Posted on October 26, 2016 by Matt Pressman
A fascinating overview of Elon Musk's financials was detailed in The Economist* reporting that Musk has become, "America’s most audacious corporate financier as well as its best-known entrepreneur. In just over a decade he has created an empire valued at a cool $44 billion... A blend of financial laboratory, corporate labyrinth and buttock-clenching thrill ride, Musk Inc has pushed the boundary of what was thought possible."
Above: Elon Musk charging a Tesla Model S (Source: The Economist* via Bloomberg)
Although Musk has faced adversity before, the pressure is on for the next phase of his three businesses — Tesla Motors [NASDAQ: TSLA], SolarCity [NASDAQ: SCTY], and privately-held SpaceX. "Musk has repeatedly defied the odds. But the stakes have got bigger now that shareholders, creditors and counterparties have tens of billions of dollars at risk. Tesla, an electric-car manufacturer, must ramp up production quickly and also meet the threat from new electric models designed by traditional car firms. Mr Musk wants to merge two of his firms, Tesla and SolarCity, a company which installs rooftop solar panels... [while] SpaceX launches rockets for government and commercial clients and is financed by private investors."
Above: Elon Musk's business can be visualised as having four parts showcased in this infographic (Source: The Economist*)
The Economist* breaks down Musk's business in four parts — visualized in the infographic above. "In total Musk Inc has perhaps $8 billion of sales, and is set to burn $2.3 billion of cash during 2016... Musk Inc also carries echoes of Asian and Italian business federations, which pool resources and people: SolarCity uses batteries made by Tesla, for example, and SpaceX has made loans to SolarCity. Mr Musk is the chairman of all three firms, which share some directors. His cousins manage SolarCity. Fidelity, a big asset manager, owns large stakes in each of the trio."
Above: This infographic includes (left) the Wall Street Journals' prior look at multiple synergies throughout Musk's companies, and, (right) the financials of Elon Musk's empire in billions (Source: Wall Street Journal / The Economist*)
As evidenced in these infographics, Musk is not afraid to have plenty of his own skin in the game. Why? "The last [and perhaps priority] objective, control, is key to Mr Musk, who in 2000 was ousted as the boss of PayPal, an internet-payments firm he co-founded. He owns about 50% of SpaceX, but his shareholdings in Tesla (23%) and SolarCity (22%) are near the threshold where control is no longer guaranteed."
Above: Top shareholders in both Tesla and SolarCity; note: Musk's percentages differ slightly from The Economist as this infographic was published earlier in the summer (Source: Electrek via Financial Times)
That said, how does Wall Street view the future of these companies? The Economist reports, "the average of investment-bank analysts’ projections says that Tesla’s revenues will soar from $7 billion to about $30 billion by 2020, following a path like those of three of history’s most successful firms, Google, Apple and Amazon... [yet] incredulous short-sellers have queued up to bet against SolarCity and Tesla. But the Musk empire also has plenty of fans in Silicon Valley and on Wall Street." And history has shown that Musk has a track record of defying the odds — so looking towards the future, I wouldn't bet against him.