Musk's $29 bln handout makes him harder to replace
The first problem is that Tesla's 'Technoking' CEO wants 25% voting control of the company. The 2018 award would have lifted his stake over 20%. But that payday has been in legal limbo since Delaware judge Kathleen McCormick last year ordered it be rescinded due to the hopelessly conflicted process by which the board made its decision. The latest 'interim' payment, which will effectively be canceled if Tesla succeeds in getting the original reinstated, merely increases Musk's ownership to around 16%. After more than a year of struggle, the question of his next incentive package remains unresolved.
The second issue is that the tech tycoon's value to his company is increasingly double-edged. Musk once attracted a fervent following among technologists and the car-buying public. Yet brand loyalty among Tesla owners has plummeted since he jumped into electoral politics – first backing President Donald Trump and then falling out with him – Reuters reported based on S&P Global Mobility data.
Even so, Musk retains a unique aura for Tesla investors. How else to explain a stock trading at 148 times expected earnings over the next 12 months, according to LSEG data, when financial results are slumping?
He has pushed a strategy that de-emphasizes the humdrum business of selling actual cars, swapping out a path-breaking, truly cheap vehicle plan for a cut-rate model that cannot profitably hit a sub-$30,000 price. Instead, Musk now talks about Tesla building millions of humanoid robots or self-driving taxis even as it trails Google's (GOOGL.O), opens new tab Waymo and other rivals. Every decision - from cutting the sensors in each car to incorporating language model Grok - leads to more dependence on an artificial intelligence push that depends on raw scale. Here, Musk is among a select group of AI pioneers who can collect enough powerful semiconductors and push past pesky regulations.
Musk has even proposed that Tesla invest in his xAI business, potentially tying the carmaker even more tightly to the rest of his empire. As the standard business of selling automobiles is pushed further to the background, the company depends ever more on the peculiar whims of its CEO. His extracurricular activities - from xAI to rocket-maker SpaceX to political activism - seem likely to continue; investors in another of his companies were recently warned, opens new tab that Musk may re-enter the electoral arena. All the new pay package does is cement this reality, while desperately trying to rekindle the old magic.
Follow Jonathan Guilford on X, opens new tab and Linkedin, opens new tab.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
3 minutes ago
- Reuters
Indian equity benchmarks open muted as investors assess Trump's tariff threat
Aug 5 (Reuters) - India's equity benchmarks opened little changed on Tuesday after U.S. President Donald Trump reiterated his threat of harsh tariffs on goods from India over its Russian oil purchases. The Nifty 50 (.NSEI), opens new tab fell 0.01% to 24,720.25 points and the BSE Sensex (.BSESN), opens new tab lost 0.09% to 80,946.43 as of 9:15 a.m. IST. Trump on Monday threatened to raise tariffs on goods from India over its Russian oil purchases, while New Delhi called his attack "unjustified" and vowed to protect its economic interests, deepening the trade rift between the two countries. Analysts said the ongoing trade rift has hit the market sentiment, and expect the benchmarks to be rangebound until there is clarity over U.S. tariffs. Nine of the 16 major sectors logged gains at the open. The broader smallcaps (.NIFSMCP100), opens new tab and midcaps (.NIFMDCP100), opens new tab were flat.
Daily Mail
3 minutes ago
- Daily Mail
Taylor Swift and Travis Kelce unite against 'ridiculous' Trump after comments about her looks... but NFL star risks angering Republican teammates
It's no secret that President Donald Trump and pop star Taylor Swift have some bad blood between them. The US president launched yet another attack on the 14-time Grammy winner on Monday morning, when he declared Swift as 'no longer hot' in a bizarre Truth Social rant.
Reuters
26 minutes ago
- Reuters
Tyson Foods boosts revenue forecast as chicken sales rise
Aug 4 (Reuters) - Tyson Foods (TSN.N), opens new tab raised its annual revenue forecast and reported better-than-expected quarterly earnings on Monday as consumers' increased appetite for chicken helped offset steep losses in its beef business. Shares rallied 4% after dropping on Friday to their lowest level since February 14 amid pressure from a nationwide cattle shortage. The herd dwindled to its smallest size on record this summer after a years-long drought dried up pastures used for grazing, forcing meat companies like Tyson to pay more to buy cattle to slaughter. Tight supplies also drove beef prices to record highs this year in a blow to consumers. However, Tyson benefited in the quarter that ended on June 28 from increased sales volumes and prices for its chicken. Chicken remains a more affordable protein compared to beef and pork, CFRA analyst Arun Sundaram said. Quarterly profit margins jumped for Tyson's chicken business, along with its pork and prepared foods units, compared to a year earlier. "The only soft spot in our business is the beef segment," CEO Donnie King said. Tyson expects fiscal 2025 revenue to grow 2% to 3%, compared with its prior forecast of flat-to-up 1%. The company raised its annual income outlook for the chicken business to between $1.3 billion and $1.4 billion from its previous forecast of $1 billion to $1.3 billion. Its beef business is now expected to lose $375 million to $475 million, though, compared with a previous estimate of $200 million to $400 million in losses. King said ranchers likely started the process of rebuilding the cattle herd by keeping female cows, known as heifers, on farms for breeding. Supplies will remain tight because it takes roughly two years to raise full-grown cattle. Tyson reduced processing line speeds at beef plants due to low supplies in the meantime, said Brady Stewart, who oversees the company's beef business. "We like that strategy moving forward," he said. Quarterly volumes in Tyson's beef business fell 3.1%, but sales grew 6.9% as prices jumped 10%. The segment had an adjusted operating loss of $151 million, including a goodwill impairment charge of $343 million. That compared with losses of $69 million a year earlier. Quarterly chicken sales rose 3.5%, with volumes up 2.4%. Tyson permanently closed U.S. chicken plants that employed thousands of workers in recent years to increase efficiency. "Tyson's portfolio is leaning heavily on chicken," said Alex Jarombek, senior analyst for research firm Consumer Edge. The company's total quarterly net sales increased 4% to $13.88 billion, beating analysts' estimate of $13.56 billion, according to LSEG data. Tyson posted adjusted earnings per share of 91 cents, above the estimate for 78 cents.
