Elon Musk's added value boosts Tesla
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The Tesla board has over 700 billion reasons why it might want Elon Musk to stay on as CEO, rather than replacing him with someone with a bit more time to spare.
Why it matters: As directors of a public company, Tesla's board members have a fiduciary responsibility to their shareholders, which means keeping the share price as high as possible.
- Whatever his controversies, Musk has been astonishingly good at turning Tesla into a company with a stratospheric valuation.
By the numbers: Tesla's market value, as of the close of trade on Thursday, was $903 billion on revenue of $96 billion over the past 12 months.
- By contrast, Tesla's biggest rival, Chinese automaker BYD, was valued at $145 billion on revenue of $114 billion over the same time period.
Between the lines: One way of looking at those numbers is to think of Tesla as a carmaker worth about as much as BYD, on a price-to-revenue basis, plus a "Musk premium."
- Looking at it that way, Tesla's car business would be worth $122 billion.
- Adding in the Musk premium, however, would ring it in at $781 billion.
How it works: On some level, it doesn't matter where the Musk premium comes from, whether it's optimism about self-driving technology, hopes of a breakthrough in robotics, or simply Musk fans buying Tesla as a meme stock.
- Whatever the premium is, it has been very good at rewarding Tesla's shareholders, and risks getting lost should Musk leave the company.
- "Musk is Tesla and Tesla is Musk," Dan Ives, one of Wall Street's biggest Tesla bulls, wrote on X on Thursday.
The bottom line: Tesla's board is surely very happy Musk is coming back.
