Late last month, the New York Times wrote an article about how Elon Musk is broke. ?About four months ago, I ran out of cash,? said Elon Musk, co-founder of PayPal and the head of Tesla Motors.
Musk made about $200 million when PayPal was sold to eBay. And Tesla Motors Inc. (NASDAQ:TSLA) raised about $465 million from the Energy Department in the form of low-interest loans.
Musk said that his account is less than empty because he spent his last cent in his businesses and is now living off the loans of his wealthy friends. Making matters worse, he is the middle of a divorce with his wife Justine Musk because he ran off with actress Talulah Riley.
Justine wants the house, alimony, child support, and $6 million in cash. She also wants partial ownership in Tesla Motors and Elon’s stake in rocket company SpaceX.
Essentially Musk was having liquidity issues, but he could have borrowed money from friends or rushed a private stock sale. He decided not to because he wanted to hold on to his equity in Tesla, which just had an initial public offering (IPO). “My assets are huge,” said Musk with a laugh. Elon was required to hold on to at least 65% of Tesla as part of the loan agreement from the Energy Department too.
Musk did not make his initial fortune from PayPal. He also started a dot-com publishing business called Zip2 that he sold for $300 million. SpaceX, another company founded by Musk has a $1.6 billion contract with NASA, which is being phased out, but SpaceX did complete a successful launch of Falcon 9 at Cape Canaveral, Florida.
Now that Tesla is a public company, it is estimated that Elon Musk made at least $24 million from the IPO. Tesla is the first automotive company to have an IPO since 1956, which is when Ford went public. Tesla set the price at $17 per share and Musk sold 1.42 million shares to underwriters.
Tesla builds electric cars (such as the $109,000 Roadster) that are often bought by celebrities and other wealthy customers.