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The Almighty Buck

Elon Musk Overtakes Bill Gates To Grab World's Second-Richest Ranking (bloomberg.com) 144

An anonymous reader quotes a report from Bloomberg: Elon Musk's year of dizzying ascents hit a new apex Monday as the Tesla co-founder passed Bill Gates to become the world's second-richest person. The 49-year-old entrepreneur's net worth soared $7.2 billion to $127.9 billion, driven by yet another surge in Tesla's share price. Musk has added $100.3 billion to his net worth this year, the most of anyone on the Bloomberg Billionaires Index, a ranking of the world's 500 richest people. In January he ranked 35th.

His advance up the wealth ranks has been driven largely by the electric automaker, whose market value hit $500 billion after Tesla shares rallied further on Tuesday. About three-quarters of his net worth is comprised of Tesla shares, which are valued more than four times as much as his stake in Space Exploration Technologies Corp., or SpaceX. Musk's milestone marks only the second time in the index's eight-year history that Microsoft Corp. co-founder Gates has ranked lower than number two. He held the top spot for years before being bumped by Amazon.com founder Jeff Bezos in 2017.

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Elon Musk Overtakes Bill Gates To Grab World's Second-Richest Ranking

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  • News value? (Score:5, Informative)

    by mvreijn ( 5102551 ) on Wednesday November 25, 2020 @08:08AM (#60764622)
    Insanely rich person gets richer. Whatever. While writing this comment, numerous people died because of poverty.
    • Insanely rich person gets richer. Whatever.
      While writing this comment, numerous people died because of poverty.

      Millions of people die due to poverty related conditions because of people who own countries, not because of people whose companies have high market capitalizations.

    • by antdude ( 79039 )

      And illness like COVID-19 & SARS-CoV-2!

  • He's earned 100,300 million $$$ this year and we're only in November!

  • Mania (Score:4, Informative)

    by jschultz410 ( 583092 ) on Wednesday November 25, 2020 @08:53AM (#60764768)

    Tesla's market cap could eventually be justified if and when it displaces all other major car manufacturers.

    Maybe that will eventually happen in a decade or two, but to price them as if it already has happened is pretty crazy. Especially considering that the other major car manufacturers haven't suffered a major market cap drop yet too. The auto market has not recently doubled in size.

    Tesla's battery business certainly justifies additional value, but they don't own all their tech and production and they will face stiff competition in that business. Their solar energy business is marginal at best.

    I think what has happened here is that many people have decided that Tesla is a tech company like Google, Microsoft, FB, Apple, Amazon, etc., and decided that, therefore, they deserve to be similarly priced as those companies. The reality though is that cars are hard and expensive to produce, especially relative to software or even electronics. So, it will be very difficult for Tesla to produce the eye popping profits those other companies do.

    • I think it's because investors who don't know anything about the auto industry or automotive technology think that Tesla is going to become an automotive megacorporation at least on par with GM or VW AG, judging by how they've done so far. Telsa had a lot of success in a short time because they caught the big auto manufacturers sleeping on EVs, but they're awake now, and Tesla will soon be a small fish in a big pond. There's nothing too special about Tesla as an auto manufacturer and the big players are goi

      • Most if not all automakers' first-generation EVs (discounting prior research projects) will suck compared to a Tesla. It's even money whether FCA will survive long enough to make a good one — the market for muscle cars and Jeeps must be almost saturated by now. The other major automakers should still be around that long, though.

      • by robi5 ( 1261542 )

        A lot of investors don't actually justify the company value on the basis of how large a car company it may become over time, in terms of number of cars sold. They see Tesla as a technology company that can disrupt a number of other industries. For example, they're becoming quite good as a maker of manufacturing plants, and as an innovator, from EVs to origami car chassis to manufacturing tech. Also, many investors are enthusiastic about the company's first mover advantage in collecting road trip data via se

      • Well, there's the issue.

        Tesla's market cap is ALREADY more than 8 times as large as GM's. It's about 5.5 times as large as VW's. It's about 2.5 times as large as Toyota's.

        Indeed, Tesla's market cap is ALREADY larger than all the next several large auto manufacturers combined.

        I think Tesla looks to be a good company and expect it to be around for a long time now. The valuation the market is putting it on though is pretty bonkers.

    • by AmiMoJo ( 196126 )

      It's all money being bet on them getting "full self driving" to work. The recent beta release has only made investors think it's imminent, when in fact it's far far from it.

