When Amazon CEO Jeff Bezos became the world’s richest person in 2017, Elon Musk was number 21. A respectable number, maybe, but barely under Bezos’ radar.

Four years later, the Tesla and SpaceX CEO has stolen Bezos’ title. Musk is now worth $188 billion, $1 billion more than Jeff Bezos – an interesting development at a time when e-commerce has soared due to COVID-19, and leaves one to wonder how it happened.  

Musk has been able to lay claim to the title thanks to Tesla’s incredible performance. In the past year, Tesla’s stock value has soared 700%. A Tesla share that was worth USD $70 in January 2020 is sitting around USD $826 as at the 19th January 2021 with a market cap of  $830 billion.

Although Tesla’s 5-for-1 stock split in August 2020 has played a role in its skyrocketing value, it does have a basis in reality: Tesla has had 5 consecutive profitable quarters. 

Tesla is also likely to benefit further from Joe Biden’s election. Biden plans to create 1 million jobs in the US auto industry and invest in electric vehicle infrastructure. 

Meanwhile, Amazon’s growth was quite modest in 2020 compared to Tesla. At the start of 2020, Amazon shares were worth USD $1,800. As at the 19th January 2021, they sit at USD $3,104.25. 

This slower growth could be due to multiple factors such as Amazon potentially reaching its growth potential and reduced investor confidence due to controversies surrounding workers rights violations, political spats and privacy and antitrust concerns. Whatever the reason, the real test for Amazon will be in 2021 as the COVID-19 vaccinations roll out and people begin to return to physical stores. 

Although 2020 was a year like no other for both Amazon and Tesla, the real test will be 2021. While Amazon will have to deal with COVID-19 vaccinations encouraging a return to physical stores, Tesla’s position as an unlikely underdog is strengthening with growing political and investor support.

On the 29th January Reach is joined by Joel Fleming, Portfolio Manager at Yarra Capital, for our monthly ‘Meet The Fund Manager’ webcast. If you would like to attend the session and have an opportunity to ask Joel questions live, you can book here.

‘Meet the Fund Manager’ is a monthly webcast series which gives you direct access to prominent fund managers who share their “Insider” views on their top stock picks that they think have the greatest upside.

Sources:

• Amazon is getting too big and the government is talking about it
• My Love-Hate Relationship With Amazon Stock
• Tesla CEO Elon Musk beats Amazon’s Jeff Bezos to become world’s richest person
• Amazon e-commerce sales soar amid COVID-19
• Tesla is now worth more than Facebook
• Tesla vs Amazon stocks, the performance in 2020
• Yahoo Finance – Tesla stock price
• Amazon’s Growth Could Slow Dramatically — and Soon
• Amazon’s inevitable missteps becoming a problem for its products, services