How can I become CEO of Tesla
Tesla - Billion dollar bonus program for CEO Musk
The figures for the first quarter of 2021 were in line with expectations: with 184,800 units sold, this was just 4,000 more than in the fourth quarter of 2020. However, only 2,000 of Model X and S found a buyer and sales of Model 3 and Y could be bought with high discounts. Revenue rose to $ 10.74 billion, a strong year-over-year increase of 73.5% and roughly in line with expectations.
The profit was based once again on regulatory credits in the amount of US $ 518 million and trading profits from Bitcoins in the amount of US $ 101 million. Without this extra income, things wouldn't look so good, which is also reflected in the figures per share: US $ 0.93 non-GAAP and thus US $ 0.15 better than expected, but only 0 with conservative GAAP accounting. $ 39 per share, $ 0.08 less than expected. Mathematically, there would even have been a loss without the windfall income.
Meanwhile, the stock exchange, the buy side analysts and large investors as well as the 43 million followers of Elon Musk always concentrate on the positive interpretation of the company figures. Now a lot could change if the regulatory credits are no longer sold at their previous level (over US $ 1.4 billion in 2020 alone): Stelantis, the new large motor vehicle group created from the merger of PSA and Fiat, has recently announced that they would now hold enough of these emission rights themselves and that there would be no need to buy them. Fiat had previously acquired almost all of these ZEVs from Tesla.
Luck in misfortune: In China, VW is now well on the way to buying them from Tesla, as there is also a form of regulatory credits in China, i.e. quotas for battery-electric vehicles (later also for hydrogen-powered vehicles).
No salary but option rights as a bonus program for CEO Musk
Meanwhile, Seeking Alpha reports under the heading “Big payday for Elon Musk as Tesla CEO notches ludicrous stock award” that Elon Musk received a very ambitious bonus program “CEO Performance Award” in 2018 through its management board and the supervisory board but also the shareholders (excluding Commitment). I remember that there was criticism from various quarters, but it was waved through in terms of voting rights. These are so-called milestone payments, i.e. a form of gratuity if certain company goals (sales figures, earnings figures, stock market valuation) are achieved.
Six of these twelve defined goals have now been achieved, and according to a recently published 10-K filing, Elon Musk is said to already have option rights that entitle him to purchase 50.66 million shares at an average price of US $ 70.01 each. The share price is currently $ 660. In terms of books, Musk now has over US $ 30 billion more in assets, even if he first has to convert the option rights and then there is a five-year holding period.
At the same time, a further 40 million shares could go to Musk via option rights, as Musk receives these pro rata for each increase in the market value in US $ 50 billion steps. It started at US $ 100 billion, today the valuation is over US $ 650 billion (excluding the own share that Musk holds and which is said to be 30%).
For me there are a lot of questions, starting with the possible dilution in the case of the exercise of the options to tax questions, whether there could be valuation pitfalls, according to which taxes may be due, which Elon Musk and / or even Tesla may be entitled to are to be borne (without obligation). The latter arises for me from the situation at Plug Power, where the issue of option rights - in this case to major customers - led to book entries (non cash charges). This may be different with employee options, but for me a negative as well as a potential danger. Recently, a law firm in the US accepted Elon Musk's bonus program and took legal action against it, which supports my thesis.
Further critical tones can be heard from China because of the data transmission of the vehicle locations / movement profiles. The military and public authorities are no longer allowed to buy a Tesla. There are even regulations in individual regions / cities. Negative news continues in Grünheide, as Tesla is probably on the road without the necessary permits, the water problem has not yet been clarified and the start of production does not appear to be possible until the final quarter. Last but not least, the US Federal Reserve wants to examine which regulations should be applied to artificial currencies such as Bitcoins for companies. Tesla has probably already had a profit of US $ 1 billion with a stake of US $ 1.5 billion.
My conclusion is and remains that the stock market valuation of over US $ 600 billion is completely exaggerated and I am not convinced by any argument that justifies it. Tesla fans like to argue that it is not a car company but a high-tech / software company (autonomous driving & Co.), but then money would have to be earned in this area. I'll go further: Anyone who has earned well in Tesla and has high book profits should perhaps cash in.
Every investor must always be aware of his own risk assessment when investing in stocks and also consider a sensible risk diversification. The BZ companies and stocks mentioned here are from the small and mid-cap segment, i. that is, they are not standard values and their volatility is also much higher. This report is not a buy recommendation - without commitment. All information is based on publicly available sources and, as far as the assessment is concerned, only represents the personal opinion of the author, who focuses on a medium and long-term evaluation and not on short-term profit. The author may own the stocks presented here.
Author: Sven Jösting, May 06, 2021
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