Ever looked at those headlines saying Elon Musk is worth $700 billion and wondered where that cash actually lives? Honestly, it’s not in a vault. He doesn’t have a Scrooge McDuck swimming pool filled with gold coins. Most people think he just has a massive salary, but the reality is way stranger.
Musk is "cash poor" by billionaire standards. Basically, his wealth is a giant mountain of paper. It’s tied up in world-changing companies that investors are obsessed with. If the stock market sneezes, he loses $20 billion in an afternoon. If a rocket lands on a boat, he’s suddenly the richest human to ever walk the Earth.
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The Mystery of the $0 Salary
You’d think the CEO of Tesla would pull in a few million a year in base pay. Nope. He takes no salary. Zero. No bonuses, either. Instead, how is elon musk rich is entirely about stock options. He made a bet with the Tesla board back in 2018: "Don’t pay me anything unless I make this company worth a trillion dollars."
People thought he was crazy. At the time, Tesla was struggling to build the Model 3 and burning through cash like a bonfire. But the bet paid off. When Tesla’s valuation skyrocketed, Musk unlocked "tranches" of stock options. This means he got the right to buy Tesla stock at a super low price from years ago, even though the current price was through the roof.
The Delaware Drama
Just recently, in December 2025, the Delaware Supreme Court actually restored his massive 2018 pay package. A lower court had previously voided it, calling the $55 billion deal "unfathomable." With that restoration, and a new 2025 pay plan approved by shareholders that could eventually be worth $1 trillion, his net worth just kept climbing.
SpaceX: The Secret Engine of Wealth
While Tesla gets all the news, SpaceX is arguably the more stable pillar of his fortune now. As of early 2026, SpaceX is valued at roughly $800 billion in private markets. Musk owns about 42% of it.
Think about that.
That stake alone is worth over $330 billion. Unlike Tesla, SpaceX isn't traded on the New York Stock Exchange. You can't just go buy a share on your phone. This makes his wealth "illiquid." He can’t easily sell it without a complex process. But with Starlink—his satellite internet business—now dominating global bandwidth, SpaceX is becoming a cash cow. There’s even talk of a massive SpaceX IPO later this year that could value the company at $1.5 trillion.
How It All Started (The Zip2 and PayPal Days)
Musk didn't start with a silver spoon, despite the rumors about emerald mines. He arrived in Canada with $2,000 in his pocket. His first real win was Zip2, an online city guide he started with his brother Kimbal. They slept in their office and showered at the YMCA to save money.
When Compaq bought Zip2 in 1999, Musk walked away with $22 million.
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Most people would retire. Musk put almost all of it into X.com, which eventually became PayPal. When eBay bought PayPal for $1.5 billion in 2002, Musk made about $180 million after taxes. Again, he didn't buy a yacht. He famously put $100 million into SpaceX, $70 million into Tesla, and $10 million into SolarCity. He was so broke afterward that he had to borrow money for rent.
The New Frontier: xAI and the Everything App
Lately, a huge chunk of his wealth growth is coming from xAI. This is his artificial intelligence company that he’s merging with X (formerly Twitter). In late 2025, xAI was raising money at a $230 billion valuation.
Wait, how is a social media site and an AI startup worth that much?
- Data: xAI uses the real-time data from X to train its models.
- Compute: Musk has built some of the world's largest supercomputers (like the Colossus cluster).
- Vertical Integration: He’s using AI to run the "everything app" vision he’s had since the 90s.
The "Cash Poor" Paradox
So, if he has all these billions, why does he say he’s cash poor? Because he doesn't sell his stock. If he sells a billion dollars of Tesla stock, he has to pay massive capital gains taxes. Plus, if the CEO starts dumping stock, other investors panic and the price drops.
Instead, he does what many ultra-rich people do: he borrows against his shares. He goes to a bank like Morgan Stanley, shows them his $700 billion in stock, and asks for a "small" loan of a few hundred million. The interest rates are low, and he doesn't have to pay income tax on a loan. That’s how he buys private jets or funds things like the X acquisition without actually "having" the cash in a checking account.
Is This Wealth Sustainable?
There are risks, obviously. Musk’s wealth is incredibly concentrated. If the federal government pulls SpaceX contracts (which total over $20 billion) or if robotaxis fail to materialize for Tesla, his net worth could crater.
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Critics like the New York Times also point out that his foundation often funds projects tied to his own companies, which some call "self-serving philanthropy." Others argue his close ties to political administrations—like his role in the second Trump administration—create a conflict of interest that could either boost or blow up his business empire.
Actionable Takeaways for the Rest of Us
You probably aren't going to launch a rocket company tomorrow, but there are a few "Musk-style" lessons that actually apply to normal investing:
- Concentrated Bets: Musk didn't get rich through a diversified 401(k). He picked a few things he believed in and went all-in. It's high risk, but it's the only way to see "escape velocity" growth.
- Incentives Over Salary: He aligned his pay with the company's success. If you can negotiate equity or performance bonuses instead of just a flat salary, your "ceiling" becomes much higher.
- Reinvesting Gains: He didn't take the PayPal money and sit on it. He rolled it into the next (riskier) thing. Compounding only works if you keep the capital at work.
Understanding how is elon musk rich requires looking past the dollar signs. It’s a story of extreme leverage, massive government contracts, and a market that prices his companies based on the future of humanity rather than just today's profits.
If you're looking to track your own net worth, start by separating your liquid assets (cash/savings) from your equity (house value/401k). Most of your wealth will always be on paper until the day you decide to sell.