Tesla Keeps Rising

Elon Musk’s fortune continues to skyrocket.

According to the Bloomberg Billionaire Index, the Tesla co-founder became the second richest person in the world Monday, overtaking Bill Gates.

His net worth increased from $7.2 billion to $127.9 billion, technically tied with Microsoft co-founder, whose net worth is $127.7 billion. 

Gates’ fortune would be bigger, though, if he hadn’t given a good amount to charities — more than $27 billion since 2006 only to the Bill and Melinda Gates Foundation, which is supporting, for instance, the development of Covid-19 vaccines.

Still, Musk’s net worth increase is impressive. Just one week ago, he climbed to third place, surpassing the Facebook CEO, Mark Zuckerberg.

The 49-year-old entrepreneur, who is also the co-founder of the rocket company SpaceX, saw his fortune rise to more than $100 billion in 2020. In January, he ranked 35th.

Amazon founder Jeff Bezos has kept the title of the wealthiest person in the world since 2017. His net worth is $182 billion.

About three-quarters of Musk’s net worth comes from Tesla shares, which rose more than 550% so far this year. 

On Monday, Tesla’s stock ended the trading day 6.58% up, at an all-time closing high of $521.85, and it kept rising on Tuesday (by 2.30 pm ET, it was climbing almost 7%)

The same day, the investment firm Wedbush raised the company base-case stock price target to $560 from $500. The analyst Dan Ives also increased his bull-case price target by 25%, to $1,000 from $800.

“With the sustained path to profitability and S&P 500 index inclusion achieved, the Tesla bull story is now all about a stepped-up EV demand trajectory into 2021,” he wrote in a note to clients.

S&P 500

On November 16, S&P Dow Jones announced the electric-car maker would be included in the S&P 500 index on December 21, giving another boost to the stock.

According to experts, when a stock is added to an index, it usually rises in the short-term, but not necessarily in the long-term.

One reason is that portfolio managers of passive funds that track the S&P 500 index and have the goal to beat it will have to buy Tesla’s stocks — like it or not. They are expected to buy about $ 50 billion of Tesla’s shares.

Today, the company is the most valuable automaker in the world, with a market cap above $500 billion.

The South African-born entrepreneur can also cash in a $55.8 billion bonus if Tesla’s value tops $650 billion by 2028.

Musk doesn’t receive a salary from Tesla. As CEO, he opted for equity-based compensation plans, approved by the board.

Controversies

Musk is an entrepreneur full of controversies that pretty frequently make headlines.

According to Musk, his career full of achievements also includes big failures — which is a sign of innovation. “If things are not failing, you are not innovating enough,” he says.

For instance, he was fired from PayPal. One year earlier, he founded a financial service company called X.com, which merged the next year with the rival Confinity, creating PayPal.

He was named CEO of the new company but was fired by the board a few months later over a disagreement about which server the firm should use. Musk was pushing to move from the free Unix operating system to Microsoft Windows.

He was fired while on his way to Australia for vacation, but yet he still gained $180 million from the deal. 

Last May, the eccentric businessman tweeted that “Tesla stocks price is too high,” a post that made the company lose $14 million in market cap. 

Another recent controversy was about the coronavirus. 

Criticizing the lockdown, he tweeted in April that the initiative was like “put everyone under de facto house arrest.”

And a couple of months ago, he said in an interview that he and his kids are not at risk of getting Covid-19 and that he will not take a vaccine when one would be available.