Tesla Stock Hits a Speed Bump as Judge Rules Against Musk’s Pay Deal

Key Takeaways

• Shares of Tesla pulled back from multiyear highs after a judge ruled for a second time against the EV maker’s pay package for CEO Elon Musk.
• The company said it would appeal the decision.
• Tesla shares have been on a tear following Donald Trump’s election on optimism Trump’s policies and his close relationship with Musk will benefit the carmaker.

Tesla (TSLA) shares gave back some of their recent gains after a Delaware judge struck down for a second time a multi-billion dollar pay package for CEO Elon Musk.

Chancellor Kathaleen McCormick upheld her earlier decision supporting shareholders who sued to block the agreement with Musk, which was earlier valued at $56 billion. Tesla shareholders overwhelmingly voted in June to reinstate the compensation for Musk, and the company on social media platform X said the decision was wrong “and we’re going to appeal.”

The news contributed to a pause in the recent runup of Tesla shares, which have soared since the presidential election, yesterday hitting a more than two-and-a-half year high. The stock has received a boost from expectations that President-elect Trump will cut regulations as well as end federal tax incentives for electric vehicle purchases, which might benefit Tesla.

“Musk is Tesla and Tesla is Musk,” Wedbush analyst Dan Ives, a Tesla bull, wrote. “One way or another the Board is getting Musk his pay package (and another long term one for the next decade) to secure Musk will be CEO of Tesla at least through 2030.”

Shares of Tesla are about 46% higher year-to-date. The stock was recently down about 2%.