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

Tesla Motors' CEO Elon Musk is a self-made billionaire. Here's how he did it, and how you can profit from his expertise.

Jan 29, 2014 at 10:33PM

Tesla Motors (NASDAQ:TSLA) 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 (NASDAQ: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.

Tesla Speedy

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.

Solarcity Image

Source: SolarCity.

On top of this, Musk also holds a significant stake in SolarCity (NASDAQ:SCTY); 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. 

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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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