Elon Musk is well known for being an innovator, entrepreneur, and visionary. Tesla Motors, a company he co-founded in 2003, has been successful in creating and marketing high-end cars. With Tesla soaring to new heights in the automotive industry, one may be curious to know just how much of the company Elon Musk owns.
The short answer is that Elon Musk owns or has a controlling stake in about 22% of Tesla’s current shares. While this is not a majority stake, his ownership is significant, and is that of a controlling stake due to having a majority of voting rights in the company.
Elon Musk began his involvement in Tesla as a technology consultant three years before the company’s initial IPO in June 2010. He was later appointed CEO of the company on October 16, 2008, a position he still holds today. Although he initially only owned 25,000 shares of the company (out of 128,500,000 shares outstanding), he has grown his overall ownership by purchasing additional shares, executing a 2-for-1 stock split, and receiving stock options as part of his executive pay.
In mid-May 2020, Elon Musk’s potential direct stake was reported to have reached over 20% after the latest stock split and the exercise of additional stock options. Tesla’s shares have been in the range of $320 to $740 at the time. With share prices and trading volumes both at peak levels, this would have allowed Musk to increase his stake through the execution of additional stock options.
Additionally, Elon Musk does not only control his direct stake in Tesla, but also owns a portion of his own private companies. Several of these companies also have ownership shares in Tesla, such as his space exploration venture, SpaceX. SpaceX bought a stake in Tesla in 2015 and has since increased it to 9%, worth approximately $2.3 billion in the most recent quarter.
In the most recent quarter, Musk’s total stake in Tesla, including those of other SpaceX companies, reaches a value of over $40 billion in Tesla’s shares. This is almost double the amount of his current stake, making him the second richest person in the world, surpassing Berkshire Hathaway CEO Warren Buffet.
In order to remain as the chief executive of Tesla, current regulations require that Elon Musk must maintain a controlling stake in the company. This allows him to maintain control over the decisions and directions that the company takes while also reaping the rewards of owning a significant portion of the company.
Overall, Elon Musk’s stake in Tesla is significant, both financially and in terms of decision-making power. His ownership of the company has been beneficial not only to himself but also to other investors, allowing them to benefit from the company’s success as well.
Elon Musk’s Involvement in Tesla Over the Years
Elon Musk’s stake in Tesla has had a long-term evolution since his involvement with the company in 2003. Initially, Musk was only an investor and a technology consultant for the company’s early projects for the battery and electric-powered cars. Soon enough, he became CEO of the company in 2008 and invested a significant quantity of his own money into the project.
Since then, Musk has managed to increase his stake in the company by accumulating additional shares, exercising stock options and taking part in other financing opportunities related to Tesla. He has also used his own capital to make personal investments in the company’s success, such as the $50 million he invested in 2019 in Tesla’s popularized Autopilot software.
In 2020, Musk’s possession of Tesla shares reached the legal threshold of 20% of the total amount of Tesla’s shares outstanding. This was made possible through both of his stock splits and the exercise of stock options. By having a controlling stake in the company, this allows Musk to make executive decisions that take the company into the future of electric vehicles and autonomous driving technologies.
Elon Musk’s Ownership Versus Other Investors in Tesla
Having a controlling stake in the company, Elon Musk’s ownership of Tesla is significantly higher when compared to other investors. Institutional investors, such as Fidelity, BlackRock and Baillie Gifford, have a combined stake of 27.7% of the company’s shares, while other public investors own roughly 6.7% of the company’s shares.
In terms of how much other investors own of Tesla, the second-largest holder of Tesla is the mutual fund company Vanguard Group Inc., which owns 8.7% of the company’s shares. After that, Blackrock Inc., which owns 6.1% of Tesla’s shares, is the third-largest investor in the company; followed by Baillie Gifford with 6%, and Fidelity Investments with 4.6%.
