By
Bena Ilyas
April 23rd, 2024
In the past seven trading sessions, Tesla stock has jumped by 40%. Yesterday, Tesla stock closed at $1,365.88 per share, in the pre-market today, it is 1.66% up.
Tesla Inc (NASDAQ: TSLA) CEO Elon Musk is floating on a cloud: due to Tesla stock’s take-off, he has not only topped several billionaires including MacKenzie Bezos and Charles Koch on the rich list but also come closer to a big payout potentially worth $1.8 billion.
Back in 2018, Elon Musk received Tesla’s performance-based compensation package of 20.3 million stock option awards divided into 12 tranches. In other words, he received options that vest based on Tesla’s market cap and milestones for revenue and profit growth instead of salary or other cash bonuses. Each of Musk’s tranches gives him the option to buy 1.69 million Tesla shares at $350.02 each.
Previously, Tesla hit three targets that allow Musk to exercise the options. They included $100 billion in average market cap in a 30-day period, $20 billion revenue, and $1.5 billion in earnings before adjustments.
Payout Series to Elon Musk
Musk’s first tranche was worth about $700 million in May when it vested. However, since then, the company’s value has significantly jumped. Better-than-anticipated second-quarter Tesla deliveries and its expansion in different markets have led to a surge of Tesla stock. As a result, Elon Musk’s potential fortune has increased. With the current Tesla stock’s price, Elon Musk would theoretically be able to sell those shares from the May tranche as well as the one upcoming and have a total $3.5 billion payout, or $1.8 billion for each tranche.
If Tesla’s six-month average market capitalization reaches $150 billion, the vesting of the second tranche of options will allow Elon Musk to buy Tesla stock as part of his 2018 pay package.
Notably, a complete payout of all Musk’s tranches would surpass anything received by any previous executive in the US. It would potentially make up $55.8 billion on the condition that further shares are not issued.
Tesla Stock Has Room for Rising
In the past year, Tesla stock’s price has grown by 400%. Its current level is at 69 times the projections for 2022. In the past seven trading sessions, Tesla stock has jumped by 40%. On July 7, it hit a new record of $1389.86 per share. Yesterday, Tesla stock closed at $1,365.88 per share, in the pre-market today, it is 1.66% up.
Looking at Tesla stock’s surge against the global economic loss, analysts revised their price target for it. For example, the JMP Securities analyst Joseph Osha has pushed the price target of a share from $1,050 to $1,500. American mutual fund manager Ronald Baron believes Tesla stock has plenty of room to continue rising in the next five years. In particular, he predicts a $2,000 or $3,000 price for Tesla stock.