Elon Musk is undoubtedly the face of Tesla. Many may not know however that it’s a company in which he didn’t start himself. He came on board after it was already incorporated by the two founding businessmen. He became the Chief Executive Officer in 2008 after one of the founding members was ousted. So, does Elon Musk own Tesla?
No – though he does own part of it. Tesla is not owned by one particular person or corporation. It is a publicly traded company and therefore has numerous shares in which anyone can purchase and be a part-owner. Musk holds more shares than any other individual or institution, at 38 million, with about another 20 million on the way.
Being the majority shareholder, Musk’s shares have him owning over 19% of the overall company. The second-highest individual shareholder is Jeffery Straubel, the remaining founder of Tesla and he has just over 306,000 shares, which is less than 1% of what Musk owns. So yes, Elon Musk owns Tesla, he’s just not the only one.
Publicly Traded Companies
So, what is the difference between a private company and a publicly traded one? And how does a company go from being private to become public?
For the sake of this article, we’re going to talk in general terms, but note that each country has a system and legalities around public companies.
A publicly listed company is one in which a corporation has decided to split into shares and make those shares available to the public, most often through a stock exchange, to buy and sell freely as they choose.
Why would a corporation want to do that? Well, they might have to due to state laws. Other reasons why are there is the potential to make more money and divide any debts. Besides, offering shares to employees keeps them vested in the company and they are more likely to stay.
There are downsides to being a publicly traded company as well, such as numerous audits. And one area can straddle the pro and con columns, and that is publicly released information. The law requires much more transparency to public companies. This is good in that it’s easier to trace, better for audits, and can help secure investments. However, some companies may not want all of that information just floating out there for anyone to access.
As with many public companies, Tesla has several individual, and institutional, holders. This means that people themselves hold shares, such as Elon Musk, and institutions such as J.P. Morgan. Generally, because institutions can afford more, they tend to hold the most shares. This isn’t the case with Tesla, Elon Musk owns more shares than any other individual or institution. We mentioned earlier that Jeffery Straubel is the number two individual shareholder, however, some institutions hold more shares in Tesla than he does.
The number of available shares is continuously changing due to buying and selling on the daily stock exchange. Tesla can also decide to add more shares at certain points throughout the year. You may be thinking that that would then dilute the shares that are currently out there, and making them less valuable, thus current shareholders would lose money.
That’s another one of those yes and no questions. Technically the moment the additional shares are made available the shares already owned would have a bit of a dip in value, so you wouldn’t want to sell at that particular time, however, due to the popularity increases, the value would increase thus providing enough of a balance that the pre-owned shares would be worth about the same.
Elon Musk can be considered a serial shareholder as he is involved in several companies and not just Tesla. He doesn’t view himself as an investor, however, as he is fully involved, in one way or another, with each of the companies in which he is a shareholder. This is how he gets paid as he does not collect an annual salary from any of his companies, it’s all done through stocks.