How did Elon Musk make His Money? – Elon Musk soared to billionaire status, entering the exclusive club in 2012 and topping the list just nine years later.
His fortune is primarily derived from his shareholdings in the electric car company Tesla, where he serves as CEO.
The top 400 industry executives on the Forbes 400 list have lost a combined $315 billion due to the decline in tech stocks.
Nonetheless, they are not in pain. Many of them are still considerably wealthier than before the pandemic. Elon Musk’s fortune will skyrocket from just under $20 billion in 2019 to a staggering $255 billion in 2022. As of Thursday, the 51-year-old from Pretoria, South Africa, has added Twitter to his portfolio.
Musk has dabbled in numerous initiatives throughout his career, including online payment systems, artificial intelligence, transportation above and below the earth, and space travel. His musings can increase or decrease the value of his and other enterprises, as well as cryptocurrencies.
He recently decided to resign as Twitter’s CEO and appointed Linda Yaccarino as his replacement.
How much is Elon Musk worth? How did the owner of Twitter, Tesla, and SpaceX become so wealthy?
Elon Musk’s vast fortune has been diminished by the woes of the stock markets, but he still tops the list of the wealthiest individuals.
The Early Life Of Elon Musk
Musk was born on June 28, 1971, in Pretoria, South Africa, where he spent his adolescence. Errol Musk and Maye Musk were wealthy parents. His father was an engineer, while his mother was a registered dietitian and supermodel. Musk possessed exceptional computer abilities as a child. At the age of 12, he created his own video game, which he sold for $500.
Musk emigrated to Canada at age 17 to avoid mandatory military service in apartheid-era South Africa. He began his postsecondary education at Ontario’s Queen’s University. Later, in 1992, he transferred to the University of Pennsylvania, where he studied economics and physics. Musk and his friends transformed a rented home into a nightclub while he was in college, signaling his first foray into entrepreneurship.
After briefly pursuing a Ph.D. in physics at Stanford University, Musk entered the dot-com era internet industry. He co-founded Zip2 with his sibling Kimbal, which became his first successful business venture. In 1999, they sold the company to Compaq Computer Corp. for $307 million, with Musk receiving $22 million. This laid the groundwork for his subsequent entrepreneurial endeavors.
How Did Elon Musk Make His Money
The technology sector is one of the fastest-growing industries in the globe. Some billionaires have invested in technology, innovation, and digital entrepreneurship, thereby accumulating immense wealth and achieving worldwide renown.
Mark Zuckerberg of Facebook and Jeff Bezos, founder of Amazon, have transformed from basic tech entrepreneurs into global icons. Elon Musk is a well-known figure in the fields of technology, innovation, and business. He was at one point the richest man in the universe.
Surprisingly, he is also the first person in 2022 to shed $200 billion in net worth.
Elon Musk Billionaire Mindset
The majority of billionaires amass wealth by consistently making low-risk investments in specific disciplines until they break even. Elons’ rise to prosperity follows a distinct path.
He amassed wealth through multiple and diversified business ventures as opposed to a singular path to success. His electric vehicle company, Tesla, has contributed substantially to his wealth, as has his aerospace company, SpaceX.
His business ventures have accrued wealth over time, transforming him into a billionaire. He recently purchased Twitter for $44 billion, a transaction that gives him control over the social media platform on which he is an influential user.
Elon Musk’s Income Streams
Musk has been consistently involved in a variety of enterprises, including PayPal, SpaceX, Tesla, and the recently acquired social media platform Twitter. As opposed to the vast majority of billionaires, his success was not the result of a singular, large venture.
The key to his success has been diversification, which has significantly increased his net worth. Tesla contributed to his wealth, however, as the electric vehicle market and demand expanded. We will investigate his businesses and their role in his entrepreneurial success.
Elon Musk’s first business venture was Zip2, which provided online city guides and served as a directory for newspapers and other businesses. With the assistance of family and investors such as Greg Kouri, the business expanded and attracted the attention of computer manufacturer Compaq. In 1999, the company paid over $340 million for the property.
Musk’s 7% stake in Zip2 made him a multimillionaire at 27. Uncharacteristically, he celebrated by purchasing a $1 million McLaren F1 supercar, a fact he subsequently admitted to CNN. Musk was already concentrating on his next significant business venture, X.com, despite his early success.
X.com and PayPal
In 1999, Elon Musk co-founded X.com, an online company that offered a platform for digital transactions. This innovative concept made online money transfers simpler, resulting in more than 200,000 new consumers in a single month. Despite investing millions of dollars from his Zip2 earnings, investors believed Musk lacked the experience to serve as CEO.
X.com merged with its close competitor Confinity in March 2000. This merger resulted in the formation of PayPal, a colossal digital payment transfer company where Musk returned as CEO. Under Musk’s stewardship, PayPal became one of the most successful companies despite early criticism.
In 2002, eBay acquired PayPal for approximately $1.5 billion in stock, netting Musk after-tax earnings of approximately $180 million. Musk invested PayPal sales proceeds in Tesla, SpaceX, and SolarCity.
