Tesla chief Elon Musk has overtaken Amazon founder Jeff Bezos as the world’s richest person, after a surge in his company’s share prices saw his net worth boom to a whopping US$195 billion (AU$250 billion).
Tesla’s share price rose 7.94 per cent to US$816.04 per share on Thursday, taking the company’s market cap to US$773 billion. On 8 January 2020, Tesla’s share price was just US$93, marking an increase of around 777 per cent in one year.
Shares in Tesla have gained more than 23,900 per cent since its 2010 initial public offering, according to Bloomberg.
At the beginning of 2020, Musk’s net worth was around US$27 billion, which took him just inside the world’s top 50 richest people. Now, US$11 billion ahead of Bezos (worth US$184 billion), his rise to the top marks the fastest in history.
Why did Tesla’s share price rise so quickly?
Tesla’s surge can be attributed to a few things.
In August, Tesla announced a 5-for-1 stock adjusted split. That’s when a company divides the shares of its stock into new shares to boost its liquidity. After news broke of the split, the company’s share price picked up 8 per cent.
Later that year, Tesla entered the S&P 500 for the first time in 2020, after it posted four consecutive quarters of profits. Though it marked its debut with a 5 per cent fall, the long-term sentiment on Tesla is still bullish.
In July last year, investment firm Morgan Stanley said it was extremely unlikely for Tesla to justify its current stock price within the next decade, and that its share price was being driven up by tech-oriented investors.
Investment bank JPMorgan echoed that statement in December, saying the stock is “dramatically overvalued”, and urged investors thinking of raising their holdings in the company to not do so.
Jeff Bezos in 2020
Bezos started 2020 as the world’s richest person, and despite the COVID-19 crisis, he only got richer.
In 2020, Bezos, who owns more than 50 million shares of Amazon stock (worth more than US$170 billion) saw his net worth increase by US$72 billion.
Bezos’ wealth reportedly crossed the US$200 billion-mark in August last year, but according to the Bloomberg Billionaires Index, the Amazon founder is worth US$184 billion today.
To put that into perspective, Bezos’ wealth is bigger than the GDP of most countries in the world (like Hungary and the Ukraine), and is larger than the market cap of many companies on the S&P 500.
Bezos and Musk join Microsoft co-founder Bill Gates and Facebook founder Mark Zuckerberg as two of just five centibillionaires – fortunes exceeding $100 billion – in the world.
What will Elon Musk do with his money?
Unlike Bezos’ billionaire ex-wife, Mackenzie Scott, or Bill Gates, Musk has not signed any pledges to give away his fortune to charity.
However, last year, Musk tweeted he intended to sell “almost all” of his physical possessions.
He backed it up in a December interview with German publisher Axel Springer, saying, “I'll have basically almost no possessions with a monetary value, apart from the stock in the companies”.
Musk said he intended on selling his house, and would just sleep “in the factory or the office”, however he will likely rent a house for his kids.
Instead, he hopes his wealth encourages humanity to “become a spacefaring civilisation” and “a multiplanet species”.