What Happened: The Tesla stock plunge wiped off roughly $90 billion off the company’s market capitalization. The negative reaction was despite the second-quarter top- and bottom-line exceeding expectations.
Analysts blamed the predicament on a big increase in the “other income” component that boosted results, a production warning issued for the third quarter, CEO Elon Musk’s hint at more price cuts, and a lack of clarity on the margin outlook.
Musk’s personal fortunes also took a tumble following the stock drop. According to Bloomberg’s Billionaires Index, the billionaire’s net worth fell by $20.3 billion to $234 billion based on the closing price of the stock on Thursday.
Notwithstanding the drop, Musk is still the world’s richest person. He is ahead of the second ranker Bernard Arnault, who runs the French luxury retailer LVMH, by about $33 billion.
Why It’s Important: Tesla is Musk’s flagship business, and he also runs other companies, such as SpaceX and the Boring Company, while also owning social-media platform Twitter. Much of his fortunes are tied to his ownership stakes, primarily in SpaceX and Tesla.
After plunging about 65% in 2022, Tesla stock took a turn for the better this year as a series of price cuts and copious discounts kept volume growth going amid a still uncertain economic environment.
The company is also contending with competition in several geographies. Tesla bulls point to a promising future as multiple cogs in Tesla’s wheels begin to work in unison, and the sum-of-the-parts story plays out.
Produced in association with Benzinga
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