As of this writing, Elon Musk is worth more than $ 200 billion. He is the wealthiest man in the world, surpassing Jeff Bezos by $ 18 billion. Elon’s total assets are $ 170 billion more than a year ago. Exactly two years ago, Tesla’s entire market cap was just $ 53 billion. At that time, Elon was worth about $ 25 billion. Where do you predict Elon’s total assets will be in a year? How about two years and beyond? Is it possible that Elon Musk will become the world’s first billionaire? Anything is possible! Here’s how it can happen …
When we talk about Elon Musk’s net worth, it is important to remember that his fate comes from two sources:
1) He holds a 48% stake in privately held SpaceX.
2) He holds a 20% stake in publicly traded Tesla.
When SpaceX last raised money in August 2020, it valued it at $ 46 billion. Therefore, Elon’s 48% stake =
$ 22 billion
As I type this article, Tesla has a market cap of $ 783 billion. Therefore, Elon’s 20% share =
$ 156 billion
But wait, $ 156 + $ 22 = $ 178 billion. How is Elon currently valued at $ 202 billion? We are “missing” 24 billion dollars!
There is a complex answer to this question. If you care for everyone, the simple answer is, here you go:
Elon’s unique bonus plan with Tesla has earned him an additional $ 50 billion in shares. Half of them, roughly $ 25 billion, have been approved by the board and to give net worth to what is missing in the math above =
$ 202 billion
The other nearly $ 25 billion is yet to be officially confirmed and awarded by the board.
If you want complicated answers, you go here, or feel free to leave under the dash below:
Back in 2018 Elon and Tesla boards came up with a compensation plan Elon was given a 12-level milestone bonus plan. At the time the plan was forged, Tesla had a market cap of $ 50 billion. Each time Tesla’s market cap rose to $ 50 billion, and stayed at that level for a sustained period, Elon was empowered to buy 1.688 million new shares of Tesla for $ 350 per share. Installments increase by $ 50 billion to $ 650 billion:
If Tesla broke the $ 650 billion market cap, the long story is that Elon was able to buy 1.688 million shares by that time for $ 350 per share… twelve times. To make matters more complicated, in August 2020 Tesla stock split 5 – 1. So now every time Elon hits a milestone, it has to buy 8.44 million shares for $ 70 per share.
And please note – as we mentioned earlier in this article, Tesla’s current market cap is $ 783 billion. Last I checked, $ 783 billion is more than $ 650 billion … the highest milestone number. Therefore, in other words, Elon has achieved all 12 milestones.
As of this writing, the Tesla board has only confirmed its half-milestone. This is $ 25 billion which is “missing” from our calculations above. And yes this means that there is currently $ 25 billion which according to our calculations, is not being counted in their total assets.
Yada yada yada when he exercises his options loses some shares and sets aside money for taxes yada yada yada…
When all this is said and done, at some point next year, assuming Tesla stays above $ 650 billion, the board will confirm the second half of that $ 50 billion. At that time, by our mathematics, Elon would own 270 million shares of Tesla. At today’s share price, the price of those shares alone would be:
$ 223 billion
If SpaceX’s valuation remained exactly the same, then $ 46 billion would be Elon’s total assets at that point =
245 billion dollars
If you think this is a completely unforgivable number, please remember that Jeff Bezos had never divorced, today he would be valued at around $ 256 billion.
Who knows what the future will bring for Tesla stock and SpaceX valuations, but let’s show that they both continue to explode (in a positive way … not in a rocket launch way).
Will it take $ 1 trillion to hit?
Just for fun, let’s say SpaceX’s next big increase is in the $ 100 billion valuation. And assume that Elon’s share in this process decreases from 48% to 40%. At that stage, Elon’s SpaceX stake would be $ 40 billion. And consider that over the next two years a SpaceX rocket strikes gold on an asteroid, rocketing its valuation up to $ 250 billion in a private funding round, or as a future public company. At that point, SpaceX will contribute $ 100 billion to Elon’s total assets.
Assuming that we soon live in a world where Elon officially owns 270 million shares of Tesla, what would it take for Elon to make the $ 900 billion difference close to $ 1 trillion? According to our math, Tesla will have to hit:
$ 3,333 per share
Tesla is currently trading:
$ 826 per share
If this sounds completely insane, keep in mind that a year ago (after taking stock split into consideration), Tesla was trading at:
$ 102 per share
Two years ago Tesla was:
$ 60 per share
Tesla’s market cap would be $ 2.35 trillion at $ 3,333 per share. Apple’s current market cap is $ 2.14 trillion. So a massive mass jump, but not out of the known universe of market caps.
A major caveat here is that all the net worth we mention are pre-tax. If Tesla and SpaceX continue to grow, Elon’s pre-tax paper net worth will increase but whenever he sells a share, he will have a capital gain and the IRS will cut. If he decided to sell every single share of Tesla and SpaceX that day it would have hit $ 1 trillion … and if there was a market that could handle such a huge influx of shares for sale … Elon really Will end with a net worth close to $ 500 billion.
It is said that, if SpaceX rises to a $ 250 billion valuation in some crazy world and Tesla rises to a $ 2.35 trillion valuation, Elon Musk will officially be the world’s first trillionaire at that time.