Even if you think all of these intangibles are just pie-in-the-sky silliness, Tesla has about $3.5 billion in deferred revenue from FSD sales. That is actual money that they’ve collected from customers, but they can’t recognize until FSD improves further. I’m not entirely sure what their thresholds are, but the FSD beta from last year allowed them to recognize several hundred million of that, and presumably they can’t recognize all of it until they actually achieve their stated goals.
Since becoming a public company in 2010, Tesla’s total net profit was ~USD30b. In the past 10 years, after the big start up costs and establishing a new market for EV’s, yadda yadda, same cite it was more like USD25b.
So, Elon is getting an additional award of more or less twice the total profit of the lifetime of the company. That only he can deliver.
Maybe. 
Doesn’t pass the smell test for me. YMMV
While true to some extent, note that the options package was tied to actual company performance. Here is the plan from 2018, which is the same one that was just reinstated:
Note that the full amount requires both driving up the stock price (of which Musk got ~10%) and some combination of revenue and EBITDA targets.
Maybe you can meme the stock price a bit. But revenue is harder, and EBITDA harder yet, especially on an annual basis (yeah, you can sometimes pump individual quarters, but that’s hard to keep up for a year). But Musk easily beat the EBITDA target, achieving $16.6B in 2023 vs. the $14B milestone. He would have gotten absolutely nothing without improving the core financials.
In the back of my mind is skepticism about Tesla’s self driving car efforts relative to Waymo. Electric cars are easier to produce than internal combustion engines: I expect the legacy car industry to get crushed over the next couple of decades. Musk may have mastered the art of the sale, but Waymo has been quietly hitting benchmarks for years:
There’s always Mars though.
That said, for one guy to have catapulted 3 huge companies - Paypal, Tesla, and Space-X is truly incredible: Musk is a man of high capitalist accomplishment. He’s also made a hash of Twitter which lets face it is probably a win for humanity, setting aside the promotion of fascism and misinformation. My take is that the emperor isn’t all there, but you can’t argue with the opinions of multitudes.
Well, one problem is that you will never be able to buy a Waymo. It will only ever be a robotaxi. Whereas FSD, while imperfect, is driving me around today with minimal interventions (typically only at the beginning and end of a journey, which Waymo doesn’t handle at all).
But that’s sorta besides the point. Tesla makes good revenue off their FSD sales which is not currently being fully recognized. It will be once FSD improves further, independent of how close it is to Waymo. The money isn’t hypothetical–it’s already been collected. It just doesn’t currently (fully) factor into their income.
Let me address a few things in case my point isn’t crystal clear (with respect to this event specifically)
Suppose, as @Stranger_On_A_Train suggested, that Robyn Denholm and her crew are just stooges that do whatever Musk asks. Well, that might not be great in terms of overall governance, but it has no relevance for the compensation package.
You can see the compensation package in the graphic I posted above. Even a 4th grader could figure out how it works and determine the conditions for success. Whatever the Tesla board might have said about it, it still went through a shareholder vote which was wildly successful. Any shareholder who could figure out how to vote could figure out how the plan worked.
But perhaps the shareholder vote was unduly influenced by a small number of parties, as @wolfpup suggested. Well, it’s not that either, because Musk and crew recused themselves, nor were there any giant hedge funds or otherwise that could easily override the remaining investors. It was almost entirely retail investors and highly accountable institutions like Vanguard or various pension plans.
But maybe the retail investors got steamrolled anyway. No, it’s not that–not only does Tesla have a fairly high proportion of retail investors compared to the rest of the market, but they also voted in large numbers. And they were very much in favor of the plan in the first place.
Ok, then–perhaps the court was still right that Tesla misled investors somehow (although it’s not clear how, again because the nature of the plan was crystal clear). Well, it was put again to the vote and still passed with flying colors.
Did the retail investors get steamrolled this time? No–in fact there was a giant “get out the vote” effort to convince retail investors to vote their shares. And again they did in large numbers. Getting retail investors to vote on anything is nigh-impossible most of the time. Not here.
But what about the small number of shareholders that still disagree? Well, they got outvoted so there’s not much reason to care. Still, Tesla shares were up today and so they all have an opportunity to exit with a nice profit.
I think self drive is where the value lies. Actual, reliable, “robot chauffeur” self drive is a game changer.
