Musk triples for­tune as one red let­ter day fol­lows an­other

The bil­lion­aire founder of Tesla has been the stand-out win­ner dur­ing the pan­demic,

The Daily Telegraph - Business - - Technology Intelligen­ce - re­ports Michael Cogley

‘Peo­ple say ‘hey you’re a bil­lion­aire, you’ve got all this stuff ’, well now I don’t so what are you go­ing to do?’

The term bil­lion­aire has be­come “pe­jo­ra­tive”, Elon Musk said on the Joe Ro­gan Ex­pe­ri­ence pod­cast in­May.

At that point, the stock price of Tesla, his elec­tric car com­pany, was up 81pc since the start of the year in the midst of a pan­demic that has seen world economies bat­tered, high streets shut­tered and of­fice work­ers sent home.

To­day, it’s up 326pc to $1,907 since Jan 1, plac­ing Musk, 49, among a wealth of bil­lion­aires that have seen their net worth soar in the past year. Dur­ing lock­down, Musk’s wealth has tripled to $90.3bn (£68.5bn).

He isn’t the only one. Jeff Be­zos has seen his wealth rise by $80bn to $195bn as Ama­zon be­came a crutch for much of Western so­ci­ety dur­ing lock­down. Sim­i­larly, Eric Yuan the founder of video-con­fer­enc­ing soft­ware Zoom added $10.4bn to his wealth, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex. Mean­while Mark Zucker­berg has seen his wealth rise $21bn to $99.4bn.

But de­spite the surges among the world’s rich­est, it is that of Musk that is the most eye-catch­ing.

“The share price is ridicu­lous when you com­pare it to other car man­u­fac­tur­ers and es­pe­cially if you look at the vol­ume of ve­hi­cles that Tesla de­liv­ers ver­sus some­one like Ford or Toy­ota,” says policy man­ager at Ac­cess Part­ner­ship Tier­nan Kenny.

It was just last month that Tesla over­took Toy­ota as the world’s most-valu­able car brand, but al­ready that looks to be a dis­tant land­mark in the rearview mir­ror. Tesla sold 367,500 units last year, a record for the com­pany. Mean­while Toy­ota shipped a hefty 10.74m ve­hi­cles. De­spite this, on July 1, Tesla shares hit $1,134 push­ing its val­u­a­tion to $209.47bn, $4bn more than that of Toy­ota. Since then, Tesla’s mar­ket cap­i­tal­i­sa­tion has risen to $351bn.

The un­re­lent­ing surge of the stock has made Musk – who has ad­mit­ted in the past that he feels it’s over­val­ued – the world’s fourth wealth­i­est man. The tremen­dous year for Tesla stock has seen his for­tune over­take the likes of lux­ury re­tailer LVMH’s Bernard Ar­nault and In­dian busi­ness mag­nate Mukesh Am­bani. Only Be­zos, Bill Gates, and Mark Zucker­berg are worth more than him ac­cord­ing to Bloomberg.

Climb­ing any fur­ther will be even more chal­leng­ing for one of the world’s most-fa­mous busi­ness­men.

“To be hon­est, I think it will be dif­fi­cult for Elon to over­take Zucker­berg be­cause Tesla’s share price run re­cently has been ex­cep­tion­ally bullish, even by Tesla’s stan­dards,” says David Mad­den, an an­a­lyst at CMC Mar­kets.

“We would need to see a fur­ther jump in de­mand pro­jec­tions from the car­maker, and at the same time we would need to see a neg­a­tive Face­book story to weigh on the share price.”

Mad­den says any such story is un­likely and that the so­cial me­dia gi­ant had largely fended off the “Boy­cottFace­book” cam­paign. Tesla’s surge has con­founded some an­a­lysts who can­not tie the com­pany’s fun­da­men­tals to its share price.

Musk is cur­rently paid through a long-term in­cen­tive plan that is linked to the com­pany’s rev­enue and val­u­a­tion. The first tranche was made avail­able to him af­ter the com­pany posted rev­enue of more than $20bn and held a val­u­a­tion of more than $100bn for a year. Meet­ing the first tranche of his un­prece­dented pay­ment plan within two years shocked many stock watch­ers.

“I’ve seen some peo­ple say that part of the in­crease in the share price is from peo­ple who are us­ing stock trad­ing apps who are just buy­ing brands they like, with­out re­ally un­der­stand­ing the fun­da­men­tals that go un­der­neath it,” says Kenny.

“It’s ob­vi­ously go­ing quite well for him, es­pe­cially com­pared to a few years ago when they were hav­ing big prob­lems with the pro­duc­tion lines.

“But the real ques­tion is, at some stage, is he go­ing push too far and end up kind of im­plod­ing the share price?”

Some had sug­gested that the com­pany could even go bank­rupt at a time when a num­ber of out­bursts from Musk shook con­fi­dence.

In 2018 he was lam­basted for sug­gest­ing he had se­cured fund­ing to take the com­pany pri­vate when he had not. He was also em­broiled in a messy bat­tle with a diver who helped res­cue a ju­nior foot­ball team that was stuck in a cave in Thai­land that same year.

But the past 12 months have been un­re­lent­ing for Musk, who has also seen his SpaceX busi­ness ex­cel with mul­ti­ple satel­lite launches.

The South African’s me­te­oric rise is poised to con­tinue but there are risks with ev­ery­thing he is un­der­tak­ing.

“Pretty much all of his com­pa­nies are moon­shots,” says Kenny.

“Fif­teen years ago he said I’m go­ing to make this elec­tric car com­pany worth an ab­so­lute for­tune, I’m go­ing to make a re­us­able rocket com­pany, a hy­per­loop train and a com­pany that makes brain ma­chine in­ter­faces.”

The policy man­ager says it would be a “strug­gle” to turn one of them into a suc­cess but Musk seems to be jug­gling them. “They are still quite high risk how­ever,” Kenny says. Musk’s SpaceX, is poised to pad his for­tune by an­other $3bn. It raised $1.9bn in new fund­ing in an SEC fil­ing on Tues­day. The fund­ing round in­creases its eq­uity val­u­a­tion to $46bn, $10bn more than its last round in May.

Left-wing think tank In­equal­ placed Musk among the “Oli­garch dozen” a col­lec­tion of bil­lion­aires that had gained the most dur­ing the pan­demic. The group la­belled him as the big­gest “pan­demic prof­i­teer”.

When asked about the rise in his net worth, Musk re­port­edly told Forbes that he “re­ally couldn’t care less”. “These num­bers rise and fall, but what re­ally mat­ters is mak­ing great prod­ucts that peo­ple love,” the busi­ness mag­nate said.

This year, he even com­mit­ted to sell­ing his worldly pos­ses­sions, say­ing that they can be used as an “at­tack vec­tor”. “Peo­ple say ‘hey you’re a bil­lion­aire, you’ve got all this stuff ’, well now I don’t so what are you go­ing to do?” he said on the Joe Ro­gan Ex­pe­ri­ence.

As long as the num­bers tacked onto his wealth con­tinue their up­ward trend, it ap­pears he will have to deal with the pe­jo­ra­tive de­scrip­tion of “bil­lion­aire” for some time yet.

Elon Musk, be­low cen­tre, and, clock­wise from bot­tom left: Mark Zucker­berg; Bill Gates; Eric Yuan; Masayoshi Son; MacKen­zie Scott; Larry Page and Jeff Be­zos

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