Tesla Drops In Pre-Market After Musk Seeks 25% Control Of The Company - Forbes

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Tesla’s stock was down around 2% in pre-market trading early on Tuesday after the company’s CEO Elon Musk warned Monday he would start building AI and robotics products outside the company unless he gained 25% voting power.

Key Facts

In a series of posts on X, his social media platform, Musk said he was “uncomfortable growing Tesla to be a leader in AI & robotics” without having around 25% of the voting power in the company.

Musk, who owns around 13% of electric vehicle maker’s stock (22% if including options) said his proposed 25% threshold would be enough to be influential “but not so much that I can’t be overturned.”

The billionaire warned that if this doesn’t happen, he would “prefer to build products” outside of Tesla.

Musk said there was a big difference between a company like Tesla and GM, adding that the electric carmaker was more akin to a collective of dozen startups.

Musk added that 15% or lower voting power means “a takeover by dubious interests [is] too easy.”

Tesla’s share price dropped to $214.2 in premarket trading, down around 2.1% from Monday, continuing a poor start to 2024 having fallen nearly 12% since the start of the year.

Crucial Quote

“I would be fine with a dual-class voting structure to achieve this, but am told it is impossible to achieve post-IPO in Delaware,” Musk said.

News Peg

Earlier, Musk responded positively to followers on X, formerly known as Twitter, who suggested the billionaire deserved better compensation from Tesla. In 2018, the company’s board had outlined a 10-year pay package —valued at around $55 billion—for Musk, which is now mired in a legal challenge. Musk signaled that his remarks were not a feud with the board, whom he called “great,” adding that a new “compensation plan” for him isn’t in place because of the legal battle. The Delaware court overseeing the case is yet to pass a verdict on whether Musk’s compensation package was fair to shareholders.

Forbes Valuation

According to our estimates, Elon Musk’s net worth as of Monday evening was $230.2 billion. This makes him the richest person in the world on Forbes’ Real-Time Billionaires tracker by some distance, with second-placed LVMH CEO Bernard Arnault’s fortune being almost $50 billion lower.