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Tesla's quarterly report could land Musk another $3 billion

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Noel Randewich, Reuters

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/2020/reuters/10/06/elon.jpg"/><figcaption>SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the automobile awards &quot;Das Goldene Lenkrad&quot; (The golden steering wheel) given by a German newspaper in Berlin, Germany, November 12, 2019. Hannibal Hanschke, Reuters/File</figcaption></figure></div>Tesla&#x27;s upcoming quarterly report could put another $3 billion in Chief Executive Elon Musk&#x27;s pocket.The electric car maker on Tuesday saw the six-month average of its stock market value hit $250 billion, a milestone toward triggering the fourth of 12 tranches of options to buy Tesla stock at a discount, granted to the billionaire in his 2018 pay package.Musk&#x27;s compensation is exclusively made up of a series of potential stock options rewards based on market capitalization and operational goals. To secure Musk&#x27;s fourth tranche, Tesla still must hit a goal related to revenue or profitability, and that could happen in the company&#x27;s third-quarter report, the date of which has yet to be announced.Tesla’s stock was down 0.8 percent at mid-day on Tuesday, but the company&#x27;s six-month average market capitalization rose, thanks to a strong rally in recent months.Each tranche gives Musk the option to buy 8.44 million Tesla shares at $70 each, about a sixth of their current price.At Tesla’s current stock price of $420, Musk would theoretically be able to sell the shares related to the upcoming tranche, plus three other tranches that vested in recent months, for a combined profit of $11.8 billion, or almost $3 billion per tranche.Musk’s first tranche was worth about $700 million in May, when it vested, but its value has increased along with Tesla’s stock price.The Silicon Valley billionaire&#x27;s pay package, which surpasses anything previously granted to top US executives, was controversial when it was approved by shareholders. The median compensation for Tesla employees last year was about $58,000, according to a company filing.Tesla’s stock has surged 400 percent in 2020 as the company increased sales of its Model 3 sedan, giving it stock market value of almost $400 billion. After Tesla last week said it delivered a record 139,300 vehicles in the third quarter, investors are now awaiting the company&#x27;s quarterly financial report.While investors focus on gross margins, free cash flow and earnings per share in that report, adjusted EBITDA will be key to Musk&#x27;s personal finances. EBITDA, which stands for earnings before interest, taxes, depreciation and amortization, is a non-GAAP operating metric that Tesla further customizes by excluding the cost of stock-based compensation, including Musk&#x27;s.In the four quarters through June, Tesla&#x27;s adjusted EBITDA reached $4.42 billion, just short of a $4.5 billion milestone that would open the way for Musk&#x27;s next options tranche.JPMorgan estimated in a recent client note that Tesla will report adjusted EBITDA of $1.183 billion for the September quarter, which would raise Tesla&#x27;s rolling four quarters of adjusted EBITDA to $4.52 billion. That, along with Tuesday&#x27;s increase in the company&#x27;s six-month average market capitalization, would qualify Musk for his next options payout.

The electric car maker on Tuesday saw the six-month average of its stock market value hit $250 billion, a milestone toward triggering the fourth of 12 tranches of options to buy Tesla stock at a discount, granted to the billionaire in his 2018 pay package.

The electric car maker on Tuesday saw the six-month average of its stock market value hit $250 billion, a milestone toward triggering the fourth of 12 tranches of options to buy Tesla stock at a discount, granted to the billionaire in his 2018 pay package.

Tesla's quarterly report could land Musk another $3 billion

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Tesla's quarterly report could land Musk another $3 billion

Noel Randewich,

Reuters

Published Oct 07, 2020 05:37 AM PHT

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