Elon Musk, founder of American electric vehicle and clean energy company Tesla is set to become the world’s third richest entrepreneur after news this week that his personal wealth has increased by around £11.3bn.
Yesterday, it was announced that Tesla had been accepted into the S&P 500, a major US stock market index.
As a result, Tesla’s share price rose by 14% on the New York stock exchange. Musk currently owns a 20% stake in Tesla – which means that his net worth rose to more than £88bn – a £65bn increase during 2020.
Earlier this month, Tesla’s group revenues rose 39% year-on-year to £6.65bn, beating market expectations.
That was driven by a 44% increase in vehicle deliveries, partly offset by changing product price/mix (as 56% growth in lower priced Model 3 and Model Y vehicles offset a 13% fall in Model S and X deliveries). The smaller energy generation and storage business saw revenues rise 44% to $579m.
Gross margins in the automotive business improved from 22.8% last year to 27.7% this quarter – befitting from a 196% increase in regulatory credits. Operating margins in the quarter came in at 9.2% – more than double the level achieved last year.
Net income of $874m rose 156% year-on-year, coming in way ahead of market expectations.
Tesla reported free cash flow in the quarter of £1.06bn, up from $280m a year ago. Together with a £3.8bn share issue during the quarter that saw the group finish the quarter with a net cash position of £638m, up from £4.15bn net debt three months ago.
While the full year production and delivery target of 500,000 vehicles remains unchanged- that goal has “become more difficult” given the economic environment and social distancing restrictions. The group believes it has sufficient liquidity to fund its current development plans, which include building Model Y capacity and the launch of Tesla Semi.
Tesla will now enter the S&P 500 on 21 December meaning that the California-based firm would achieve a stock market valuation of over £300bn.