The next 12 months will be Musk's most profitable period

Business Crypto January 26 (Shao Feng) recent news, as of yesterday's close, Elon Musk's Tesla stock has lost about $30 billion this year, the stock fell 12%. But the next 12 months could be musk's most profitable period ever. Tesla will post strong financial results this year, which will bring musk billions of dollars in stock rewards.

Musk didn't get any base salary or cash bonuses from Tesla. Instead, he would earn stock options based on the company's achievement of certain financial and market value objectives. His 2018 compensation package allocates 1.01 shares of split-adjusted stock, which will be awarded to Musk in equal amounts in 12 installments as the company meets those benchmarks.

Tesla stock

Although Tesla's stock price has recently slipped, falling out of the trillion-dollar club, the market capitalization benchmark has been fully realized. To date, seven of these financial targets have been achieved, with two achieved in 2019, two in 2020 and three in the first nine months of 2021. As a result, Musk has received 59 million of the 1.01 options in the scheme.

Tesla will meet the remaining five financial goals this year, giving Musk all the options he might get under the 2018 package. If they're right, he'll be eligible for this year's four installments — a record for him — and he'll get it again in early 2023 once the results for the fourth quarter of 2022 are officially announced.

Following Tesla's growth trajectory, it would be impossible to happen if Musk didn't get all five parts on top of all the triggers this year.

Each instalment will give Musk the right to buy 8.4 million shares at a premium of $70.01 per share — the price at which the option was first granted in 2018. Using Monday's closing price of $930 means that each lot of options is worth $7.3 billion, compared to the total value of all five lots of $36.3 billion.

When Tesla announced its fourth-quarter results on Wednesday, Musk was likely to qualify for at least one option, perhaps two. Once the first quarter results are announced in April, Musk should have at least three batches on hand and a fourth by mid-year.

No matter how many options Musk gets over the next 12 months, he may not be taxed on those options for about five years. This is because once he exercises the option and buys the extra stock, he only pays taxes on the option. And he's only likely to do so if the option is about to expire.

He did so last year when he exercised 22.9 million options that were scheduled to expire in August 2022, leaving him with a record $11 billion in taxes last year.

These latest options won't expire until January 2028, so he probably won't exercise them until 2027. As part of his 2018 compensation package, he hasn't paid taxes on the 59 million options he's already received. And he probably won't pay taxes on any of the 42 million additional options he might get over the next 12 months, regardless of the value of those options.

As the Fed adopts higher interest rates and less stimulus to curb inflation, investors are increasingly worried about riskier tech stocks like Tesla. Tesla is worth more than the world's 10 automakers, even though its sales are well below theirs, making it a classic example of stocks with problematic valuations.

At one point, Tesla shares fell as much as 10 percent during Monday's plunge in U.S. stocks. But they rebounded alongside other markets, closing down just 1.5 percent. Still, that's enough to reduce Musk's net worth by $3.3 billion.

The recent decline in Tesla shares is seen as a temporary setback, with Tesla shares reversing a similar decline in early 2021, up 50% at the end of the year.

Tesla shares have recently been sold off, down 25 percent since hitting a record high in early November, making Wednesday's earnings report particularly important for investors. They'll want to learn more about plans to ramp up production at the two new plants and when plans to launch their pickup truck, the Cybertruck, which will face competing manufacturers of pickups and upstart EVs from established automakers like Ford (F).

Tesla's future imagination space has always been the core to support its accelerated growth, and if it can no longer give investors or institutions more imagination space, its market value will also come to an end. However, the most recent drive to Tesla's stock price is the pickup truck, if it can be listed in the short term, and a large number of production, will once again push Tesla to another high.