The fixation on Elon Musk's billionaire-ness overlooks the fact that he doesn't care about money (TSLA)
Elon Musk has said he's ridding himself of earthly possessions. But he mostly owns California real estate — millions of dollars' worth, an illiquid asset that's hard to sell. His Tesla shares, after a massive run-up, are worth close to $40 billion, but he almost never sells stock. He lives off loans from major banks, using his Tesla stake as collateral. Musk appears to be selling several of his multimillion-dollar homes, but his latest moves aren't really all that weird; he's never cared much about money, seeing it as a means to an end. Visit Business Insider's homepage for more stories.
Tesla and SpaceX CEO Elon Musk is sometimes accused of caring about only money, but the truth is that money is almost meaningless to him. That's because he's a multibillionaire, to a degree. As Tim Higgins pointed out in The Wall Street Journal, Musk's 20% stake in Tesla makes him worth about $40 billion — but he can't sell any of those shares without relinquishing some control over the company or provoking a sell-off that could damage investors. So Musk lives off credit: About $550 million is his current burden, owed to a trio of banks and backed by his Tesla shares. With Tesla's market capitalization at nearly $150 billion — it's worth more than General Motors, Ford, and Fiat Chrysler Automobiles combined — this isn't an issue, and Musk recently qualified for the first tranche of a big equity payday that the Tesla board approved several years ago. It adds up to $1 billion in stock, but don't expect Musk to turn it into cash. He has rarely been a seller; more often, he borrows more money to buy additional shares. There's been some speculation that Musk, who has been essentially broke in the past, is unloading some of his homes in Los Angeles and San Francisco to raise money. He says that isn't the case and that what he really wants to do is lighten his burdens, possibly because he and his companion, the musician Claire Elise Boucher, better known by her stage name, Grimes, just had a child together. Even if Musk is trying to deleverage his personal balance sheet a bit, he's not exactly marketing liquid assets; multimillion-dollar mansions in California can take years to sell, if they sell at all. A walking, talking wealth paradox
What Musk embodies is a walking, talking wealth paradox: so rich on paper, but kind of not rich in reality. He does have access to a type of "supermoney," to borrow a term from the economist George Goodman, who wrote a book with that title in 1972. It isn't legacy stock wealth nor dividend income — which today is taxed at lower rates than regular income — but rather debt that uses his Tesla stake as collateral. It sort of like having a mega-credit card, or a gigantic home-equity line of credit. Before you get mad, it's worth noting that Musk has this option only because he took the approximately $180 million he made when eBay bought PayPal — which was cofounded by Musk — in 2002 and sunk all his winnings into Tesla and SpaceX, which were at the time considered to be monumentally risky investments. Musk's view was that he had a chance to move the needle on global warming with Tesla — electric vehicles emit no greenhouse gases — and also pursue a "backup-biosphere" plan for Earth by using SpaceX as a way to colonize Mars, making humanity "multiplanetary," in his words. Skeptical? Fine. But space exploration had previously required the resources of large nations, while the perceived wisdom in the auto industry, pre-Tesla, was that starting a new car company was impossible. Musk couldn't have picked two better ways to lose all his money. He essentially did with Tesla in 2008; only some 11th-hour financing, a US Department of Energy loan guarantee, and equity stakes from Daimler and Toyota enabled the company to avoid bankruptcy and build its first all-original vehicle, the Model S sedan. And it wasn't ka-ching after that: Tesla raised just $220 million from its 2010 initial public offering, and the stock price was flat for several years after that. Limited enthusiasm for rich-people stuff
Musk has shown some affection for rich-people things in the past, including a McLaren supercar (which he wrecked), the James Bond Lotus submarine car, and his aforementioned mansions. But for the past decade, I've tried to figure out what he spends money on, and apart from supporting his large family (six children, including X Æ A-12, his son with Grimes), I've come to the conclusion that he doesn't blow his money on ... anything. He has some cool clothes, but that's hardly an extravagant outlay. He drives Tesla vehicles. He sent his personal original Roadster into orbit, so goodbye to that museum piece. He tweets a lot, so he probably owns the latest iPhone. I think he plays video games, so ... an Xbox and a flat screen or two? And he travels quite a bit using a business jet, but so do mere millionaires. Perplexing as this thought might seem, Musk thinks of money less as a medium of exchange and even less as a store of value; he doesn't even see money as a way to make more money, a standard play of high-net-worth people. No, he sees money as a means to an end, and he appreciates its function as a financing tool — to achieve his grand and futuristic goals and to serve the more mundane but immediately impactful effect of creating 40,000 jobs at Tesla and thousands more at SpaceX. It would appear that he's now doubled down on his money philosophy and is determined to shed any obvious trappings of billionaire-ness. And that isn't at all surprising.FOLLOW US: On Facebook for more car and transportation content! Join the conversation about this story » NOW WATCH: Why Teslas accelerate so fast
