Bloomberg reports that Elon Musk has surpassed Jeff Bezos to become the richest person in the world, with a net worth of $188.5 billion. Golly! How did he get here?
The Long Answer
Tesla stock rose an astonishing 743 percent in 2020, meaning that the CEO and founder’s 20 percent stake increased its value by a factor of 8½, taking him from a run-of-the-mill billionaire to the very top of the heap.* Additionally, Musk has made billions off a complicated bonus deal that rewards him for good stock performance.
The larger question is: How did a company selling less than 1 percent of the world’s cars become more valuable than Volkswagen, Toyota, Nissan, Hyundai, GM, Ford, Honda, Fiat Chrysler, and Peugeot combined? Explanations abound. Maybe Tesla will make a lot of cars pretty soon? Maybe Tesla is really a battery company? Maybe retail investors are buying Tesla stocks based on their admiration for the company’s charismatic CEO? Maybe the stock market is just a fun casino that’s completely detached from the economic fundamentals of the companies involved? Nobody knows!
The Short Answer
In the summer of 2019, Amazon CEO Jeff Bezos finalized his divorce from ex-wife Mackenzie Scott, which left her with about $38 billion in Amazon stock. Amazon stock is up more than 70 percent since then, so if the Bezi were still counted as one net worth on the Bloomberg list, Jeff Bezos would be far ahead of Musk, at $242 billion.
Correction, Jan. 8, 2020: This post originally misstated that the value of Musk’s Tesla stake increased by a factor of 7½. It increased by a factor of 8½.