The escalation of Tesla Inc.'s stock is putting CEO Elon Musk within reach of a potentially $ 1.8 billion payday, his second auto maker jackpot in about two months.
Fueled by stronger than expected car deliveries, Tesla's shares have risen more than 40% in the past seven sessions, bringing the company's market capitalization to $ 259 billion. Most importantly for Musk's personal finances, Tesla's six-month average market capitalization reached a record high of $ 138 billion.
Achieving an average market capitalization of $ 150 billion in six months would trigger the acquisition of the second of the 12 installments of options granted to the billionaire to buy Tesla shares as part of his 2018 payment package. In early May, the first installment Musk was acquired after Tesla's average six-month value reached $ 100 billion.
Musk has already achieved goals related to Tesla's financial growth that are also necessary to acquire the approaching share of options.
Each installment offers Musk the option to buy 1.69 million Tesla shares for $ 350.02 each. At Tesla's current share price of $ 1,397 US, Musk would theoretically be able to sell shares related to the tranche invested in May and the following tranche for a combined profit of more than $ 3.5 billion or $ 1, 8 billion per installment.
Musk's first installment was worth about $ 700 million in May, when it was invested, but its value has since increased, along with Tesla's share price.
Tesla rose 500% last year as the company increased sales of its Model 3 sedan.
Company registers strong sales despite the pandemic
Tesla last week reported more than expected vehicle deliveries in the second quarter, challenging declining sales in the auto industry in general, with the coronavirus pandemic hitting the global economy.
The solid delivery numbers raised expectations for a profitable second quarter, which would mark four consecutive profitable quarters, Tesla's first and a major hurdle to be added to the S&P 500 index.
Musk, who is also the majority owner and CEO of rocket maker SpaceX, receives no salary, only the options in his compensation package. A total payment for all tranches would outweigh anything previously granted to US executives.
When Tesla introduced Musk's payment package, he said he could, in theory, reap up to $ 55.8 billion in the U.S. if no new shares were issued. However, Tesla issued shares to compensate employees and also sold shares in secondary offers, including a $ 2 billion share sale in February.