Tesla is five times bigger than all the public companies in Texas
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Elon Musk has done another thing, which obliges us to do another thing. Here, per MainFT, is the latest thing:
Elon Musk has said Tesla will “immediately” hold an investor vote on whether to move its corporate registration to Texas, after a court judgment in Delaware voided his $56bn pay package.
The billionaire posted his comments about shifting to the state where Tesla’s physical headquarters are located following the ruling this week by Kathaleen McCormick, a judge in the Delaware Court of Chancery.
“Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas,” Musk wrote on his social media platform X.
Good, fine, whatever. A person might have strong opinions about whether Delaware courts are more rigorous around corporate governance standards and fiduciary duty as applied to Cult-of-Personality stocks than those in Texas. Those without strong opinions can refer to comprehensive coverage from the FT’s Richard Waters, Stuart Kirk, Sujeet Indap (twice) and Lex, as well as a multi-bylined Q&A.
All we’re going to add is data, starting here:
By market cap Tesla is in the top tier of companies incorporated in Delaware, though the year-to-date sell-off has narrowed its lead over the pack (Visa, Broadcom, UnitedHealth, Walmart, etc) to about $10bn. Delaware-incorporated companies are valued at $34tn in aggregate, so Tesla is 1.7 per cent of that total.
But Tesla is five times bigger than all the Texas-incorporated Russell 3000 stocks put together:
Could we have made these charts look better? Yes, we could. Can we be bothered? No, we can’t.
Thing is, it’s possible to argue that companies like Apple and Farmer Mac extract some advantage from being domiciled in the same state as they’re incorporated. There’s loads of research on home bias versus the Delaware advantage, which might be extrapolated in all sorts of ways when applied to big data sets like this:
These are normal sorts of enterprises with conventional chains of command, though. Their ways of working just don’t apply to Tesla, which is less a company and more the publicly traded division of a self-contained hysteria factory. Any deeper analysis of state court jurisdiction over businesses as it applies to Tesla will be rendered irrelevant the moment Musk does another thing, and won’t change even one reader’s preconceptions in the meantime.
Honestly, we’re only posting this so you have a fresh comment box in which to argue with each other.