PROJECT SYNDICATE: Musk Has Made Tesla a Meme Stock
& here is the Project Syndicate-edited version of my thoughts on how Tesla needs to replace Elon Musk with its very own Tim Cook pronto. I blame the $60 billion “compensation” package…
Although Tesla appears to be wildly overvalued compared to rival automakers, its shareholders are betting that they can sell their holdings to a greater fool in the near future, and Elon Musk is eagerly indulging their speculative exuberance. None of it bodes well for company’s workers, suppliers, and other customers.
BERKELEY—From the standpoint of America and the world, Tesla is a historically important technology-generating enterprise—the tip of the spear in the transition away from internal-combustion-engine vehicles. From the standpoint of long-term shareholders, it has the potential to be a sustainable profit-making enterprise. From the standpoint of its suppliers, employees, and customers, it is a source of income and production.
And from the standpoint of Wall Street speculators, it is a bouncing ball in a roulette wheel: a tech-bubble casino play.
In early 2018, Tesla’s board of directors and shareholders approved a pay package for CEO Elon Musk granting him 12 tranches of stock options, each equal to about 1% of the company’s total equity, valued fully at some $55 billion. The first tranche would vest if Tesla’s market capitalization surpassed $100 billion, and each successive tranche would vest when it rose another $50 billion (provided that the company also met various revenue and cash-flow targets).
OVER AT PROJECT SYNDICATE: <https://www.project-syndicate.org/commentary/elon-musk-tesla-meme-stock-by-j-bradford-delong-2024-05>