Elon Musk overtakes Jeff Bezos to become world’s richest person

Elon Musk, the outspoken entrepreneur behind Tesla Inc. and SpaceX, is now the richest person on the planet. Elon Musk edged past Amazon founder Jeff Bezos to grab the title of world’s richest person, according to Bloomberg.

A 4.8 percent rally in Tesla’s shares on Thursday vaulted Musk past Amazon.com Inc founder Jeff Bezos on the Bloomberg Billionaires Index.

Elon Musk’s net worth was $188.5bn at 10:15am in New York (15:15 GMT), $1.5bn more than that of Bezos. Bill Gates is now a distant third at $132 billion, according to Bloomberg.

Although the broader market was up sharply Wednesday, Big Tech stocks, including Amazon, fell on concerns that Democratic control of the Senate could mean greater scrutiny and regulation on the industry. Another gain in Tesla (TSLA) shares Wednesday lifted Elon Musk’s net worth by $4.1 billion to $165.4 billion, according to Forbes’ calculations. But Forbes does not appear to be giving Musk credit for the value of options he received in 2020 to buy an additional 33.6 million shares of Tesla.

Elon Musk is also the primary shareholder and CEO of SpaceX, though SpaceX is privately held, so its value does not fluctuate as much as the value of Tesla. Bezos’ stake in Amazon shares increased by $75 billion in 2020, to $173.3 billion, given the huge increase in sales driven by the Covid-19 pandemic. But that was nothing compared to Elon Musk’s holdings in Tesla. The 170 million shares of Tesla he already owns increased in value by $106 billion during 2020, as shares shot up 743% during the course of the year.

The value of his stock options he held at the start of the year increased by $14.2 billion, while the new options he received during the course of the year as part of his pay package had a value of $21.5 billion at year’s end. Musk caught Gates for the title of the world’s second-richest person in late November, but Tesla shares have increased in value by 45% since then, lifting Musk’s net worth by $53 billion over the past couple months.

Tesla shares are off to a good start in 2021, rising more than $90 a share, or 13%, since the start of this year, including the gains early Thursday. That has lifted Musk’s Tesla holdings and options by about $20 billion this year. Meanwhile, Amazon’s stock was down slightly for the year as of late morning Thursday.

Musk is set to qualify for options to buy another 16.9 million shares of Tesla early this year, according to company filings. Those options would be worth $12.3 billion at the shares’ current value, after taking into account the exercise price.

Bezos does not have any Amazon stock options, only the 53.2 million shares he has as the company’s founder. He would have had more if he hadn’t given 19.7 million shares to his ex-wife, MacKenzie Scott, in his divorce. Bezos has also sold off or has given away shares as part of his charitable donations. Musk has never disposed of any Tesla shares.

With Bezos now in Musk’s rearview mirror, Musk can look ahead to closing in on another rival, ExxonMobil (XOM), the United States’ most valuable oil company. It has a market value of $192 billion. So, Musk, who is a leading advocate of switching drivers around the world from gas and diesel to electric vehicles, is within reach of being worth more than one of America’s largest oil companies.

How Elon Musk rose to his current wealth

The South Africa-born engineer’s net worth was $188.5 billion at 10:15 a.m. in New York, $1.5 billion more than Bezos, who has held the top spot since October 2017. As chief executive officer of Space Exploration Technologies Corp., or SpaceX, Musk is also a rival to Bezos, owner of Blue Origin LLC, in the private space race.

The milestone caps an extraordinary 12 months for Musk. Over the past year his net worth soared by more than $150 billion in possibly the fastest bout of wealth creation in history. Fueling 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 jump in Tesla’s stock price further inflates a valuation light-years apart from other automakers on numerous metrics. Tesla produced just over half-a-million cars last year, a fraction of the output of Ford Motor Co. and General Motors Co. The company is poised for further near-term gains as Democrats captured both Georgia Senate seats and handed control of Congress to the party that’s advocated for quicker adoption of electric vehicles.

Musk, 49, has benefited from Tesla’s stratospheric rise in more than one way. In addition to his 20% stake in the automaker, he’s sitting on about $42 billion of unrealized paper gains on vested stock options. Those securities come from two grants he received in 2012 and 2018, the latter of which was the largest pay deal ever struck between a CEO and a corporate board.

Despite his astronomical gains, Musk has said he has little interest in material things and has few assets outside his stakes in Tesla and SpaceX. He told Axel Springer in an interview last month that the main purpose of his wealth is to accelerate humanity’s evolution into a spacefaring civilization. “I want to be able to contribute as much as possible to the city on Mars,” Musk said, “That means just a lot of capital.”

The world’s 500 richest people added a record $1.8 trillion to their combined net worth last year, equivalent to a 31% increase. The gains were disproportionately at the top, where five individuals hold fortunes in excess of $100 billion and another 20 are worth at least $50 billion.

Less than a week into the new year the rankings have already been upended by extraordinary rallies. China’s Zhong Shanshan has vaulted past Warren Buffett to claim the sixth slot after shares of his bottled-water company surged, adding $15.2 billion to his fortune.

Source: CNN, ALJAZEERA