This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Tesla shares are not partying with the rest of the "Magnificent 7" grouping of high-flying, growth-focused stocks, hammered by the residual fears of persistent demand weakness prompting additional price cuts, which then bleed into the company's all-important gross margin metrics. Consider the fact that the EV giant's shares are down around 13 percent in the first two weeks of 2024. Against this relatively morose backdrop, Elon Musk has now opened a whole new "can of worms" by publicly asking for a 25 percent voting control over Tesla, as per a new investment note from Jeffries.
I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned.
Unless that is the case, I would prefer to build products outside of Tesla. You don’t seem to understand…
— Elon Musk (@elonmusk) January 15, 2024
As we noted in a dedicated post, Elon Musk set the proverbial tongues wagging earlier this week when he announced that he was uncomfortable working as Tesla's CEO with his current voting power, chaffing at possessing sufficient control to be "influential" but not enough to prevent being "overturned" on occasion. The ultra-billionaire then laid down the gauntlet, threatening to "build products outside of Tesla" should the EV giant's board not acquiesce to his demands.
Bear in mind that Elon Musk owns roughly 13 percent of Tesla, corresponding to around 412 million shares. While delving into the specifics behind his characteristically quixotic demand, the mega-billionaire complained that with sub-15 percent of the voting rights in Tesla, the bar to override him is "too easy."
CONTEXT: Elon Musk currently owns about 13% of Tesla outright (~412M shares). Additionally, he currently holds about 304 million exercisable stock options from his 2018 compensation package at a price of $23.34 per share.
Elon has until 2028 to exercise those options. However,…
— Sawyer Merritt (@SawyerMerritt) January 16, 2024
Yet, as detailed in the exhaustive X post above and corroborated by publications such as Barron's, Elon Musk currently owns around 304 million unexercised stock options as part of his 2018 compensation plan, entitling the EV giant's CEO to around 9 percent of Tesla's 3.2 billion outstanding common shares. If Musk were to exercise these options at $23.34 per share, his stake in Tesla would rise to around 22 percent. Of course, this action will also entail tax liabilities, which Musk will likely pay by selling Tesla shares akin to what he did back in 2021. After factoring in the net effect of these tax-related liquidations, Elon Musk's voting control over Tesla is expected to end up at around 20 percent.
Critically, this 20 percent voting control level is materially higher than the sub-15 percent level that Elon Musk took umbrage with. The question then emerges: when the CEO of Tesla already has a well-defined path toward 20 percent voting control of Tesla, why the urgency to secure another compensation package?
Of course, as we detailed in our previous post on this topic, Tesla's board will likely not allow any new compensation package for its CEO until a verdict is delivered in a related trial. For the benefit of those who might not be aware, Tesla underwent a trial in Delaware in 2022, where some shareholders asserted that Elon Musk's 2018 compensation plan should be voided by the court as it was a result of sham negotiations and dictated by Musk himself. While the trial has concluded, a verdict in this case is yet to be delivered.
Meanwhile, as admitted by Elon Musk himself, the easiest way out of this dilemma - via a dual-share structure - is almost an impossibility for Tesla, given the fact that post-IPO changes to the share structure are generally extremely difficult.
Here’s a MOONSHOT of an idea…
Give @elonmusk 51% voting power in a new holding company that includes Tesla, SpaceX, X (formerly Twitter), xAI (Elon's AI venture), Neuralink and Boring Company.
THE DETAILS:
1. SUPERVOTING SHARES - Elon would hold super-voting shares allowing…
— Dave Lee (@heydave7) January 17, 2024
This has not prevented some die-hard Tesla fans from trying to come up with potential solutions, including the idea of a holding company.
Jefferies says Musk's "25% for AI" tweet opened a can of worms, $TSLA CEO's rather lax attitude towards governance and fiduciary duties seen as problematic pic.twitter.com/LYmHqJkmhA
— Trader 53 (@trader_53) January 17, 2024
Given the specter of a lengthy tug-of-war of sorts between Elon Musk and Tesla's board on this topic, one Jeffries' analyst just described this situation as akin to "opening a can of worms."
Today's Tesla Germany price cuts are even crazier than they initially look as financing rates have been slashed to Zero (prev > 6%)$TSLA pic.twitter.com/AV8h39Zn2n
— Trader 53 (@trader_53) January 17, 2024
As if corporate upheaval were not enough of a challenge to contend with, Tesla stockholders also have to factor in ongoing price cuts in various key markets in their overall calculus.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
Follow Wccftech on Google to get more of our news coverage in your feeds.
