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How the hell did the board vote yes for this???
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This is what scares me.
BillOfRights
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One of several things
This has been my thought. Why would the company approve this? Is the brand of Tesla still that tied to Musk? The car sales have falter because of Musk. I know they make more money on batteries and satellites than cars but those are not tied to a brand personality or so I wouldn't think. All I can figure is Musk has some sort of emerging technology legally tied to him or he has proof that large government contracts are solely tied to him. That is to say he is extorting the board.
How rich and connected are the board members? Is it possible they are able to gain a business advantage by being on the board of a company able to do that? Cui bono ain't necessarily just about Musk.
I don't have any specific knowledge of the makeup of Tesla's board, but often times the board members are essentially puppets of the CEO, particularly in the case of a company like Tesla that is so controlled by the majority owner. These folks just want to keep their cushy board seats and will rubber stamp anything the CEO wants to keep them.
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They had no choice. Tesla is so overvalued (PE Ratio is nearly 300x!!) that it is essentially a meme stock tied to Musk’s popularity right now. There is a much smaller but real company at the core based on current assets and diminishing performance, but if Musk walks, the meme stock craters.
There are a lot of performance milestones on this package that would mean vastly growing the market cap and to some extent getting the company’s actual value to meet or exceed its current meme stock value based on business metrics.
To get the total value of this contract, he has to meet all dozen milestones, including getting the market cap from $1.5 trillion to $8.5 trillion over the next decade. Each month f the steps unlocks another 1% of Tesla stock but they are increasingly tough to hit … and the stock would be locked up (he couldn’t sell it) for up to a decade.
—> https://www.wsj.com/business/autos/...3?st=mQqjfy&reflink=desktopwebshare_permalink
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They had no choice. Tesla is so overvalued (PE Ratio is nearly 300x!!) that it is essentially a meme stock tied to Musk’s popularity right now. There is a much smaller but real company at the core based on current assets and diminishing performance, but if Musk walks, the meme stock craters.
There are a lot of performance milestones on this package that would mean vastly growing the market cap and to some extent getting the company’s actual value to meet or exceed its current meme stock value based on business metrics.
To get the total value of this contract, he has to meet all dozen milestones, including getting the market cap from $1.5 trillion to $8.5 trillion over the next decade. Each month f the steps unlocks another 1% of Tesla stock but they are increasingly tough to hit … and the stock would be locked up (he couldn’t sell it) for up to a decade.
Have they figured out how to actually make money from AI yet? Kinda like in the first decade of Amazon, there really weren't any profits but the stock zoomed up based on speculation about the potential future profits. Seem like Amazon had an unreal PE ratio back then, like over 300 or something.
sunnyheel
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The scam is in the plan.
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depends on structure but generally, no, not tax free — but these are restricted units, so the ordinary income tax won’t be due until they fully vest (when the shares are unlocked) — in 7.5 to 10 years. Then he would owe capital gains on the value in excess of the vesting price when he sells the shares.
1moretimeagain
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IMO $8.5 trillion market cap seems like the toughest one to meet.
How much are they paid by Tesla? SpaceX? Boring?
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Pull back 50-75 years and these interest rates are kinda normal but interest had been so low for so long that it feels horrible now. When my parents bought the house my mom still lives in backing the 1970s, their interest rate was over 16%. I remember them talking about the relief of refinancing down to 10%. But they used equity in that little house to get three kids through college and then to renovate the house itself (twice). My mom is 80 and still has a (small) house payment on it from the second, more extensive (and really well done) renovation 20 years ago. But the equity in that modest 1970s split level home made a huge difference in their ability to raise three kids on modest incomes.
But I don’t know if that model works for modern Americans. It meant staying in one small town their entire lives.
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Your mom is 6 years older than me, but we shared experience. When I bought my first home in 1982 I had a 12.5% variable rate mortgage that sucked up 50% of my net income. In 1984 I was delighted to be able to refinance with an 11% 30 year fixed rate mortgage.
And of course back then we also had to contend with a double digit inflation rate.
And yes, folks got used to 2% inflation and 4% mortgage rates in Trump's 1st term but it was not because we had a "great economy "; It was because we were teetering on recession throughout his term.
Today, the top 10% are making out like bandits in the stock market, enjoying juicy tax cuts, and celebrating with Trump at his Great Gatsby party in Mar-A-Lago while the working and middle class American families are trying to find ways to meet their monthly bills.
Thanks Biden
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You left out a third possible outcome
We see a 20% correction in the stock market and continued massive white collar layoffs...
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