Tesla Shares Drop Nearly 4% After Elon Musk Gets $1 Trillion Pay Package Approved
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Key Takeaways
- Tesla shares fell by almost 4% during Friday trading in a broad market decline.
- Elon Musk received a $1 trillion pay package after the Tesla shareholder meeting.
- The compensation gives Musk extra voting power if Tesla hits specific milestones.
- Tesla must reach $8.5 trillion market cap for Musk to get the entire payout.
- Negative consumer sentiment and a weak job outlook pushed markets further down.
Table of contents
Tesla Shares Fall as Markets Decline
Shares of Tesla fell almost 4% on Friday during trade. This drop happened alongside a larger stock market fall. On Thursday night, Tesla finished its shareholder meeting.
Later, Elon Musk was given a large compensation deal worth $1 trillion. Musk is already the richest person in the world. Many investors closely watched how the market and Tesla shares would react to this announcement.
Musk’s $1 Trillion Pay Package and its Conditions
As per the new pay package, Musk will get 12 different sets of shares, but only if Tesla achieves certain targets over ten years. The first set of shares is given out once Tesla becomes worth $2 trillion in total market value. Right now, Tesla’s market value is about $1.54 trillion.
For each $500 billion increase in Tesla’s value (up to $6.5 trillion), more awards will be given. If Tesla’s market cap grows by $1 trillion, Musk will get the final two portions. To get the entire payout, Tesla’s value must reach $8.5 trillion. This package also gives Musk more voting power in the company if goals are met.
Impact of Consumer Sentiment and Job Market
After the shareholder vote, Tesla’s stock price went up. But on Friday morning, it fell during early trading. US stock markets also dropped, led by tech stocks.
This happened as investors saw negative consumer sentiment figures. The University of Michigan reported a sentiment score of 50.3. This is about 6% lower than October, and the weakest since 2022.
Government job reports are delayed because of a government shutdown. Still, private job data and forecasts also show a weak job market. This has caused more selling in the stock market, adding to worry among investors.
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Frequently Asked Questions
Why did Tesla shares fall by nearly 4%?
Tesla shares dropped mainly because the overall stock market was falling. Negative consumer sentiment and a weak job market also added to the pressure on Tesla’s stock.
What is included in Elon Musk’s $1 trillion pay package?
Elon Musk’s pay package includes twelve sets of Tesla shares. He will receive each set only if Tesla reaches fixed performance and market value goals in the coming ten years.
How will Musk get the full payout from Tesla?
To get the full payout, Tesla’s total market value must reach $8.5 trillion. Only then will Musk receive all twelve share tranches in the package.
What factors affected the US stock market recently?
The US market fell due to weak consumer sentiment data, doubts about the AI investment boom, and a poor job market outlook. Tech stocks suffered the most during this period.
How does consumer sentiment impact share prices?
When consumer sentiment is low, people spend less and feel unsure about the economy. This often causes investors to get worried and sell shares, leading to lower prices in the stock market.
