actively lucrative in investment matters, costly divorce, and philanthropic activities. He would have made a greater increase in net worth if he held his stake in Microsoft or invested in line with today’s market trend. He is still on the top list of richest men even after all the setbacks that brought him down.