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Tesla walloped Wall Street’s expectations with its third-quarter earnings announcement last week, enriching its CEO and founder Elon Musk in the process.
After the market close on October 23, the electric car maker reported earnings per share of $1.86, while analysts expected losses of 42 cents per share. Tesla’s adjusted profit of $342 million comes after two straight quarters of losses, which Wall Street expected to continue.
Tesla stock spiked nearly 24% in the week through October 31, 2019, increasing Musk’s net worth by $2 billion, to $22.9 billion. The 48-year-old self-made billionaire is currently the 21st richest person in America, up two places and $3 billion from when the Forbes 400 list was published in early October.
Musk owns nearly 22% of Tesla’s stock, which accounts for roughly half of his fortune. He also has an estimated $12.5 billion stake in SpaceX, his privately-held aerospace company known for reusable rockets.
In the third-quarter earnings call, Musk highlighted that Tesla is ahead of schedule on Model Y preparations, accelerating the expected launch of the new compact SUV to summer 2020. He also touted the new Smart Summon feature, which allows Teslas to self-navigate around parking lots and driveways when the owner sets a destination within 200 feet on the Tesla app.
U.S. auto-safety regulators told Forbes in early October that it is looking into accident reports involving Smart Summon. Musk stated on the earnings call that the feature has been used one million times and Tesla will soon release an improved version using the rider data.
“The next step will be full self-driving with Smart Summon being kind of the beginning of that,” Musk said. He cautiously predicted that Tesla will grant early access to “feature-complete” full self-driving capabilities by the end of the year.
Despite the earnings surprise, Tesla’s revenue of $6.35 billion represents an 8% drop year-over-year. Many analysts expressed concern about the decline and the possibility that Tesla is overvalued. “With this in mind, we have to question whether the valuation premium being ascribed to TSLA as a ‘growth’ or ‘technology’ unicorn is truly justified,” wrote Bank of America analyst John Murphy in a research note.