      If Tesla did actually develop a full self driving car it would be worth far more than actually making the cars themselves. There would be so many applications for it, not just cars but all kinds of commercial vehicles and haulage, factory robots, military, fully self flying aircraft, all sorts of stuff. They would have cracked some incre

    • Tesla's market cap could eventually be justified if and when it displaces all other major car manufacturers.

      No. Tesla's market cap would be justified if they *could* displace all other major car manufacturers at some point in the future. Market cap is not at all based on what is happening now, it entirely reflects on possibilities of the future.

      I.e. company announces vaccines passed a trial phase, market cap shoots up, it doesn't have approval, it's not making profit, it's just raw value.
      The sword cuts both ways too. E.g. BP, whose market cap during the gulf of mexico incident dipped below the raw value of its ow

  • Unlike Bill Gates, Elon Musk did it without establishing and running his company on anti-competitive behavior. Microsoft got convicted for abusing its market power, which it obtained through nasty techniques and deception to begin with. They were busy identifying startups and much smaller companies, "cutting Netscape's air supply" etc. which has negative effects to this day. Embrace, extend, extinguish.

    So this isn't a milestone. When Elon Musk had 1/100h of the wealth Bill Gates had, he was already superior

  • by TomGreenhaw ( 929233 ) on Wednesday November 25, 2020 @11:40AM (#60765238)
    There are liquid assets (e.g. checking account) and illiquid assets (e.g. a house).

    I would argue that Elon Musk's wealth is an illiquid asset; he can't sell it all as it would tank the stock price while he was selling it.

    Guys like Warren Buffet and Bill Gates over the years have become heavily diversified with a huge variety of assets. They could sell a lot to obtain a staggering amount of capital. Guys like Jeff Bezos and Elon Musk - not so much. Additionally if their stock tanks, did the wealth they supposedly lost ever really exist?

    While these guys are super rich on paper, in reality there is a big limit on how much real money they can lay their hands on.
    • by pavon ( 30274 )

      In addition, if Musk wants to retain a high degree of control over his companies, that sharply limits the amount of stock he can sell. He currently own around 21% of Tesla, but 2/3 vote is required to make any large changes, so nearly 85% of the remaining shareholders would be needed to overrule him.

    • He can borrow against his stock as collateral at rock bottom interest rates ...

    • Guys like Jeff Bezos

      Jeff Bezos's early Google investment alone would qualify him for the Fortune 400. Nor is there a reason to think he cannot access his money. Every quarter he sells over a billion dollars worth of Amazon stock to finance his hobbies like rocketry and his personal spending. Other than people panicking, assuming Bezos getting out of Amazon stock was an indicator of trouble at Amazon, there's no reason him selling all his stock over a couple of years would tank the stock.

      I'd say Musk is

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      he can't sell it all as it would tank the stock price while he was selling it

      You assume that stock can only be traded within the stockmarket. If Musk decided to sell his 20% stake in Tesla to Apple or the Saudi Public Investment Fund, they would make a transaction between themselves - Musk's stock would never enter the market. They would be obliged to announce the transaction, but it would be perfectly legitimate. Musk would almost certainly get a premium for his stake.

      This happens all the time when one company wants to buy a stake in another. So yes, he can sell it all - but he'd b

    • While these guys are super rich on paper, in reality there is a big limit on how much real money they can lay their hands on.

      When you reach a certain threshold of wealth due to your ownership of a large corporation, there is no longer a practical limit on how much real money you can get your hands on. You can take out loans against the value of your shares, and they can be hundreds of millions of dollars. Donald Trump has over $467 million in loans. Giant banks are willing to lend this kind of money in hopes that you will default, and they get to take ownership of your company. That's the game, and why there is no limit to th

  • The weird thing with being rich through owning stocks is that the current monetary value of the stocks doesn't exist, at least not really for those quantities of stocks.

    Suppose I have a company that I get to put on the stock market, and initially 10 of the 1000 shares get sold for 1000 USD each, the company is now worth 1 million. Only 10k USD changed hands. One share of the 10 on the open market gets sold for 2000 USD. 11k USD is now in other hands. The company is now officially worth 2 million. There is

  • Tesla stock price is spiking because of some anomaly in future stock pricing algorithms back in May - Sep of 2018. The company was in doldrums, and Elon himself admitted later he had less than two months of cash at hand. The company looked nearly certain to go bankrupt. But still there were people willing to buy deep deep out of money future calls way out in the future, two three years out. They used a standard model to predict probability of TSLA reaching that price and priced out those options and sold th

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