Elon Musk, the CEO of Tesla and owner of X, has seen a significant increase in his wealth, adding $26 billion to his net worth after Tesla's stock experienced its most substantial rally since 2013.
Following a better-than-expected earnings report, Tesla shares surged by 22%, marking their second-largest gain since the company's IPO in 2010. This surge has propelled Musk's total net worth to approximately $269 billion, placing him over $50 billion ahead of Larry Ellison, the largest shareholder in Oracle and a former Tesla board member.
Musk's wealth is primarily derived from his substantial ownership stake in Tesla, where he controls nearly 13% of the outstanding shares. In addition to Tesla, Musk holds a significant portion of SpaceX, which is valued at over $200 billion in private markets. His portfolio also includes ownership of X and the artificial intelligence startup xAI. The ongoing litigation regarding a shareholder lawsuit related to his 2018 pay package could further impact his wealth, depending on the court's outcome.
Tesla's recent earnings report revealed earnings per share of 72 cents, surpassing the average analyst estimate of 58 cents. The company's profit was bolstered by $739 million in revenue from environmental regulatory credits and an additional $326 million from its Full Self-Driving (FSD) system. During the earnings call, Musk expressed optimism about the company's future, projecting vehicle growth of 20% to 30% for the upcoming year. This positive outlook contributed to the stock's impressive rally, reversing a trend of declining shares that had been on track for the worst month since January.
Despite the upbeat earnings report, Tesla has faced challenges in delivering on its promises regarding autonomous driving technology. While competitors like Alphabet's Waymo have successfully launched commercial driverless services, Tesla has consistently missed its own deadlines for bringing similar products to market. Currently, the company does not offer vehicles that can operate safely without human intervention, raising questions about its ability to fulfill its ambitious plans for an autonomous future.
In addition to his business ventures, Musk has been actively involved in political campaigning, particularly in support of Donald Trump. Since endorsing Trump following an assassination attempt on the former president, Musk has ramped up his political rhetoric and financial contributions to a political action committee (PAC) backing Trump. His recent campaign efforts have included a $1 million daily giveaway to registered voters in key battleground states, aimed at mobilizing support for his pro-Trump PAC.
However, Musk's political activities have drawn scrutiny, with the U.S. Department of Justice warning that his voter sweepstakes may violate federal election laws. Investors have expressed concerns about the potential impact of Musk's political engagement on Tesla's brand integrity and shareholder value. Questions have arisen regarding whether Musk's activism could detract from Tesla's core mission and affect sales growth, highlighting the delicate balance between personal beliefs and corporate responsibilities.
The recent surge in Tesla's stock has been met with mixed reactions from investors, particularly in light of Musk's political activities. Some retail investors have voiced concerns about the implications of Musk's public activism on the company's performance. A notable comment from an anonymous investor questioned how Tesla is addressing these concerns and whether Musk's actions are harming the company's growth prospects. This sentiment reflects a broader apprehension among shareholders about the intersection of Musk's personal beliefs and his role as CEO.
Despite these concerns, the market's response to Tesla's earnings report has been overwhelmingly positive, with the stock recovering from earlier losses and showing a 5% increase for the year, in contrast to the Nasdaq's 23% gain. The strong performance underscores the resilience of Tesla's business model and the potential for continued growth, even amid external challenges. As the company navigates its ambitious plans for the future, investor confidence will likely hinge on Musk's ability to balance his personal and political pursuits with the expectations of shareholders and the broader market.