Tesla Inc (NASDAQ: TSLA) chief executive Elon Musk is now the richest person on the planet, after the company’s shares surged again overnight.
The electric car maker’s stocks shot up a stunning 7.94% Friday morning Australian time. This allowed the South African-born Musk to overtake Amazon.com Inc (NASDAQ: AMZN) founder Jeff Bezos into the top spot.
Tesla shares were on an absolute tear in 2020, appreciating 743% during 2020.
Musk, whose wealth is largely tied to his ownership of Tesla shares, saw his personal worth skyrocket more than US$150 billion in the past year, according to Bloomberg.
Bezos became the world’s richest in 2017 after more than 20 years running Amazon. Since then he has undergone a divorce from his wife MacKenzie Scott, which deducted about a quarter of his Amazon ownership.
Scott herself instantly became one of the wealthiest people on earth, and currently sits at 23rd spot.
Early on Friday morning Australian time, Musk tweeted “How strange” in response to the news that he is now the earth’s richest person.
He then swiftly posted “Well, back to work…”
Well, back to work …
— Elon Musk (@elonmusk) January 7, 2021
Is Tesla’s incredible rise too good to be true?
Tesla, by market capitalisation, is now worth as much as the 8 biggest petrol car makers on the globe.
Despite COVID-19, the company ascended to this confounding valuation on the back of investors’ enthusiasm that electric vehicles are the way of the future.
Then late in the year Tesla made it onto the S&P 500 Index (INDEXSP: .INX). This accelerated its growth even further as index funds were forced to buy up its stocks.
Legendary investor and GMO co-founder Jeremy Grantham this week used Tesla as an example as to why share markets are in a bubble about to pop, just like 1929 and 2000.
“As a Model 3 owner, my personal favorite Tesla tidbit is that its market cap, now over US$600 billion, amounts to over US$1.25 million per car sold each year versus US$9,000 per car for General Motors Company (NYSE: GM),” he said in a letter to investors.
“What has 1929 got to equal that?”
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Amazon. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Tesla and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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