Elon Musk experienced a significant drop in his fortune, losing $16.1 billion on Thursday, following Tesla Inc’s disappointing third-quarter earnings report, which negatively impacted the company’s shares. Despite being the world’s richest person with a net worth of $209.6 billion, Musk’s wealth declined due to Tesla’s shares plummeting by 9.3%, Bloomberg reported.
Musk owns 13% of Tesla and primarily derives his wealth from the company. Tesla reported its first quarterly decline in sales this year, delivering 435,059 vehicles, and faced reduced margins due to repeated car price cuts.
Musk, who had previously labeled Tesla as “recession-resilient” last year, expressed concerns on Wednesday about the impact of high interest rates on demand. This worry arose after the company failed to meet revenue expectations, despite implementing substantial price reductions, marking the largest miss in over three years.
This change in Musk’s stance, notable given his prominence in the auto industry, raised anxieties about the future of the electric vehicle (EV) sector.
“It didn’t have the same zip. We await Tesla’s earnings calls with a sense of excitement and suspense — and they usually deliver. Not Wednesday night,” Canaccord Genuity analysts said.
Nevertheless, Musk’s overall wealth has increased by over $70 billion in 2023, driven by a resurgence in Tesla shares despite the company’s weakening financial fundamentals. After briefly being surpassed by LVMH’s Bernard Arnault, Musk has reclaimed his position as the world’s wealthiest individual by a significant margin, the Bloomberg report said.
Despite its challenges, Tesla remains committed to delivering new vehicles to 1.8 million customers by the end of the year. The company, still the most valuable vehicle producer globally, plans to release its long-awaited Cybertrucks in November, albeit approximately two years behind the initially projected schedule.
The Tesla stock has sustained an impressive 80% increase for the year, making it one of the top performers in the S&P 500 Index in 2023. Much of this growth is attributed to investor confidence in artificial intelligence investments, with some speculating that Tesla could emerge as a prominent AI company.
Despite this optimism, Tesla faces significant challenges. The deployment of its self-driving software might take several decades. Additionally, to establish dominance in the future self-driving car sector, the company must maintain its current leadership position in the electric vehicle industry, a task made more challenging due to the intensifying competition in the market.
(With inputs from agencies)