SpaceX and Starlink
Elon Musk founded SpaceX in 2002 with the aspirational aim of colonizing Mars, after spending the majority of his PayPal earnings. With a $100 million initial investment, Musk automatically became the company’s CEO and principal engineer.
The company struggled with unsuccessful product introductions and came close to bankruptcy. However, through Musk’s persistence and additional investments, SpaceX eventually achieved success. In 2008, the corporation reached an agreement with NASA worth $1.6 billion.
SpaceX is the first private company to send astronauts to the International Space Station after launching the first privately developed liquid-propellant rocket into orbit. The space company is also developing the Starlink satellite broadband constellation.
Musk is estimated to own approximately 44% of SpaceX, making his stake worth approximately $55 billion. Bloomberg estimates the value to be approximately $47 billion due to a 15% discount typical of large private technology corporations selling stock on the secondary market.
After establishing SpaceX for a year, Musk invested over $6 million in Tesla Motors. He joined the company’s founding duo, Martin Eberhard and Marc Tarpenning, who established it in 2003. They concentrated on producing electric vehicles with superior range, acceleration, and performance in order to compete with conventional diesel engines.
In 2008, as the main shareholder, he became chairman and CEO of the company. Musk oversaw the company’s development into what it is today. Tesla has become synonymous with high-performance, aerodynamic, and long-range electric vehicles.
Tesla has become an EV market leader in the United States, with a market share of over 60 percent. It has a market capitalization of approximately $950.48 billion. This is significantly less than the $1 trillion in 2021 due to inflationary concerns and supply chain conflicts.
Given Musk’s massive investments in Tesla (over $141 billion), it is fair to assume that the company accounts for the majority of his fortune. As the EV market expands and Tesla continues to release high-quality EVs, the stakes will continue to rise. Nonetheless, more manufacturers are entering the EV market, thereby increasing competition.
The Boring Company and Neuralink Corporation
Musk’s entrepreneurial endeavors did not conclude with Tesla. In 2016, he founded The Boring Enterprise, an urban transportation, and utility tunneling enterprise.
In the same year, he founded Neuralink, a neurotechnology that helps disabled patients regain vision, communication, and movement. Musk has invested $100 million in each company to this point. The two enterprises reveal his speculative nature in business, a trait that has contributed to the success of the majority of his endeavors.
Neuralink is Musk’s foray into artificial intelligence. The company intends to use artificial intelligence and sensors to establish telepathic connections between humans and machines. The company’s valuation of $500 million is an excellent start for a startup. Once completely operational, Neuralink is anticipated to experience exponential growth. If clinical trials conducted on piglets are any indication, the company has the potential to revolutionize medicine.
The Boring Company seeks to alleviate traffic congestion in major metropolitan areas by interconnecting transportation tunnels. The conclusion of one loop in Las Vegas demonstrates that the system’s viability is already apparent. Approximately valued at $5.7 billion. As more systems are integrated and the project reaches maturity, the company is destined to expand.
Although analysts doubt the long-term profitability of both businesses, Musk appears unmoved. Perhaps he is heavily investing in both enterprises, moves that have made him the richest man on earth.
Elon Musk Re-investment Strategy
Musk’s series of apparently risky investments may appear rash and careless at first glance. On closer inspection, a pattern emerges. Musk consistently reinvests substantial sums of money, yielding positive results.
Musk invested a significant portion of the $22 million he earned from Zip2 into his next business, X.com. After merging with Confinity Inc. to form PayPal, the company defied the odds by becoming profitable. The $1.5 billion transfer of PayPal to eBay yielded a profit of $180 million after taxes for Musk.
He invested the entire amount in his new businesses: $100 million in SpaceX, $10 million in SolarCity Corporation, and $70 million in Tesla.
Musk’s willingness to take risks stemmed from the clarity of his objectives. He calculated his prospects of success with great care. Musk envisioned the future and worked assiduously to achieve both, despite the fact that his approach may appear audacious. The outcomes of his calculated risk-taking are self-evident.
How Much is Elon Musk Worth?
In 2012, Elon Musk debuted on the Forbes Billionaires List with a $2 billion net worth. Musk had a net worth of $27 billion at the beginning of 2020, but it has since skyrocketed. According to Bloomberg, by July of the same year, he had surpassed Warren Buffett with a net worth of approximately $70.5 billion.
A little over a year later, when Musk surpassed $200 billion, he surpassed Jeff Bezos as the wealthiest person in the world. In November 2021, just a few months later, he became the first person with a net worth exceeding $300 billion. He returned above $300 billion by the end of the month after momentarily falling below the $300 billion mark.
Similar to other technology companies, Tesla has suffered since the beginning of the year. While Tesla’s share price is down more than 35 percent from its November 2017 high, it is still marginally higher year-over-year. Musk derives the majority of his fortune from the electric car manufacturer’s stock, which he receives in lieu of a salary.
This has allowed him to avoid paying income taxes, for which he has been heavily criticized. However, he now faces a hefty tax liability because he cashed in his options and sold some of his regular company shares. Reuters estimates that Musk has sold approximately $32 billion worth of company stock in less than a year, reducing his stake in the company from 20% to 15%.