Elon Musk’s Best Investments

Elon Musk has been hailed as a genius. He’s also been dubbed a “modern-day Tony Stark.” And, at this point, few would deny that he’s a talented entrepreneur. However, some amount of his notoriety is the result of his antics, especially his performances on the social media platform Twitter. In 2018, on April Fool’s Day, Musk sent out a series of posts on Twitter that joked that Tesla had gone bankrupt.

While some analysts and investors haven’t found Musk’s viral internet fame very entertaining, he’s been lauded by others for his willingness to engage with the public on a shared forum.  Musk is also behind more than one company that has disrupted its respective industry. A list of some of Musk’s best investments includes PayPal Holdings Inc. (PYPL), SpaceX, DeepMind (GOOGL), Tesla Inc. (TSLA), and The Boring Company. 

Musk is the CEO and co-founder of Tesla and the CEO and lead designer at SpaceX. As of Jan. 26, 2021, according to the Bloomberg Billionaires Index, he has an estimated total net worth of $209 billion, surpassing Jeff Bezos as the richest person in the world.

PayPal

PayPal has a notable roster of executives and investors. The popular online payment system provides an electronic alternative to traditional paper methods like checks and money orders. PayPal’s co-founders include Ken Howery, co-founder of Founders Fund and former U.S. Ambassador to the Kingdom of Sweden; Max Levchin, an early investor in Yelp and the founder and CEO of Affirm Inc.; and Peter Thiel, co-founder of Palantir Technologies and Founders Fund.

Musk no longer holds a stake in PayPal. He exited his position after the e-commerce company eBay purchased PayPal for $1.5 billion in 2002. Musk reportedly earned $180 million in the sale.

In 1999, Musk used $10 million to co-found X.com, an online financial services and e-mail payment company. A year later, the company merged with Confinity, which was later renamed PayPal in 2001.

SpaceX

Musk used much of the proceeds of his PayPal sale to found Space Exploration Technologies Corporation, commonly known as SpaceX. By his own account, Musk spent $100 million to found SpaceX in 2002.

SpaceX has been a remarkable success, both financially and in its technological innovations. NASA awarded SpaceX with a lucrative contract in 2006. In 2009, SpaceX launched Falcon 1, the first-ever private liquid-propellant rocket to reach orbit. In 2010, SpaceX’s Dragon spacecraft reached the International Space Station (ISS). In 2012, NASA granted SpaceX a second contract to help shuttle crewmembers between the ISS and Earth.

SpaceX is a private company, so determining its valuation is somewhat difficult. In 2019, SpaceX raised $1.33 billion from three rounds of funding. In Feb. 2020, people familiar with the financing of the company told CNBC that SpaceX was seeking to raise $250 million at a price of $220 per share. This would raise the value of SpaceX to around $36 billion, up from $33.3 billion previously. It is one of the most valuable private companies in the world, and it ranks among the most in-demand of any pre-IPO companies.

Musk is still the largest shareholder and the CEO of SpaceX, and the company is now worth far more than the $100 million that Musk originally invested to form the company.  If the company was ever taken public, it is likely that Musk would earn a huge sum.

SpaceX has made the idea of space travel exciting again for the collective imagination. The most recent round of fundraising is to continue the development of three ambitious programs: Crew Dragon, Starlink, and Starship. NASA has awarded SpaceX over $3.1 billion to develop the Crew Dragon capsule, which represents SpaceX’s efforts to fly humans into space. Starlink is also part of SpaceX’s efforts to fly people into space, but the project Starlink would entail creating a global network of about 12,000 small, interconnected satellites that would provide high-speed internet to any place in the world.

DeepMind Technologies

The artificial intelligence company DeepMind Technologies was launched in late 2010 with Musk as one of its key angel investors. In Jan. 2014, Google announced it had acquired the company for an undisclosed amount, but it was speculated that the sale was between $400 and $600 million.

Musk is famously worried about artificial intelligence overtaking humans, and he is reported to have invested in DeepMind not to make money, but to give him a window into how fast the technology behind artificial intelligence was developing. The company has focused much of its research on deep reinforcement learning. Deep reinforcement learning is an artificial intelligence technique that combines deep learning — primarily used for recognizing patterns — with reinforcement learning, geared around learning based on reward signals, such as a score in a game. DeepMind gave this technique its name in 2013 in a paper, which represented a breakthrough in the field of artificial intelligence.

DeepMind hasn’t found any successful commercial applications of deep reinforcement learning yet, although Alphabet has applied the technique internally as a method of reducing power costs for cooling Google’s servers.

Tesla Motors

Although Musk was not a founding member of Tesla, he led an early round of financing in 2004. In 2008, Musk went from being a board member of Tesla to its CEO, even though he was still serving as the CEO of SpaceX. On June 28, 2010, Tesla launched its initial public offering (IPO) on NASDAQ. Shares of common stock were available to the public at $17 per share. As of Jan. 26, 2021, shares of Tesla are valued at $888.60.

The company’s mission is to accelerate sustainable transportation by introducing mass-market electric cars to the market. In November of 2017, Tesla announced the creation of fully electric semi-trucks, which were preordered by companies such as UPS and PepsiCo. The company’s affordable and high-quality electric vehicles include the Model S, the Model X SUV, the Model 3 sedan, and the high-end Roadster supercar. 

In Jan. 2020, Reuters reported that Musk was set to earn $346 million of stock awards as part of a performance-based compensation package. Musk does not earn any salary or cash bonuses; rather, he receives stock award options that vest based on the company’s market capitalization and other growth milestones. Musk owns around 241 million shares of Tesla, or 25% of the company.

The Boring Company

Musk founded the infrastructure and tunnel construction company The Boring Company in late 2016. The company was founded on the premise that traffic is awful; when there is miles and miles of unused earth beneath roadways, traveling above ground isn’t necessary. The company’s goal is to reduce the cost of tunneling while also speeding up production. Boring Company hopes to achieve this by making smaller tunnels and creating its own high-power boring machines.

In 2020, The Boring Company has projects underway in Hawthorne, Calif., Las Vegas, Los Angeles, Chicago, Baltimore, and Washington, D.C. To fund the project, Musk announced that he would start selling The Boring Company branded hats. On Dec. 16, 2017, Musk announced he had sold 42,000 hats and raised $840,000. After hitting his goal of selling 50,000 hats, Musk began selling the next branded Boring Company product: a flamethrower. Musk sold these flamethrowers for $500, and in just a few days, Musk had raised $10 million.

In July 2019, it was announced that The Boring Company had received its first outside funding. The company raised $120 million by selling shares of its stock to early-stage venture capital firms. Prior to this round of funding, in May 2019, the Las Vegas Convention and Visitors Authority approved a $48.6 million proposal from The Boring Company to build an underground tunnel, called the LVCC Loop, that will travel underneath the Las Vegas Convention Center and feature three stations and a pedestrian tunnel. In Feb. 2020, The Boring Company finished the first of the two planned tunnels in the loop. The project is anticipated to cost around $52.5 million.

Also in early 2019, The Boring Company released a 505-page report that detailed their plan to construct a link between Washington, D.C., and Baltimore via a high-speed transit system.

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