Entrepreneur and billionaire Elon Musk has a unique, self-disciplined mindset about money. In short, he claims he doesn’t want to dig into investors’ cash unless he sets the table first.
“I always invest my own money in the companies that I create,” Musk has been quoted as saying. “I don’t believe in the whole thing of just using other people’s money. I don’t think that’s right. I’m not going to ask other people to invest in something if I’m not prepared to do so myself.”
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So it goes with Musk, whose net worth is valued at $201 billion as of June 4, according to the latest Bloomberg Billionaires Index of the world’s wealthiest individuals. At the moment, he’s the third-richest person in the world, behind Amazon.com Inc. (ticker: AMZN) founder Jeff Bezos at No. 2 and Bernard Arnault, chairman of LVMH Moët Hennessy Louis Vuitton (OTC: LVMUY), at No. 1.
Unlike some of his billionaire peers, such as Warren Buffett or Ray Dalio, Musk isn’t and never has been a stock picker by trade. Instead, he’s more of an indirect market influencer, founding, co-founding or investing early in big brand companies like privately owned SpaceX and subsidiary Starlink; online bank X.com, which later merged with Confinity and became PayPal Holdings Inc. (PYPL); and his crown jewel, electric vehicle company Tesla Inc. (TSLA).
Musk also moves markets as an owner, something he’s done with X (formerly Twitter), SpaceX and xAI, Musk’s latest entrepreneurial effort, which, according to the company’s web page, works on building “artificial intelligence to accelerate human scientific discovery.”
There’s no doubt that Musk has left been influencial in the stock market — either directly through public company ownership, as a business owner who works closely with publicly traded companies he favors, or even with X comments about companies and CEOs he likes (or doesn’t like).
Here are five of the best investments to consider that are connected to Elon Musk’s business endeavors, plus one upcoming initial public offering to watch for. As always, it’s important to do your own research before diving into any new investment, and a few of these holdings have had volatile track records:
— Tesla Inc. (TSLA)
— PayPal Holdings Inc. (PYPL)
— Nvidia Corp. (NVDA)
— Modine Manufacturing Co. (MOD)
— Bitcoin (BTC)
— Starlink
Tesla Inc. (TSLA)
Year-to-date (YTD) return: -29.7%
Musk has a 20.5% stake in Tesla, which has a market capitalization of about $551 billion as of June 4. Tesla’s CEO recently ran into a buzzsaw with the Institutional Shareholder Services (ISS), a top proxy advisory firm, over his bid for a previously agreed-upon $56 billion pay package, which the ISS cited as “excessive.” On June 3, only 10 days ahead of Tesla’s next shareholder meeting, Musk garnered support from the company, which rejected the ISS charge and indicated it would be too expensive to create a new pay package for its early investor and famed CEO.
That’s all good news for Musk, who built Tesla into an EV manufacturing powerhouse. TSLA’s stock is down significantly in 2024, as cash-strapped consumers have backed away from often pricey electric vehicles. Wall Street doesn’t see the situation as permanent, though, and a consensus call from auto industry analysts sees TSLA’s price rising to $296 a share, which is about 69% higher than its current price level.
PayPal Holdings Inc. (PYPL)
YTD return: 3.1%
Musk no longer has financial ties to PayPal. But in 2000, his startup X.com merged with Peter Thiel’s online payment company, Confinity, creator of the online payment system. When eBay Inc. (EBAY) acquired PayPal in 2002, Musk received between $165 million and $180 million for his stake in the company.
Decades later, PayPal is still building steam with its Fastlane payment services and fledgling advertising business, which leans heavily on PayPal’s massive treasure trove of user data. Mizuho Securities analyst Dan Dolev recently upgraded his rating to “buy” (from “neutral”) with a $90 price target. Compared with PayPal’s June 4 closing price of $63.33, that represents upside potential of 42.1%.
Nvidia Corp. (NVDA)
YTD return: 135.1%
Business relationships are another area where Musk exerts his influence. Musk is investing heavily in Nvidia’s artificial intelligence processors and has reportedly rerouted about $500 million worth of the AI chipmaker’s H100 graphics processing units, or GPUs, to X and xAI ahead of Tesla, which reportedly irked TSLA investors. While that drama plays out, it’s interesting — but not surprising — to see Musk lean into Nvidia’s technology. Musk sees a huge future for AI, and xAI is manufacturing Grok, a large language model that ostensibly will compete with OpenAI’s ChatGPT. Musk’s xAI recently completed a $6 billion round of financing that should help fund Grok’s emerging 1.5 version with image understanding.