Tesla selling cars is like Amazon selling books as a way to fund its actual purpose of becoming the premier worldwide marketplace for almost anything. It’s like Netflix mailing DVDs as a way to fund its streaming business.
Tesla cannot possibly be worth what it is by selling cars, but it CAN be worth that much if it is the premier service provider for the self drive capabilities of cars around the world. If Musk is the man to make that happen (this is a really really big IF), he’s worth the money.
???
Even after yesterday’s move, TSLA’s price is still lower than it has been (with brief exceptions) in 44 months. That means pretty much anybody who bought in nearly the last four years would lose money if they sell today.
But Elmo isn’t going to make this happen. If it happens, the real heroes will be the engineers and researchers, not only those within Tesla but probably many others. IMHO the normal rules that allow a publicly traded business to spend its own money in any way it sees fit should be suspended when absolutely obscene amounts like $55 billion are being used to feed the insatiable greed of just one man. If advancing FSD is the goal, re-invest that money in R&D. If not, distribute it to shareholders as dividends. Or do both. But just giving it to Elmo is obscene.
Yes indeed. But I feel like the ‘IF’ in their minds is probably a “WHEN”, because they’ve drunk the Musk kool-aid.
The thing to remember is that Tesla already has competitors in the self-driving car space; their competition may not have a EV company with an Apple-like “cool” reputation, but ultimately that doesn’t matter, because GM or Honda or one of the other big boys will simply buy or license the first competitor that does it successfully, and throw out a competitor to Tesla’s self-driving car.
I feel like it’s a big gamble; laws and regulations haven’t caught up to the idea of self-driving cars, and the first mover in that space is going to pave the way through being named in lawsuits when people get hurt or killed.
And that’s what makes Musk’s scheme so stupidly greedy. If the company paid out dividends, Musk would get a lot of money because he owns a lot of stock.
Just going to point out that stock values based on the inherent value of a corporation are undesirable. The value of stock is based on what it trades for. Otherwise we’d see shareholders insisting on higher dividends to gain a return on their investment, which is actually money from the till. We’d also see much lower stock and stagnant stock prices and a lot of us would be retiring with far fewer assets.
There have already been lawsuits against Tesla related to FSD. One was a software engineer who was playing a game on his phone when his car went into a ditch while getting on to a freeway on-ramp that was partially under construction. He had previously reported that area as a problem.
So, this guy reports that his self driving car has a problem with a particular on ramp, then, when his self driving car approaches the on ramp, he climbs into the back seat to make sandwiches?
Why am I never selected for these juries?
Worse, cars known not to be fully autonomous (though you’d never know from Elmo’s blather) which requires drivers to get around (granted, very easy to do) the safety features set up to prevent them from not being in active control at all times.
I vote to launch Tesla and all the people like this clown into space and let the FSM sort it out.
If I could give you a 10x return in 10 years on your investment, would you give me 10% at that point? You don’t need to pay me anything unless I succeed.
Me? I’d put a cap on it - the lesser of 10% and whatever upper limit I’d think was reasonable.
But if they didn’t and worse - they approved it again when the numbers came out so big, that’s none of my concern.
There’s a legitimate argument about if such huge potentially uncapped compensation packages are good for investors or for society, but that’s a separate debate.
Who is they here? The Elon fan boys feel that way obviously but they aren’t the ones who let him get away with this heist. That was the professional shareholders who own most Tesla stock in behalf of funds, etc. They have not (or should not have) duink the Musk kool-aid.
You’re assuming that the shareholders are predominantly investors who are looking at this in a dispassionate and neutral way. I’m not entirely so sure that’s the case; I bet there’s a big dose of “Musk did something to be a billionaire, and to grow his fortune, so let’s hope he’s still got it with Tesla.” going on.
I don’t feel like this is a wholly rational decision on the part of the shareholders, and that’s what I’m shorthanding as the “Musk kool-aid”.
I mean they absolutely should dispassionate and neutral about it. We are talking about the people who run the funds that represent a massive portion of our economy. We (as a society) let them do that (getting paid huge piles of the cash in the process) allegedly because they are such amazing skilled dispassionate readers of the market.
The facts of this case indicate that in fact they are. It. And that’s a huge problem, as demonstrated we clearly can’t just let the market figure it out and it will come to the right solution.