Why did Tesla Shareholders Approve $1 Trillion Musk Package: Is TSLA Still a Buy?

Tesla (NASDAQ:TSLA) shareholders approved Elon Musk’s compensation package on Thursday that could be worth $1 trillion, with over 75% voting in favour. The decision comes despite warnings from Norway’s sovereign wealth fund about dilution. For investors, the question is whether dilution will be offset by the innovations Musk promises.

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The $1 Trillion Dilution: What It Means for Existing Shareholders

The package grants Musk up to 423 million additional shares over the next decade, increasing his ownership from around 13% to 25%. What this means: existing shareholders will see their ownership diluted by roughly 8-12%, depending on how many targets Musk hits.

To unlock the full package, Tesla must grow from its current $1.5 trillion market capitalisation to $8.5 trillion—a 466% increase that would make Tesla worth nearly double Nvidia’s $4.8 trillion valuation. The first tranche requires hitting $2 trillion, with incremental $500 billion gains thereafter.

Beyond market value, Musk must achieve ambitious milestones:

• 20 million cumulative vehicle deliveries (versus 1.8 million in 2024—an 11x increase)
• 10 million Full Self-Driving subscriptions
• 1 million operational robotaxis
• 1 million Optimus humanoid robots deployed

These targets require aggressive growth while scaling new product categories that don’t yet exist.

The Bull Case: Keeping Musk Focused Could Unlock Robotaxi Billions

Supporters argue the dilution is acceptable if it keeps Musk committed to Tesla. Wedbush analyst Dan Ives values the robotaxi opportunity alone at $1 trillion in future market value. If successful, Tesla transforms from a car manufacturer into a high-margin software business.

Tesla’s Q3 results reveal both promise and concern:

Positive signals:

• Record free cash flow of $4 billion funds AI infrastructure without external capital
• Energy revenue surged 44% to $3.4 billion, delivering strong margins when auto struggles
• Cash position of $41.6 billion supports robotaxi and robotics investment

Warning signs:

• Operating margins compressed to 5.8%, down from 10.8%—a troubling decline
• Net income fell 37% to $1.4 billion as expenses jumped 50%
• Regulatory credit revenue dropped 44%, removing a margin cushion

The bull case depends on three unproven bets: autonomous driving, humanoid robots, and continued energy growth. If even one delivers at scale, today’s dilution could prove minor.

Should Australian Investors Buy Tesla at Current Levels?

For Australian investors, TSLA trades in US dollars, meaning AUD/USD movements affect returns. Currently trading around US$449 with a forward PE ratio of approximately 172, Tesla prices in exceptional growth with minimal margin for error.
Analyst targets range from US$120 (bearish) to US$600 (bullish), with consensus at US$379—suggesting 15% downside.

The verdict depends on your conviction:

If you believe Tesla will deliver one million robotaxis generating recurring revenue by 2030, the dilution becomes acceptable. This represents a high-risk, high-reward bet on breakthrough technologies.

If you’re sceptical about regulatory approval or Musk’s ability to execute, current valuations don’t justify the risk.

Conservative investors should avoid Tesla at 172 times forward earnings with compressing margins and major dilution ahead. Aggressive growth investors might consider a small position—but only if comfortable with the possibility these moonshot projects never materialise at scale.