Economic Turmoil for CEOs in 2023: Challenges and setbacks

Subscribe Search Search Sort by Relevance Title Date Subscribe ALBAWABA - The year 2023 proved to be exceptional in its economic shocks for numerous CEOs worldwide, from Elon Musk to Gotham Adani. Interestingly, these shocks were not surprises, as predictions foretold them before their occurrence, yet their protagonists did not heed the warnings. With challenging economic conditions affecting low and middle-income individuals, the winds of 2023 were even stronger than the challenges faced by the wealthiest billionaires, including the world's richest man. How 2023 Became a Year of Shattered Dreams: Numerous banks, such as Silicon Valley and Credit Suisse, collapsed, major corporations lost billions of dollars, thousands of employees were laid off, and several CEOs became the center of attention. Thus, 2023 became a year many wish to forget, despite leaving a significant mark that will have far-reaching consequences in 2024. Some CEOs caused severe damage to their reputations, while others will face more problems in the future. Elon Musk: Losses for SpaceX, Tesla, and Neuralink: For Elon Musk, the controversial decisions related to the X platform (formerly Twitter) during 2023 were not the only obstacles. His companies, Tesla and SpaceX, also faced significant challenges. Although Tesla's stocks, the most profitable company for Musk, more than doubled during 2023 and recovered over half of its lost value from 2022, and surpassed its previous annual sales figure in just the first three quarters, challenges persisted. Tesla announced a series of price cuts for its cars to maintain demand amid increasing competition in the electric vehicle industry. This impacted its profits, and Musk warned investors of delayed profits from Cybertruck, possibly extending to a whole year. Federal safety regulators forced Tesla to recall over two million vehicles on U.S. roads to limit the use of its autopilot system, deemed a safety threat. This came after the company had already recalled all its U.S. vehicles, totaling 363,000 cars equipped with the so-called Full Self-Driving capability earlier in the year. As for SpaceX, its year was harsher, with Musk's promise of transporting people to the moon shattered by two explosive incidents involving the Starship spacecraft. Despite the setbacks, the company stated, "Success comes from what we learn, and today's test will help us improve the reliability of Starship." SpaceX turned out to be the biggest loser among Musk's ventures, facing executive resignations, an increase in hate speech incidents, and a 60% decline in sales in September. Bob Iger: Disney Returns to Square One: Disney welcomed Bob Iger back, seeking to leverage his expertise to rescue the media giant from ongoing issues. Despite leading Disney successfully from 2005 to 2021, Iger's return initially seemed like a winning move. He presented solutions to stop losses through increased advertising and subscription fee hikes. However, Disney's problems, including losses in its streaming service (Disney Plus), persisted, leading to a greater drop in stocks. Disney and other studios and streaming services were affected by the strike by the Writers Guild of America, leading to the suspension of film and television production. After a challenging year, Disney's stocks ended where they started when its board decided to bring back Iger, returning to square one. Greg Baker: Silicon Valley Bank Collapse: A year ago, only a few outside the world of tech startups had heard of Silicon Valley Bank, and even fewer knew Greg Baker, the CEO of the bank. In March, when Baker revealed the bank's liquidity issues and aimed to raise $2.25 billion in capital while intending to sell $21 billion worth of assets, it ignited a crisis in the U.S. banking system, reminiscent of the 2008 financial collapse. Escalation of Crisis Due to Baker's Plan to Sell U.S. Treasury Bonds: The crisis worsened due to Baker's plan to sell U.S. Treasury bonds, which would result in announcing a loss of $1.8 billion due to rising interest rates. The fact that he revealed the problems before being able to identify the investors needed to solve the issue, coupled with admitting that his assets had significantly depreciated, led to investors rushing to withdraw their funds from the bank. Customers hastened to withdraw around one million dollars per second, totaling $42 billion in 10 hours. The bank collapsed within 48 hours, making it the second-largest bank collapse in U.S. history at that time. Fortunately, the promises made by the Treasury Department to provide credit to banks and the Federal Deposit Insurance Corporation's commitment to compensate depositors beyond the normal insurance limits helped quell the panic. As for Baker, he became unemployed, and his stock holdings in the bank became worthless. Despite selling $3.6 million worth of his stocks a few weeks before the collapse, he had enough money to arrange a family trip to Hawaii, further fueling anger. Ulrich Koerner: Credit Suisse's Worst Performance: Only days after the collapse of Silicon Valley Bank in March, Credit Suisse informed investors that it found material weaknesses in its financial reports, indicating it hadn't assessed risks correctly. This revelation came just one month after the bank declared its worst annual performance since the global financial crisis. Depositors hurriedly withdrew funds during that period, amounting to 67 billion Swiss francs (approximately $75.2 billion) from their accounts in the first three months of the year. On March 19, the bank agreed to be acquired by UBS for 3 billion Swiss francs ($3.25 billion), about 60% less than its value. Changpeng Zhao: Money Laundering at Binance: In early 2022, cryptocurrency expert and Binance CEO Changpeng Zhao, who was one of Bloomberg's billionaires, had a net worth of around $100 billion. However, by the end of 2023, he admitted guilt in the U.S. money laundering charges, and Binance agreed to pay a record amount of $4 billion in fines. Zhao personally paid fines of $200 million and resigned as CEO of the cryptocurrency exchange he founded. His troubles were not over yet, as he faces a potential prison sentence of up to 10 years, although his final penalty is likely to be much less. The federal sentencing guidelines may put a minimum of about 18 months on Zhao, who stated at the time, "I have made mistakes, and I must take responsibility." Gautam Adani: Biggest Deception Operation: In the fall of 2022, Indian businessman Gautam Adani became the second richest person globally, surpassing Amazon founder Jeff Bezos, according to Bloomberg's billionaires index at that time, with an estimated net worth of around $146.9 billion. Troubles emerged early in the year when Hindenburg Research, a short-selling company that profits from betting on the decline of company stocks, issued a report accusing Adani of executing the largest deception operation in the company's history. Adani's group responded with a 400-page rebuttal, dismissing it as nothing more than a lie. Adani lost half of his fortune within two weeks, dropping significantly in the list of the world's richest after the plunge, reducing his estimated wealth from around $120 billion to less than half. 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