$Tesla(TSLA.US) Stock Tanked After Decent Deliveri

$Tesla(TSLA.US) Stock Tanked After Decent Deliveries. Why Elon Musk’s $1 Trillion Pay Package Will Pass.

Al Root - Barron’s

Oct 3, 2025 5:35am

After dropping 5.1% on Thursday, $Tesla(TSLA.US) stock was up 1.6% in early trading Friday at $442.96, while S&P 500 and Dow Jones Industrial Average futures climbed 0.3% and 0.2%, respectively.

The stock dropped after reporting much better-than-expected deliveries. Then came a letter from the Comptroller of the City of New York, blasting Tesla's governance and urging Tesla shareholders to vote against CEO Elon Musk's pay package, worth roughly $1 trillion if all performance incentives are met.

Investors not familiar with Tesla trading might wonder if everything is OK. Experienced Tesla investors probably didn't worry too much at all of Thursday's comings and goings.

The trillion-dollar pay package has its roots in Musk's desire to control 25% of Tesla stock, so he can't be pushed out, even though most long-time Tesla investors and his board venerate his leadership. It's unprecedented and likely too much for any one CEO. Whether the award is excessive, however, is separate from the question of whether it will pass.

Wedbush analyst Dan Ives put it succinctly. There is a "better chance of me playing in the NFL this season" than Tesla shareholders voting down Musk's pay package. Future Fund Active ETF cofounder Gary Black said "no chance Tesla shareholders vote down Elon's pay package."

There are a few reasons for that, mostly likely correct belief. For starters, incentive-laden stock options are nothing new for Tesla and Musk. What's more, shareholders have approved mulitple pay packages awarding Musk hundreds of millions of stock options over the objections of proxy advisory firms that advise shareholders how to vote at annual meetings.

Tesla's shareholder base is one reason the proxy advisory firms don't have as much sway. Retail investors hold some 40% of Tesla shares available for trading, according to Bloomberg, about twice the level of other large tech stocks.

As for deliveries, the stock market is forward-looking. Tesla stock rose about 40% in the month leading up to the delivery report. Investors knew that sales were going to be strong with U.S. car buyers rushing to beat the expiration of the $7,500 EV purchase tax credit.

Wall Street was fine with the numbers. Canaccord analyst George Gianarikas called the results a "banger" in a Thursday report. "The question now is how will [fourth quarter] and 2026 shape up after the U.S. EV tax credits have gone away?" He projects a sales decline in the fourth quarter and growth in 2026.

What to do with the stock is a better question than what the fourth-quarter deliveries will look like. Shares are undeniably expensive at about 175 times estimated 2026 earnings. Technically, things look better.

"I would hold through it, barring any real deterioration," says Farilead Strategies cofounder and market technician Katie Stockton. She isn't making a fundamental call on shares. Instead, she is looking at market history and stock charts to gauge investor sentiment.

A new all-time high is possible, Stockton adds. Investors should make sure the stock holds above its 50-day moving average, too. That's about $361. Falling below that would be a warning sign that sentiment is changing.

Write to Al Root at allen.root@dowjones.com