More Than Just SpaceX Stock: Inside Elon Musk's Portfolio

David Goodboy's picture

Thursday, March 23, 2017 - 9:30am

by David Goodboy

Dreams sometimes really do come true. The kid that everyone dismisses as a regular daydreamer can change the world with their unconventional ideas. It's even possible for the child who was obsessed with space travel and other crazy thoughts to turn these dreams into reality.

Entrepreneur and billionaire Elon Musk is the embodiment of this type of dreamer. He took the electric cars and space travel he imagined as a child and is working towards making those dreams become a reality. Tesla is now a nearly $43 billion company and SpaceX stock could one day be the next hot IPO.

It is nearly certain that Musk takes this same forward-looking approach when investing his own money. I'm very curious about the latest positions taken by this business genius, especially with all the recent publicity on SpaceX.

How Musk Made His Fortune
Elon was born in Australia in 1971 and hit the global wealthy list in 1999 with the sale of his first company, Zip2, to Compaq for $307 million (of which Musk received $22 million).

Rather than relax on the beach for the rest of his life, he used this money to pursue his dreams of changing the world. He turned into a venture capitalist, plunging millions into other far out ideas of the time.

Of that, $10 million went into X.com, a ubiquitous payments website that later rebranded as PayPal. This investment proved to be a monster, and PayPal was bought out by eBay (Nasdaq: EBAY) for $1.5 billion in 2002. Musk's 12% share in the company earned him $165 million.

Still not content to sit around, Musk poured money into a variety of "moon shot"-type, futuristic ventures. Several of these investments became multi-billion dollar companies. Perhaps the most well-known of these is the popular and revolutionary electric car company Tesla (Nasdaq: TSLA).

When Musk founded Tesla in 2003, he suffered through a period of public disbelief and even mockery by some in the investment community. Very few trusted that Tesla would gain traction, let alone become a driving force in the automobile industry. The truth is, Tesla struggled at first, even flirting with bankruptcy in 2007, but was able to raise enough equity to survive via a seed round of financing.

Thanks to Musk's passion and ability to keep the company afloat during tough times, he was named CEO in 2008. Over the next few years, thanks an intense research and development effort, Tesla launched its first electric vehicle to great fanfare. The stock surged higher, turning Musk into a multi-billionaire.

Maintaining his optimistic vision, he has stated that Tesla would eventually boast the same market cap as Apple. Today, Apple's market cap is greater than $734 billion, whereas Tesla remains at a still-impressive $42 billion.

Where His Portfolio Stands Today
In 2015, Musk also owned about a 22% stake in Tesla worth over $6 billion. Almost unbelievably, Tesla is now the third largest auto manufacturer in the United States, only beat by Ford (NYSE: F) and General Motors (NYSE: GM), with a market cap of close to $40 billion!

And that's not his only successful holding. In 2013, he spun off SolarCity (Nasdaq: SCTY), an energy services provider, into an independent, publicly traded company. The original split gave Musk just about 22% ownership in Solar City with 21 million shares.

While Elon is ramping up his holdings in Tesla, he is cutting back on Solar City. In 2013, his portfolio was approximately 72.4% in TSLA to 27.6% in SCTY. This changed radically to 85% in TSLA and 15% in SCTY by 2014. In 2015, the split became much deeper, as TSLA made up 91.6% of just 8.4% for SCTY.

Musk's Next IPO Success
SpaceX has renewed the excitement surrounding Musk in recent years. The first private company to launch a rocket into earth's orbit, the private company is officially named Space Exploration Technologies and is estimated to be worth $12 billion if the IPO would be held today.

In typical Musk passion, he states "SpaceX is like special forces... we do the missions that others think are impossible. We have goals that are absurdly ambitious by any reasonable standard, but we are going to make them happen."

The political environment could not be more positive for SpaceX stock to debut this year. Many investors think that Trump's pro-business and pro-private space contractor stance could easily lead to the SpaceX IPO in 2017. Needless to say, I would expect the same stellar price performance for SpaceX stock as we've seen for Musk's previous ventures.

P.S. You might think Tesla would be Elon's cash cow... but it's not. You'll be surprised to find he's got his eyes on an even more lucrative endeavor. One that's potentially bigger than GM, Toyota, and even Apple... combined. Click here to grab a piece this trillion-dollar golden goose for yourself.

David Goodboy does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.