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After Elon Musk criticized Bernie Sanders' brand of socialism, Sanders took him to task for taking billions of dollars in government support (TSLA, AMZN, FB, WMT)
Bernie Sanders and Elon Musk got into a tiny tussle on Twitter Friday over "socialism." Sanders...Bernie Sanders and Elon Musk got into a tiny tussle on Twitter Friday over "socialism." Sanders on Thursday introduced a bill that would place a 60% tax on the wealth gained during the coronavirus crisis by billionaires including Musk and use the money raised to pay all American's out-of-pocket healthcare expenses for a year. In response to an article about the bill, Musk tweeted out a meme that essentially criticized Sanders for spending other people's money to fund "free government programs." Sanders hit back at Musk, calling him out for criticizing programs that help the vast majority of Americans when he and his companies had benefited from billions of dollars in government assistance. Visit Business Insider's homepage for more stories. Bernie Sanders showed Friday he isn't afraid to call out hypocrisy — particularly when it comes from someone like Tesla CEO Elon Musk. Musk on Friday tweeted out a meme critical of Sanders and his brand of socialism. The tweet was in response to an article about a bill Sanders introduced Thursday that would place a 60% tax on the wealth gained by billionaires such as Musk during the coronavirus pandemic. The meme, dubbed the "Official Bernie Sanders drinking game!" showed a picture of Sanders along with the text: "Every time the Bernster mentions a free government program, chug somebody else's beer." pic.twitter.com/kogvN4rMJ8 — Elon Musk (@elonmusk) August 7, 2020 Sanders, who's no neophyte when it comes to defending his leftist views and programs, wasn't about to back down from such criticism. In a tweeted response, he called out Musk for benefiting to the tune of billions of dollars from government subsidies and linked to an article from The Los Angeles Times that detailed the assistance Musk and his companies have received. "Every time Elon Musk pokes fun at government assistance for the 99%, remember that he would be worth nothing without $4.9 billion in corporate welfare," Sanders wrote. "Oh, Elon just l-o-v-e-s corporate socialism for himself, rugged capitalism for everyone else." Every time Elon Musk pokes fun at government assistance for the 99%, remember that he would be worth nothing without $4.9 billion in corporate welfare. Oh, Elon just l-o-v-e-s corporate socialism for himself, rugged capitalism for everyone else. https://t.co/rj8FgwEDMQ pic.twitter.com/bxHcXul925 — Bernie Sanders (@BernieSanders) August 7, 2020 According to The Los Angeles Times article, Musk and his companies — Tesla, SolarCity, which is now owned by Tesla, and SpaceX — had received an estimated $4.9 billion in government support through May 2015. That assistance came in a variety of forms, including grants, tax breaks, subsidies for construction, environmental credits, and discounted loans. The amount of that assistance has only gone up since then. For example, Tesla garnered $428 million from selling regulatory credits in its most recent quarter. The company receives those credits from California for selling electric cars and sells them to other automakers who don't sell enough to meet the state's requirements. Sanders' bill would raise billions from billionaires Sanders' bill was cosponsored by senators Ed Markey, D-Mass., and Kirsten Gillibrand, D-NY. The bill would tax any wealth gained by any of the 467 billionaires in the US between March 18 and January 1 of next year and use the amount raised from the tax to pay for the out-of-pocket health expenses of every American for a year. Millions of US residents have lost their health coverage during the pandemic after losing their jobs. Even those with insurance have sometimes faced steep bills after contracting the coronavirus. The co-sponsors estimated that those billionaires had seen their wealth increase by $731.8 billion between March 18 and Aug. 5. Musk, according to a fact sheet from them, had seen his own wealth go from $24.6 billion to $70.5 billion. He would face a tax bill of $27.5 billion under the measure Much of the wealth gains cited by the bill's sponsors are a result of soaring prices. In order to pay such tax bills, the billionaires would almost certainly have to sell large numbers of shares which could undermine their companies' stock prices — and their wealth. Got a tip about Tesla, tech — or Bernie Sanders? Contact Troy Wolverton via email at email@example.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.SEE ALSO: Stanford business school graduates knew their classmates would soon found great startups, and they created a unique club to invest in them. The result is a $1.5 million fund bound by loyalty, community, and democracy Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
The billionaire space oddity on life with Grimes and Baby X, Trump, Tesla, tunnels, short shorts,...The billionaire space oddity on life with Grimes and Baby X, Trump, Tesla, tunnels, short shorts, stock surges, Facebook fumbles and everything else under the sun.
