Elon Musk became the richest man in the world, surpassing previous record holder Jeff Bezos, according to CNBC. Musk is now worth more than $ 180 billion.
Musk’s growing wealth reflects the meteoric rise in Tesla’s stock. The company’s stock price closed at $ 816 on Thursday, up almost 8% on the day. The price of this share values Tesla at almost $ 800 billion – several times more than any other automaker.
CNBC says Musk’s rise to become the richest man in the world is the fastest in history. In early 2020, just over a year ago, Musk was worth just $ 27 billion. At the time, Tesla shares were traded for less than $ 100 (adjustment for a stock split in 2020).
The stock rose to more than $ 700 over 2020. Then, in the first week of 2021, it rose above $ 800.
Big paydays ahead
Musk will become even richer in the years to come if he can increase Tesla’s revenue and profits. A risky but generous payment package, approved by shareholders in 2018, offers Musk up to 12 stock option grants if Tesla reaches certain milestones for the company’s valuation, revenue and profits. So far, Musk has qualified for four of the 12 awards.
To receive the first payment, Tesla’s stock needed to increase to $ 100 billion and Tesla needed to reach a certain limit on revenue or profits. Musk became eligible for a second payment when Tesla hit $ 150 billion – again along with a revenue or profit target. This process continues until the 12th payment, for which Musk qualifies when Tesla’s market value rises to $ 650 billion and Tesla achieves higher revenues and profits.
The rules for revenue and profit are a little complicated, but, for example, Musk will receive all 12 awards if Tesla earns revenues of $ 175 billion and profits of $ 6 billion over a year. Between the fourth quarter of 2019 and the third quarter of 2020, Tesla achieved revenues of $ 28 billion and profits of $ 550 million. Therefore, Tesla will need to grow substantially before Musk receives all of these payments.
If he qualifies for these payments, they will substantially increase Musk’s wealth. Each option award gives Musk the right to buy 1 percent of Tesla shares at a discounted price. Therefore, if Musk wins the remaining eight prizes, they will add tens of billions of dollars to their net worth.
There is little mystery about how Musk wants to use his enormous wealth: he is determined to send humans to Mars. His other company, SpaceX, is working hard to develop the Starship, a rocket built to allow interplanetary travel. The spacecraft was designed to dramatically reduce the cost of bringing people and cargo into space and between planets – perhaps enough that someone with a net worth of more than $ 200 billion could personally finance a significant Mars program.