Elon Musk, the head of Tesla Inc and billionaire entrepreneur, has surpassed Amazon boss Jeff Bezos to become the world’s richest person, according to Bloomberg.
- Elon Musk is the co-founder of PayPal, and heads car company Telsa, rocket company SpaceX and brain-machine start up Neuralink
- Forbes still has Mr Musk trailing Amazon’s Jeff Bezos by $US7.8 billion
- There is speculation the huge rise of Tesla stock is overblown with Mr Musk saying the shares are overpriced
Including Thursday’s gains in Tesla shares, the 49-year-old had a net worth of more than US$188.5 billion ($242.3 billion), US$1.5 billion ($1.9 billion) more than Mr Bezos, Bloomberg’s report said.
Mr Musk’s personal wealth was boosted last year when Tesla became the world’s most valuable car manufacturing company after its shares surged more than eight-fold.
He has a 20 per cent stake in the company and about US$42 billion ($54.1 billion) of unrealized paper gains on vested stock options, according to the Bloomberg report.
Tesla shares were up as much as 7.4 per cent on Thursday (local time) at a record high of US$811.61 ($1,046).
The Forbes Billionaires List, however, said Mr Musk still trailed Mr Bezos by US$7.8 billion ($10.1 billion).
Forbes has a more conservative estimate based on the Tesla stake that he has pledged as a collateral for personal loans.
To take that into account, it applies a 25 per cent discount to his shareholding, according to its report in November.
Mr Musk, who co-founded and sold internet payments company PayPal, now leads some of the most futuristic companies in the world.
Besides Tesla, he heads rocket company SpaceX and Neuralink, a startup that is developing ultra-high bandwidth brain-machine interfaces to connect the human brain to computers.
He set up the Boring Company to make affordable tunnels below busy city streets for an all-electric public transportation system to avoid the nasty traffic jams in US cities.
But it hasn’t been a smooth upward rise for Mr Musk.
In the middle of 2019, Tesla’s losses were piling up, sales were not enough to cover expenses and big debt payments loomed.
The situation was so bad that one influential Wall Street analyst raised the possibility that Tesla would not be able to pay its bills and would have to be restructured financially.
Since then, the electric car and solar panel maker’s shares have skyrocketed, rising nearly 700 per cent in 2020 alone.
Tesla’s rise has been so stunning that even Mr Musk has said the shares were overpriced.
Tesla and Mr Musk have for years engendered strong divisions on Wall Street, and the rise from near-collapse to an astronomical valuation is no exception.
Many investors who drove Tesla’s value higher are individuals who bought the stock after a five-for-one split reduced the price of a single share last summer.
The bulls are largely betting on the company’s future and point to five straight profitable quarters, rising sales, and world-leading battery and software technology to justify their predictions.
Bears, including short sellers who have lost millions betting against the stock, still predict a collapse.
They cite limited markets for high-priced Tesla vehicles, repeated quality problems, huge capital costs for factories, and growing competition from conventional automakers.
New York investment manager Ark Invest has consistently predicted Tesla’s meteoric rise.
Ark says Tesla has a technology advantage over other auto companies in performance and range of its vehicles.
And if Mr Musk makes good on his pledge to reduce battery costs, demand for electric vehicles will rise, with Tesla uniquely positioned to respond at large scale.