Elon Musk is now officially richer than Warren Buffett after Tesla's stock hits an all-time high (TSLA, BRKA)
Elon Musk is officially more wealthy than Warren Buffett. Tesla stock, of which Musk is the...Elon Musk is officially more wealthy than Warren Buffett. Tesla stock, of which Musk is the largest holder, skyrocketed to record highs this week. Buffett, meanwhile, donated almost $3 billion of Berkshire Hathaway stock, causing his riches to shrink. Visit Business Insider's homepage for more stories. Elon Musk's wealth officially surpassed that of Warren Buffett on Friday, according to the Bloomberg Billionaires Index, fueled by Tesla's skyrocketing stock price and a hefty donation by the Oracle of Omaha. Musk, the CEO of Tesla and the electric-car maker's biggest shareholder, saw his riches surge more than $6 billion on Friday alone to $70.5 billion as the company's market value capped off a week of fresh highs. The stock is up 259% in 2020 compared with the benchmark S&P 500 index's 1% gain. Musk is now No. 7 on the list, up from No. 12. Buffett, the most famous investor and a multibillionaire, saw his fortune decline this week after giving away $2.9 billion worth of Berkshire Hathaway shares to charity. Since 2006, Bloomberg reported, he's gifted more than $37 billion worth of shares. Billionaire wealth is anything but straightforward Musk takes zero salary from Tesla, while Buffett has famously taken $100,000 annually for decades. For both men, their riches are largely tacked to the daily ups and downs of equities markets. Musk, in particular, has made headlines for his massive — and massively complicated — pay structure that allows him to buy $1.8 billion tranches of highly discounted Tesla stock as the company hits specific performance targets, like profitability goals and market-capitalization benchmarks. He hit the first of those goals earlier this year. He's also said Tesla stock is likely overvalued, but that hasn't stopped investors from pushing the price high enough to make it the most valuable car company, despite producing only a small fraction of what traditional automakers churn out. Then there's the question of what to do with such wealth. "It doesn't make a lot of sense in most cases if you've basically organized a company," Musk told Joe Rogan on his podcast in May. "How does this wealth arise? If you organize people in a better way to produce products and services that are better than existed before, and you have some ownership in that company, then that essentially gives you the right to allocate more capital." That's where Buffett comes into his theory. "There's a conflation of consumption and capital allocation," Musk said. "So when you take Warren Buffett, for example — and to be totally frank, I'm not his biggest fan — he does a lot of capital allocation. He reads a lot of annual reports of companies, all the account, and it's pretty boring honestly. What he's trying to figure out is, 'Does Coke or Pepsi deserve more capital?'" The two billionaires couldn't be more different in communication, either. "He's a remarkable guy," Buffett, who has tweeted only nine times, said of Musk in 2019 as the Tesla CEO sparred with US securities regulators. "I just don't see the necessity to communicate."SEE ALSO: Elon Musk has officially hit the first milestone of his $55 billion compensation package Join the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button