Tesla (TSLA) CEO Elon Musk has now received access to the first of 12 potential stock option awards from his extensive 2018 compensation plan- and thanks to the stock’s recent rally, these shares are now worth a whopping $775M.
To receive his stock options, the company’s market cap had to stay at $100B or more on a 30-day and six-month moving average, alongside trailing four-quarter revenue of $20B or EBITDA of $1.5B.
Musk can now purchase 1.7M Tesla shares at $350.02 each, or $591M total. Based on Thursday’s closing price, these shares now have a total value of about $775M. Of course, the actual profit Musk makes will depend on whether he exercises the option, and when he decides to sell his shares.
Tesla shareholder Richard Tornetta recently sued Tesla’s board, claiming that it breached its fiduciary duty by awarding Musk excessive compensation. The judge ruled in 2019 that the board must now defend Musk’s compensation package, writing: “Plaintiff has well pled, however, that the board level review was not divorced from Musk’s influence.”
Indeed, Tesla stock has almost doubled recently, gaining 93% on a year-to-date basis. And according to Wedbush analyst Daniel Ives, the electric vehicle maker is currently ‘turning a corner’ in terms of both demand and production. Although he reiterated his hold rating on the stock, Ives boosted his TSLA price target over 30% to $800- which is now in-line with the stock’s current share price.
“While Tesla (and every other auto manufacturer) is navigating this unprecedented COVID-19 environment, the company took a major step forward around fulfilling demand and production concerns with the Fremont artery now up and running after the Musk vs. Alameda County stand-off got resolved,” Ives said.
“While 2Q delivery numbers remain in flux due to a host of logistical issues as well as overall lockdown conditions now starting to ease across the US and Europe, it appears underlying demand for Model 3 in China is strong with a solid May and June likely in the cards and clear momentum heading into 2H” the analyst continued.
Overall, Tesla scores a cautious Hold consensus from the Street, with analysts concerned the stock has rallied too far, too fast. Indeed the $620 average analyst price target indicates 23% downside potential from current levels. (See Tesla stock analysis on TipRanks).
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