Tesla's addition to the S&P 500 index spiked shares of the company, which boosted the CEO and founder, Elon Musk, up the rankings of the richest people in the world.
Tesla is set to officially join the benchmark S&P 500 index in December, however it is still a complicated process to get there.
The electric car company has been reported as one of the largest beneficiaries of the boom in retail investing during the 2020 pandemic and lockdown. It was reported that last month, almost 40,000 Robinhood accounts added Tesla shares in just four hours. The trend isn’t limited to the U.S. either as South Korean retail investors have piled into Tesla since the beginning of this year, and now hold about a 1% stake in the American auto maker.
Tesla’s $464 billion market value now exceeds that of retail behemoth Walmart Inc., the largest company in the U.S. by revenue.
The electric automaker's stock gained as much as 12%, which boosted Musk's wealth by $11.8 billion. He is now worth $115.4 billion, making him richer than Facebook founder, Mark Zuckerberg, who stood in third place in the global wealth ranking with a net worth of $110.8 billion.
Even though this has put Musk on a much higher pedestal, it does not mean that his spending power changes. His riches are largely tied to massive stakes in Tesla and other private ventures like SpaceX and the Boring Company. The billionaire entrepreneur publicly stated that he maintains a "cash poor" lifestyle, and that he has mortgaged many of his Los Angeles-area mansions – which included three of homes that were listed for sale earlier this year – as Musk vowed to sell "almost all physical possessions."
However, even though Musk does not take a salary from his company, on paper he is still the highest-paid executive in the world. For his performance, he receives a 12-level compensation package, where massive tranches of stock options are awarded at progressive corporate performance milestones. This pushed Musk’s net worth to nearly $600 million in 2019 alone. With this latest addition, Musk stands to make over $55 billion from the total 20 million options, once all the performance metrics are reached.
In order to spend that wealth, Musk is set to sell stock options that has vested into actual equity. Currently, he hasn't sold any of his stake in Tesla since 2016.
However, even though Musk has been pushed up the wealth ladder, he still has a long way to go to reach the world’s richest person, Jeff Bezos, who is worth more than $200 billion.