Last week, news surfaced about Elon Musk, the founder of Tesla, facing a major wealth loss. The richest individual on the planet saw a staggering decrease of approximately $16.1 billion (RM76.3 billion) in his net worth due to Tesla’s disappointing third-quarter earnings report. The electric car company’s stock performance fell short of expectations, causing this significant setback.
Musk, currently the world’s wealthiest person with a fortune of $210 billion (RM1 trillion), owns 13 per cent of Tesla. Much of his wealth is tied to the company. Despite this setback, he remains $55 billion (RM262 billion) richer than Bernard Arnault, the world’s second richest person.
The decline in Musk’s net worth followed a 9.3 per cent drop in Tesla’s stock price, a reaction to the company’s unsatisfactory performance in the third quarter of the fiscal year 2024. Tesla fell short of its earnings and sales forecasts, marking a disappointing period for the company.
The Reasons Behind Tesla’s Drastic Earnings Drop
During a post-earnings conference call, Musk emphasized the negative impact of high-interest rates on consumer confidence, acknowledging the challenges faced by the electric vehicle giant. Tesla reported its first quarterly sales decline in the year, delivering 435,059 vehicles. Profit margins also reached their lowest point in over four years due to continuous price reductions on Tesla’s vehicles.
Despite these obstacles, Musk’s wealth had soared by over $71 billion in 2023, aligning with Tesla’s stock value surge, even as the company’s financial performance weakened. After briefly losing his title as the world’s richest person to Bernard Arnault of LVMH, Musk has once again taken the top spot, though facing a substantial wealth decline due to Tesla’s recent challenges.