Tesla faces another investigation. Will it have a significant impact on the stock price?
Currently, Tesla's potential benefits for Musk are only a matter of concern for investors, rather than a serious worry.
According to a report by The Wall Street Journal on Tuesday, the US Department of Justice is conducting a criminal investigation into whether Tesla properly disclosed potential benefits provided to Elon Musk and other issues.
Some of these concerns seem to be related to Musk's houses. The Wall Street Journal reported last month that prosecutors are investigating a secret project within the company, described internally as the CEO's residence. Musk stated on social media that he has not built any houses, nor does he have plans to do so.
The company is required to disclose the compensation of key executives and transactions exceeding $120,000 with related parties.
The documents submitted by Tesla to the US Securities and Exchange Commission do include disclosure and amounts related to transactions between Tesla, Musk, and some of his other companies, including X and SpaceX.
What are the adverse effects?
Although it is too early to determine the outcome of the investigation, considering Musk's role as CEO, his issues could cause trouble for Tesla investors.
Investors only need to look at what happened to Tesla's stock during Musk's early ownership of Twitter to understand the impact of disruptions.
When Musk took over Twitter at the end of October last year, Tesla's stock price was around $225 per share. It closed at around $123 per share in 2022, a 45% decrease. The Nasdaq index fell about 3% during the same period.
The lack of market reaction does not mean that investors can ignore the report. It simply means that, for now, potential benefits are only a matter of concern for investors, not a serious worry.
Musk's primary compensation comes in the form of stock options. According to regulatory filings, Musk did not receive any additional compensation in 2020, 2021, or 2022.
In 2018, Tesla granted Musk approximately 300 million shares of stock options at a price of around $23 per share, due to achieving performance milestones. Based on the current price of Tesla's stock, the options reward in 2018 was worth about $70 billion.
