Elon Musk. Picture: BRENADAN McDERMID
Elon Musk. Picture: BRENADAN McDERMID

Elon Musk, world’s richest person. A statement that seemed outlandish one year ago became plausible, then almost inevitable as Tesla’s share price climbed higher and higher in 2020.

On Thursday it finally happened. Shares in the maker of electric vehicles surged 7.9%, boosting Musk past Amazon.com founder Jeff Bezos on the Bloomberg Billionaires Index, a ranking of the world’s 500 wealthiest people. Musk is worth $194.8bn, or $9.5bn more than Bezos, whose Blue Origin is a rival to Musk’s Space Exploration Technologies, or SpaceX, in the private space race.

Tesla’s ascent thrusts its brash founder into a role occupied by only a handful of other people in recent decades and underscores the dramatic stock moves that have upended the global wealth rankings of late.

No-one has seen a more dramatic shift than Musk. Over the past year the SA-born engineer has added more than $165bn to his fortune in what’s probably the fastest bout of wealth creation in history. Fuelling his rise was an unprecedented rally in Tesla’s share price, which surged 743% last year on the back of consistent profits, inclusion in the S&P 500 index and enthusiasm from Wall Street and retail investors alike. The shares have gained more than 23,900% since the initial public offering in 2010, including a five-for-one stock split last year.

The jump in Tesla’s stock price further inflates a valuation that is light years apart from other vehicle makers on numerous metrics. Tesla produced just over 500,000 cars last year, a fraction of the output of Ford Motor and General Motors.

Its market value of $773.5bn is bigger than that of Facebook. Larry Ellison’s 2% stake in Tesla alone would be enough to place the Oracle founder among the world’s 175 richest people (including his Oracle shares he’s ranked 10th).

Musk’s rise is even more astonishing given his dust-ups and gaffes in recent years, typically exacerbated by his spontaneous tweets. In 2018 he agreed to pay a $20m fine to the Securities and Exchange Commission and step down as chair of Tesla after tweeting a notion to take the company private at $420 a share, with “funding secured” — something he never did.

On several occasions Musk has bemoaned being “cash poor”. The vast majority of his net worth is tied up in equity of his companies, including Tesla — which pays no dividends — and closely held SpaceX and the Boring Company, a tunnelling venture. Yet he’s professed to have little interest in the material trappings of wealth.

He tweeted last year he intended to sell “almost all” his physical possessions and he told German publisher Axel Springer in a December interview that the main purpose of his wealth is to accelerate humanity’s evolution into a spacefaring civilisation.

After reports of his new status were published on Thursday, Musk tweeted “How strange,” then added “Well, back to work.”

Still, he’s on board with at least one trend among the super-rich. He confirmed last month he’d personally relocated from California to Texas, a state that has gained new popularity among the wealthy for levying zero income tax.

Even with Tesla’s remarkable rise, Bezos would still hold a wide lead over Musk had it not been for his divorce, which saw him transfer a quarter of the family Amazon stake to his former wife, MacKenzie Scott, and his philanthropy. He donated shares worth about $680m in November.

Bloomberg

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