Moreover, Elon Musk also owns a large portion of his own private companies, such as SpaceX and Neuralink, which in recent years have actively invested in Tesla’s projects. Collectively, these companies’ ownership of Tesla’s shares constitutes a significant portion of Musk’s overall ownership, making his stake in Tesla even larger.
Elon Musk’s Impact on Tesla’s Market Valuation
Since Elon Musk has stepped into his role as CEO of Tesla, the company has enjoyed tremendous success in the stock market. In 2020, Tesla surpassed the market cap of many iconic companies, making it the most valuable car company in the world and the second-most valuable company overall. Musk’s vocal and outspoken leadership and the company’s focus on groundbreaking projects such as the Autopilot system have been key factors in the impressive growth of Tesla’s stock price and overall market value.
The market also reacted positively to Tesla’s performance, which further increased Musk’s stake in the company. His direct stake in the company had a market value of over $25 billion before Tesla’s stock split, and his indirect stake was valued at about $15,6 billion at the end of the second quarter of 2020. Combined, his overall stake in Tesla’s shares was estimated to be worth $41 billion at the time.
While Elon Musk owns a significant stake in Tesla, it would be incorrect to state that he is the sole investor or decision-maker at the company. Providing options for new investors, allowing for the execution of stock splits and participating in other financing rounds are all key in maintain Tesla’s market value. However, Musk’s presence plays a significant role in how the company is viewed in the market and how its stock performs.
Risks of Elon Musk’s Ownership of Tesla
As with any investment, there are risks associated with Elon Musk’s ownership of Tesla. The most notable risk is the likelihood of his stake in the company being diluted, or reduced, if Tesla issues additional shares in the form of new equity. This could happen if Tesla executed a secondary stock offering or issued more stock options, which would reduce Musk’s overall stake in the company.
Additionally, the value of Musk’s stake in the company is inherently tied to the success of Tesla. If the company’s stock prices and overall performance were to decline, Musk’s stake in Tesla would also decline in value.
Also, since Tesla’s shares correlate more closely to Musk’s stock split decisions than to overall market fluctuations, it is possible for the company’s stock to become unstable in the event that Musk were to be removed from the company. If such a situation were to arise, it is likely that the company’s stock performance would be negatively affected.
What Other Companies Elon Musk Owns?
Elon Musk owns or has a significant stake in several other companies, such as SpaceX, Neuralink, The Boring Co, and OpenAI. SpaceX, which builds spacecraft and rockets, is his most successful venture and has had partnerships with NASA and private space companies.
Neuralink is a neurotechnology company that develops a type of neural computer-brain interface that could potentially enhance human cognitive abilities. In addition, The Boring Company is another one of Musk’s projects, which consists of the project of building an underground transit system for the city of Los Angeles.
Musk is also a board advisor of OpenAI, which is an artificial intelligence research company working to achieve general artificial intelligence. He also remains a board member of Tesla and serves as CEO of both Tesla and SpaceX.
Elon Musk’s Net Worth
As of mid-2020, Elon Musk’s net worth is estimated to be around $74 billion, making him one of the world’s wealthiest people. His net worth has grown significantly as a result of his stakes in Tesla and other private companies.
Around two-thirds of Elon Musk’s wealth is comprised of Tesla’s stock, which is estimated to be worth $47 billion by the end of the second quarter of 2020. Additionally, SpaceX and the other private companies he owns are estimated to be worth approximately $14 billion, which makes up the other third of his total net worth.
Overall, Elon Musk’s ownership of Tesla has been beneficial to himself and to other investors due to its successes in the stock market. His stake in the company consists of a combination of direct and indirect shares, and these have combined value of over $40 billion. Outside of Tesla, Musk also owns significant stakes in other companies such as SpaceX and Neuralink, which are worth around $14 billion combined. Ultimately, Elon Musk ultimately has a significant stake in Tesla in terms of both ownership and power, establishing himself as one of the most successful visionaries in the tech industry.
