CLOSINGS: View Closings

Tesla won't pay Elon Musk unless ...

Elon Musk has a huge new incentive to make Tesla a bigger player in the car industry.Tesla said Tuesday that M...

Posted: Jan 23, 2018 2:39 PM
Updated: Jan 23, 2018 2:39 PM

Elon Musk has a huge new incentive to make Tesla a bigger player in the car industry.

Tesla said Tuesday that Musk won't get paid unless the company meets ambitious financial targets over the next decade.

The goal is for the electric car company to be worth $650 billion. Its current market value is just over $60 billion.

To put in perspective just how lofty a goal that is, consider that Apple, Google owner Alphabet and Microsoft are the only three American companies that have a market value over more than $650 billion.

Amazon, led by Jeff Bezos -- the world's wealthiest person -- is just a hair below that, with a market cap of about $649 billion.

If Tesla meets all its goals, which also include revenue and adjusted profit targets, Musk will receive stock worth $55.8 billion.

He'll get a chunk of stock every time Tesla hits another milestone for market value -- first at $100 billion, then every $50 billion more after that.

Until then, Musk will do without a salary, bonus or other annual stock awards from Tesla.

But he hardly needs a paycheck. Because of his ownership stake in Tesla, his investment in SpaceX and the money he made when PayPal, a company he backed, was sold to eBay, Musk is already worth more than $22 billion, according to Forbes and Bloomberg.

So can Tesla really grow to $650 billion and make Musk even richer?

Related: Tesla stock may be the new Big Short

Bulls argue that the mass-market Model 3 car will vault the company into the upper echelon of major car companies, alongside GM, Ford, Toyota and Volkswagen.

And Tesla stock has skyrocketed more than 920% in the past five years, including a 15% gain this year.

It's probably unreasonable to expect a repeat of that growth between now and 2023. But for the sake of argument, if Tesla's stock surged 920% more in the next five years, its market value would be just under $620 billion.

Tesla skeptics have pointed out that Musk has tended to be notoriously bad at meeting deadlines, which could give larger auto companies an advantage. After all, GM's Chevrolet Bolt and Nissan's Leaf are "cheaper" electric car options.

Some analysts also worry that Tesla is spreading itself too thin. It owns SolarCity, a solar panel company co-founded by two of Musk's cousins that is developing the Powerwall battery for the home.

So Tesla is trying to disrupt the auto market and the electric grid at the same time. All while he juggles SpaceX, The Boring Company and the artificial intelligence research firm OpenAI.

Related: Should Elon Musk merge Tesla and SpaceX?

Tesla seems to recognize the risk that Musk will be distracted. As part of the pay plan, Tesla said he must stay on as either CEO or executive chairman and chief product officer. That opens up the possibility that Tesla could one day hire a new CEO.

"This ensures that Elon will continue to lead Tesla's management over the long-term while also providing the flexibility to bring in another CEO who would report to Elon at some point in the future," Tesla said in a statement.

But Tesla added that "there is no current intention for this to happen."

Tesla has been a Wall Street darling, and there's a certain cult of personality among investors about Musk. So it may be a mistake to bet against him.

But even Musk has said several times in the past few years that he thought Tesla stock was overvalued based on current sales and the lack of consistent profits.

Then again, he's also claimed Tesla could be worth $700 billion by 2025.

Click to Submit Photo

 

 

Huntsville
Overcast
56° wxIcon
Hi: 70° Lo: 59°
Feels Like: 56°
Florence
Overcast
57° wxIcon
Hi: 69° Lo: 57°
Feels Like: 57°
Fayetteville
Overcast
54° wxIcon
Hi: 69° Lo: 57°
Feels Like: 54°
Decatur
Overcast
56° wxIcon
Hi: 70° Lo: 58°
Feels Like: 56°
Scottsboro
Overcast
63° wxIcon
Hi: 73° Lo: 60°
Feels Like: 63°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Confirmed Cases: 155915

Reported Deaths: 2674
CountyConfirmedDeaths
Jefferson22988375
Mobile16788315
Tuscaloosa10235140
Montgomery9978197
Madison922894
Shelby727463
Baldwin661569
Lee651765
Marshall437249
Calhoun422461
Etowah421450
Morgan407135
Houston371734
DeKalb336029
Elmore317353
St. Clair289142
Limestone279730
Walker275593
Talladega263635
Cullman239925
Lauderdale218042
Jackson212515
Franklin203231
Autauga203030
Colbert198731
Russell19283
Blount191125
Dallas186327
Chilton185832
Coffee173211
Escambia172230
Covington171429
Dale166551
Chambers134343
Clarke133617
Pike132713
Tallapoosa131387
Marion107129
Barbour10129
Butler100240
Marengo100222
Winston91913
Geneva8617
Lawrence83732
Pickens83618
Bibb82514
Randolph82016
Hale75830
Clay73612
Washington73412
Cherokee73114
Lowndes70428
Monroe64510
Henry6436
Bullock63917
Crenshaw60330
Perry5856
Fayette56913
Wilcox56412
Conecuh56013
Cleburne5518
Macon53020
Lamar4745
Sumter47221
Choctaw39012
Greene34216
Coosa2033
Out of AL00
Unassigned00

Tennessee Coronavirus Cases

Confirmed Cases: 241513

Reported Deaths: 3076
CountyConfirmedDeaths
Shelby35564562
Davidson30982333
Knox1239889
Rutherford11502113
Hamilton11497105
Williamson689756
Sumner5900109
Wilson457756
Putnam432955
Montgomery408052
Out of TN390636
Madison371180
Sullivan354046
Bradley351923
Washington332649
Sevier329921
Blount327334
Maury316437
Unassigned28378
Robertson257741
Hamblen242248
Tipton230922
Dyer216329
Gibson212342
Hardeman185433
Coffee183223
Trousdale17587
Obion173021
Greene165451
Bedford165020
Fayette165022
Anderson164614
Dickson163619
McMinn158934
Loudon158811
Cumberland158425
Wayne15847
Lawrence155618
Jefferson152920
Weakley151125
Carter149532
Monroe141928
Warren141510
Lauderdale140417
Henderson139825
Hardin137519
Macon130725
Franklin126317
Roane12577
Haywood125327
Overton118416
Hawkins117024
White115014
Johnson11277
Carroll112525
McNairy111127
Marshall11089
Rhea108317
Cheatham103111
Cocke101412
Bledsoe10104
Lake9803
Smith97613
Campbell9759
Giles93735
Fentress88910
Lincoln8523
Crockett82920
Henry77110
Hickman76715
Marion7419
Chester72114
DeKalb71117
Decatur64811
Grainger5664
Grundy54511
Union5233
Claiborne5146
Polk49213
Jackson4465
Humphreys4344
Morgan4317
Benton4119
Cannon4042
Houston40417
Unicoi3953
Clay39413
Lewis3752
Scott3625
Sequatchie3384
Stewart3179
Meigs3066
Perry2772
Pickett2627
Moore2592
Van Buren2011
Hancock1153

Community Events