Key Morningstar Metrics for Tesla
- Fair Value Estimate: $250
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Very High
Tesla’s TSLA board of directors issued its 2025 preliminary proxy statement. It included a proposal for a new compensation package for CEO Elon Musk that features 12 operational and 12 market capitalization milestones. Tesla shares were up 3% at the time of writing.
Why it matters: Under the new compensation plan, Musk would receive restricted equity shares that would vest in 7.5 to 10 years for each milestone achieved. The market capitalization tranches should align with Tesla shareholders, who would gain alongside Musk for each tranche achieved.
- The operational milestones include adjusted EBITDA achievements, 20 million Tesla vehicles delivered, 10 million active FSD subscriptions, 1 million robotaxis, and 1 million Optimus robots delivered. These align with Tesla’s long-term goals for autonomous driving and humanoid robots.
- Should Musk achieve all 12 tranches, he could end up with an ownership stake in Tesla around or above 25%, which is in line with his stated goals. We think this package essentially removes the risk of Musk leaving Tesla for at least the next 7.5 to 10 years, in line with the vesting schedule.
The bottom line: We maintain our $250 fair value estimate for narrow-moat Tesla. At current prices, we view Tesla shares as overvalued with the stock trading in 2-star territory and roughly 40% above our fair value estimate.
- The new pay package should enable Tesla to retain Musk, removing a key near-term risk to the stock. However, shares imply a robotaxi rollout in line with management’s guidance for next year.
- We continue to forecast robotaxi testing will take longer than management’s guidance and see 2028 as the year for a full robotaxi lunch, which includes a robotaxi service available to any consumer with no Tesla employees in the vehicle and no geofencing.
