Elon Musk, the maverick chief executive of electric car company Tesla, is poised to overtake Facebook’s Mark Zuckerberg to become the world’s third-richest person after Tesla’s shares jumped 13% following its selection to join the S&P 500 index of leading US companies.
The latest surge in the Tesla share price, which had already risen by almost 500% so far this year, is estimated to have increased Musk’s fortune by about $15bn (£11.4bn) to about $117.5bn.
That places Musk, 49, third on the league table of the world’s richest people in front of Zuckerberg, 36, with $106bn according to the Bloomberg Billionaires Index. The index shows Musk in fourth place with $102bn but it does not yet include the 12% surge that took place in extended trading after the market closed on Monday.
Musk, who owns 20% of Tesla’s shares and founded rocket company SpaceX, has experienced an increase of about $90bn in his fortune so far this year.
His wealth could soar higher as Tesla’s share price growth puts Musk on target for a bonus deal that could pay him a record $55.8bn. In order to trigger the maximum payout Musk has to build Tesla into a $650bn company by 2028. It is worth just under $400bn, up from $54.6bn when the scheme was created in 2018.
The only people in the world richer than Musk are Amazon founder Jeff Bezos with a $184bn fortune and Microsoft’s principal founder Bill Gates with $129bn. Gates has given more than $50bn to help fight diseases and tackle poverty.
Musk has signed the Giving Pledge, the philanthropic initiative created by Gates and investor Warren Buffett to encourage the world’s richest people to commit to giving away at least half their wealth to charity. However, the Musk Foundation, a charity he founded with his brother in 2002, has given away less than $100m according to regulatory filings. The charity’s entire website extends to just 32 words or 259 characters – less than that allowed in one Twitter tweet, the medium favoured by Musk.
Tesla’s share price jumped from $409 to $460 in aftermarket trading on Monday following news of its admission to the S&P 500, which will take place on 21 December. Its inclusion in the index is significant because passive funds that track the S&P 500 will buy shares in the company.
“[Tesla] will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history,” a spokesman for S&P Dow Jones Indices said.
Tesla had been due to join the index at the last reshuffle in September but was passed over due to concerns about the stock’s volatility. With a stock market value approaching $400bn, Tesla will be among the most valuable companies ever added to the S&P 500 index.
Tesla has the highest market value of any car company in the world – ahead of Toyota, Volkswagen and General Motors – despite making just a fraction of the number of vehicles. Telsa expects to deliver up to 500,000 vehicles this year, compared with Toyota’s annual production of about 10m.
It has been a busy week for Musk. On Monday, SpaceX sent four astronauts to the International Space Station on its Falcon rocket and Dragon capsule in the first of a commercial contract supplied to Nasa.
Musk also tweeted that he “most likely” had a moderate case of Covid-19 and had symptoms of “a minor cold”. Musk has often said fears surrounding Covid-19 have been exaggerated and campaigned against lockdown measures.
