How to Reap Profits Like Tesla Motors' Billionaire CEO Elon Musk

Tesla Motors was one of the best performing growth stocks on the public market last year, finishing with a gain of more than 300% in 2013. The stock's astounding rise in value from just $27 a share in 2011 to around $173 apiece today has a great deal to do with Tesla Motors chairman and CEO Elon Musk. The South African-born engineer and entrepreneur is a self-made billionaire whose early investments in Tesla Motors and SpaceX almost forced him to declare bankruptcy at one point.

Here's a look at how Musk made his billions, and how you, too, can profit from his expertise.

Then and now
Musk's net worth was $6.7 billion in September, according to Forbes. However, Musk had to take a huge leap of faith to get to that point, which included investing all of his available capital into Tesla in 2008. His multimillion-dollar contribution at the time was funded by money he made from the 2002 sale of PayPal, an online payments system that he co-founded.


E-commerce giant eBay purchased PayPal for $1.5 billion in 2002, after Musk reportedly turned down two of eBay's prior bids for the company a year earlier. Musk pulled in a cool $165 million or so on eBay's final offer, which he later used to fund both Tesla and SpaceX, his commercial space exploration company. Meanwhile, PayPal has evolved into one of the most used payment processors today. It's also one of eBay's most important assets, with a global customer base north of 128 million active users -- not to mention that PayPal now accounts for as much as 40% of eBay's revenue.

Source: Tesla Motors.

Why you Musk take risks
Musk was able to turn down eBay's earlier offers because he was the largest stakeholder in PayPal at the time. He put himself in that position by continuing to scoop up shares of the company, while other top executives were cashing out, according to Business Insider. This is important, because Musk is following a similar path with his ongoing investments in Tesla.

The Tesla CEO upped the ante last year, when he invested an additional $100 million of his personal money into the California-based company during a secondary share offering for Tesla in May. Musk owns 27% of Tesla Motors stock today, including stock options, according to Forbes. Therefore, as Tesla's stock surges to new heights, so does his personal wealth.

In fact, Musk's net worth grew 233% in 2013, marking the biggest percentage gain by a self-made billionaire that year, according to Bloomberg's billionaires index. All told, Tesla's milestone-filled year contributed a whopping $5.6 billion to his overall wealth.

Source: SolarCity.

On top of this, Musk also holds a significant stake in SolarCity ; a company that installs solar panels and helps customers finance them. Not only does Musk own around 20.8 million shares of SolarCity, but also he's the company's chairman of the board and is the cousin of SolarCity's founders. SolarCity's stock price has increased nearly 500% since the company went public at the end of 2012.

Things really heated up for the energy company following news of SolarCity's new solar-powered storage system that uses Tesla's lithium-ion batteries. This could be another big win for both SolarCity and Tesla, as the system promises to save customers money by automatically using stored energy during peak hours when utility companies charge the highest rates. Musk clearly knows a good thing when he sees it.

Invest like a billionaire by investing in one
If you want to share in Musk's wild success, why not invest in him? That's what I did when I bought my first shares of Tesla in 2011. At the time, it was the most shorted stock on the Nasdaq. However, I was investing in Musk's vision for what Tesla could be down the road. Looking ahead, Musk's near-faultless track record paints a bright picture for what's to come -- not only for Tesla, but for SolarCity as well.

Make no mistake; Musk's massive stakes in these businesses are a promising sign for long-term investors. After all, he is a majority shareholder of both Tesla Motors and SolarCity today, which means he has a vested interest in unlocking shareholder value in these stocks. Together with Musk's visionary leadership, Tesla and SolarCity are revolutionizing industries in ways that others once considered impossible.

With the majority of his net worth invested in these companies, it's safe to say he'll do everything in his power to make Tesla and SolarCity even more valuable in the years to come.

3 more under-the-radar stocks that will reward you for years to come
Elon Musk became a self-made billionaire by isolating his best few ideas, betting big, and riding them to riches. You deserve the same. Fortunately, you don't need to start your own luxury-car company or privatize space travel like Musk to do so. That's because for a limited time you get the Fool's latest research report for free: "The Motley Fool's 3 Stocks to Own Forever." These picks are free today! Just click here to uncover the three companies and start unlocking profits now. 

The article How to Reap Profits Like Tesla Motors' Billionaire CEO Elon Musk originally appeared on Fool.com.

Tamara Rutter owns shares of eBay and Tesla Motors. The Motley Fool recommends and owns shares of eBay, SolarCity, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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