COVID-19 Accelerates the Rise in Wealth of Elon Musk, Jeff Bezos

By Jemima McEvoy Sunday, September 20, 2020

The majority of the US population has struggled through the pandemic. Millions upon millions are jobless and seeking unemployment. Small business owners are suffering. Then, there are Elon Musk and Jeff Bezos. A report from the Institute for Policy Studies found Bezos has been the biggest beneficiary of the pandemic in terms of net worth increase since March. Musk has seen the highest percentage gains in his personal fortune.

Jeff Bezos

Bezos’s fortune has nearly doubled through the pandemic, jumping from $97 billion during pre-pandemic lows in March. Now, the wealthiest person in the US by a mile, Jeff Bezos is worth $183.8 billion, according to Forbes’s 2020 ranking released last week. At one point, this number surpassed $200 billion, meaning his wealth was the equivalent of 1% of the US’s GDP. There’s even speculation that Bezos may become the world’s first trillionaire in the not-so-distant future. The second-highest valued person, Microsoft founder Bill Gates, is over $70 billion behind Bezos.

So, why has Bezos been doing so well? Mainly because his company has proven integral during the COVID-19 pandemic. With people largely unable to leave their homes, Amazon has experienced a tremendous surge in sales over the past few months, even (during peaks) releasing warnings to its customers to only buy essential products to avoid contributing to a delivery backlog.

“We typically want to sell as much as we can, but our entire network is so full right now with just hand sanitizers and toilet paper that we don’t have the capacity to serve other demand,” an Amazon employee told the Wall Street Journal in April.

Even as the company attempted to slow down sales, orders swarmed the online marketplace. Last quarter, Amazon reported a whopping $5.2 billion in net profit, dwarfing Wall Street’s already-high expectations, despite warnings to investors that it planned to spend its profit on coronavirus-related initiatives. As Amazon raked in the profits, so did Bezos, whose wealth mostly comes from his stock in Amazon. According to 2020 SEC filings, Bezos has an 11% stake in Amazon. However, he also has other major assets, including The Washington Post and a rival to Musk’s SpaceX company, Blue Origin, which may have, to some degree, contributed to his rising wealth. Bezos has come a long way since when he founded Amazon — then an online bookstore — in his Seattle garage in 1994.

Elon Musk

Bezos is not alone in watching his personal value balloon during the pandemic. Worth $24.6 billion pre-pandemic, Musk saw a 228% value increase to $73.1 billion as of August 13. Since then, his wealth has fluctuated — hitting highs of over $100 billion and then settling around $68 billion (his current net worth, according to Forbes).

The size of Musk’s gains is perhaps slightly more surprising than Bezos’s, as Amazon’s role in the pandemic has been clear and critical. Comparatively, Musk’s companies, carmaker Tesla and space exploration venture SpaceX, have played a lesser role, but have managed to grow nonetheless. In fact, most of Musk’s added value stems from Tesla, whose stock has increased more than five-fold this year, making it the world’s highest-valued car company. “I don’t even know if it is a stock,” said CNBC’s Jim Cramer of Tesla’s vertical trajectory. “It is something else entirely, like a new species discovered in the wild.”

Tesla’s success, even amid the pandemic, highlights how separated equity gains are from our current economic situation and future earnings projections. As explained by Russ Mitchell of the Los Angeles Times, “Prices are supported by the infusion of trillions of dollars of new money into the economy and by the steady growth of passive investing, in which money automatically flows in from 401(k) contributions and is put to work buying stocks, pushing prices higher.”

All this has been compounded by Musk’s storytelling ability. As the key Tesla spokesperson, he has successfully gained the country’s confidence and persuaded the public of his company’s high value and upward growth. Musk benefits heavily from his own success in selling Tesla as his compensation package is almost entirely dependent on the carmaker’s share price. Thus, as Tesla’s stock has multiplied, so has Musk’s personal value.

It’s worth noting that Musk has promised to give at least half of his fortune to charity.

Growing Inequality and Working Solutions

While Bezos and Musk have both watched their personal wealth soar, the rest of the country has seen growing inequality amid the pandemic. Billionaires have seen their net worth swell; however, US household wealth during the first quarter dropped by 5.6%, which is the largest drop since the 1950s. More than half of US households lost income this year.

Clearly, the pandemic has not served everyone equally, but Bezos and Musk have both set out to relieve some of the economic imbalance by creating jobs. For instance, Amazon has hired 175,000 new workers amid the COVID-19 pandemic, and plans to hire 33,000 more in the upcoming months. Meanwhile, Musk aims to increase his Tesla workforce from over 48,000 workers to 65,000 by the end of 2020.

About the Author

Headshot of Jemima McEvoy

Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.

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