“The funds from the round will be used to take xAI’s first products to market, build advanced infrastructure, and accelerate the research and development of future technologies,” xAI said in a May 26 statement.
For its part, Nvidia continues to dominate the stock market. The Santa Clara, California-based company has a massive market cap of nearly $3 trillion and closed at $1,164.37 per share on June 4.
Modine Manufacturing Co. (MOD)
YTD return: 55.9%
Like Nvidia, this Racine, Wisconsin-based thermal management products and solutions provider is a business relationship for Tesla rather than a startup of Musk’s, but it is a direct beneficiary of the electric vehicle movement and Tesla’s success. Modine has supplied battery chilling units for Tesla’s Model S since the luxury car’s launch in 2012.
MOD shares are in overdrive right now, returning about 213% in the past year, although growth has slowed in the past month, with the stock down 8%. DA Davidson isn’t too concerned about the hiccup, as it recently maintained its “buy” rating and raised its target price to $120 from $110. MOD closed at $93.05 per share on June 4.
Bitcoin (BTC)
YTD return: 70.4%
Original cryptocurrency Bitcoin hit the $70,000 level on June 4 (after trading as high as $74,000 in late March) thanks to robust inflows into crypto exchange-traded funds, or ETFs, and the new spot Bitcoin ETFs in particular.
Tesla’s selloff of 75% of its BTC holdings in July 2022 made headlines, but Musk has generally spoken enthusiastically about cryptocurrencies over the past several years, with a particular affection for Dogecoin (DOGE). In an April 2019 tweet, Musk said, “Dogecoin might be my fav cryptocurrency. It’s pretty cool.” In February 2021, Tesla made a $1.5 billion investment in Bitcoin while announcing the EV giant would accept BTC as payment from its customers. The announcement sent the price of Bitcoin up 15.4%. However, the company has flipped its position on accepting BTC several times since.
Recently, a rumor spread that Musk discussed cryptocurrencies with former President Donald Trump, making global headlines. Musk squelched that rumor on X, but with a significant caveat: “Pretty sure I’ve never discussed crypto with Trump, although I am generally in favor of things that shift power from government to the people, which crypto can do,” Musk said in a May 30 post.
Starlink
A sizable buzz has surrounded Starlink, Musk’s celebrated satellite internet company, about its going public, but Musk has denied any initial public offering as recently as late 2023. Wall Street insiders say Starlink is a prime IPO candidate with an estimated value of $150 billion and no lack of interest from investors who want a front-row seat. Musk, who knows how to trigger a headline, could likely maneuver Starlink to a prime liftoff position if he chooses to do so.
Industry analysts certainly think so. “I believe (Musk) will take Starlink out, not next year, but maybe 2025, 2026,” Justus Parmar, founder and CEO of venture capital firm Fortuna Investments, said in November. “He’s waiting for a level of stability or predictability in revenue.”
Musk has, in fact, indicated that he will take Starlink public once the company’s revenues and cash flow stabilize. The company cleared breakeven cash flow status in the second half of 2023.
When and if Starlink goes public, the IPO would be an “extremely strong catalyst for everything space-related,” Parmar added.
The One That Got Away — Or Was It the Other Way Around?
Apple Inc. (AAPL)
YTD return:
1.2%
Elon Musk’s relationship with Apple — call it an emotional investment — could be more aspirational than transactional. For starters, Apple has long been rumored to be interested in buying Tesla, and Musk confirmed an attempt to push the deal through on his end via a Dec. 22, 2020, tweet. “During the darkest days of the Model 3 program, I reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla (for 1/10 of our current value),” Musk posted. “He refused to take the meeting.”
If recent comments about Apple are any indication, Musk hasn’t let that rejection go. In the first week of May, after Apple released the new iPad Air 6 and iPad Pro models, Musk noted that Apple’s $30 billion research and development budget didn’t seem to focus much on the latest iPads. “That’s a lot of money. Maybe they have some secret products in development?” Musk commented on May 7 via X.
Apple certainly has the deep pockets to ignore Musk’s barbs — it has a $3 trillion market cap and is expected to announce a big step into the artificial intelligence realm on June 10, as CEO Cook takes the stage at the Cupertino, California-based company’s Worldwide Developers Conference. Wedbush Securities said Cook’s speech amounts to a “Gettysburg Address” on Apple’s AI plans, so investors will be watching with interest. It could light a fire under the company’s stock, which has underperformed so far in 2024.
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6 Elon Musk Investments That Are Good Bets Today originally appeared on usnews.com
