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Who Really Owns Tesla? Analyzing the Automaker‘s Unique Shareholder Structure

Tesla, Inc. (NASDAQ:TSLA) has one of the most fascinating ownership structures of any publicly traded company. The electric vehicle (EV) maker‘s shareholder base is a unique blend of retail investors, institutional funds, and insiders, each with their own motivations and levels of influence over the company‘s direction.

In this article, we‘ll take a deep dive into who really owns Tesla stock, using the latest data from regulatory filings and market research. We‘ll examine how Tesla‘s ownership mix has evolved over time, how it compares to other major companies, and what it could mean for the future of this high-profile and often controversial automaker.

Tesla Ownership Breakdown

Let‘s start with a high-level overview of Tesla‘s current ownership structure. According to Nasdaq, as of March 2023, Tesla had approximately 3.16 billion shares of common stock outstanding. Those shares were owned as follows:

Shareholder Type Shares Owned (Millions) % of Total
Institutional Investors 1,360 43.0%
Retail Investors 1,184 37.4%
Insiders 619 19.6%
Total 3,163 100.0%

Source: Nasdaq Ownership Summary

As you can see, institutional investors—which include mutual funds, hedge funds, pensions, and other large professional money managers—own the largest chunk of Tesla stock at 43%. However, this is a relatively low level of institutional ownership for a company of Tesla‘s size and prominence.

Retail investors, on the other hand, own a surprisingly large portion of Tesla shares at over 37%. This is much higher than the average for publicly traded companies, especially those in the S&P 500 index. For example, retail investors own just 10% of Apple (AAPL) and 12% of Amazon (AMZN) according to recent data from Bloomberg.

Insiders, which mainly consist of Tesla executives and directors, own the remaining 19.6% of outstanding shares. The vast majority of those insider shares belong to Tesla co-founder and CEO Elon Musk.

The Elon Musk Factor

No discussion of Tesla‘s ownership structure would be complete without acknowledging the outsized role played by Elon Musk. As of April 2023, Musk owned 412.5 million Tesla shares, or about 13.1% of shares outstanding, according to an SEC filing. That stake was worth nearly $136 billion based on Tesla‘s closing stock price on April 14th.

Musk is by far Tesla‘s largest individual shareholder, dwarfing the holdings of other insiders and rivaling the positions of major institutional investors. In fact, if Musk‘s stake was counted in the institutional category, it would make him Tesla‘s largest institutional shareholder ahead of Vanguard and Blackrock.

However, Musk is not your typical insider. His 13.1% ownership position gives him effective control over Tesla‘s governance thanks to the company‘s dual-class share structure, which gives Musk super-voting rights through his ownership of Class B shares that carry 10 votes each compared to 1 vote for regular common stock.

Musk‘s controlling stake—combined with his role as CEO and his larger-than-life public persona—means he wields enormous influence over Tesla‘s strategy, operations, and stock price. This has been both a blessing and a curse for the company over the years.

On one hand, Musk‘s bold vision, relentless drive, and devoted fanbase have been instrumental in Tesla‘s growth from an obscure startup to the world‘s most valuable automaker. His ability to generate buzz and excitement around new products and initiatives is unparalleled in corporate America.

However, Musk‘s impulsive behavior, clashes with regulators, and penchant for stirring up controversy on social media have also created distractions and legal headaches for Tesla. His tweets have moved the stock price on numerous occasions—sometimes dramatically—and drawn the ire of the Securities and Exchange Commission.

As long as Musk remains Tesla‘s largest shareholder and CEO, his presence will continue to loom large over the company. But what about the rest of Tesla‘s ownership structure? Let‘s take a closer look at the institutional and retail investor dynamics shaping the stock.

Institutional Investors: Passive vs. Active Approaches

As mentioned earlier, institutional investors own 43% of Tesla‘s outstanding shares. However, not all institutions are created equal when it comes to their trading strategies and level of engagement with company management.

The two largest institutional owners of Tesla stock—Vanguard Group and BlackRock Fund Advisors—are primarily passive investors. Together, they control around 12.6% of Tesla shares outstanding, but most of those holdings are through index funds and ETFs that track major market benchmarks like the S&P 500.

Passive investors tend to be less concerned with individual company fundamentals and more focused on broad market exposure. They are less likely to actively buy or sell shares based on short-term news or events. Over time, the steady inflows into index funds have provided a baseline of consistent demand for Tesla stock.

Other top institutional owners of Tesla, however, are active managers who take more concentrated positions based on their analysis and conviction in the company‘s prospects. Firms like Capital Research, Fidelity, and Baillie Gifford have made significant active bets on Tesla and are more likely to add to or trim their holdings over time as their views evolve.

Active institutional investors can exert more direct influence over a company through their ability to vote on corporate issues, engage with management teams, and even agitate for change if they become dissatisfied. In Tesla‘s case, the large institutional stake controlled by Baillie Gifford (around 1.5% as of March 2023) is particularly notable.

The Scottish investment firm has been one of Tesla‘s biggest and most vocal backers, at times pushing back against the bearish arguments of short sellers and others skeptical of the company‘s valuation and prospects. Baillie Gifford has also been supportive of Musk‘s long-term vision, even as his antics have turned off other investors.

However, it‘s worth noting that even Tesla‘s largest active institutional investors own relatively small percentages of the company compared to their stakes in other major holdings. This reflects the limitations of Tesla‘s overall institutionally owned float as well as the stock‘s historically high volatility and valuation.

Geographic Breakdown

Another interesting dimension to Tesla‘s institutional ownership is the geographic distribution of shareholders. While the majority of institutional investors are based in the United States, Tesla also has significant ownership from abroad, especially in Europe and Asia.

According to data from Factset, here is the geographic breakdown of Tesla‘s institutional ownership as of December 2022:

Region Ownership %
North America 57.8%
Europe 30.4%
Asia 11.6%
Rest of World 0.2%

The high level of European institutional ownership is likely influenced by a few factors, including:

  1. Europe‘s aggressive push toward vehicle electrification and emissions reduction, which has made Tesla a more compelling ESG investment.

  2. The outsized presence of UK-based Baillie Gifford among Tesla‘s top shareholders.

  3. Tesla‘s significant manufacturing and sales presence in Europe, including its Gigafactory Berlin.

Asia‘s 11.6% institutional ownership stake is also notable given Tesla‘s growing business in China and the broader region. Chinese tech giants Tencent and Alibaba each own small stakes in Tesla (less than 0.5% each), while Japanese conglomerate Softbank has been a past investor.

Retail Investors Drive the Story

While institutional investors hold more total Tesla shares, one could argue that retail investors have had an even greater impact on the company‘s stock price performance and market narrative in recent years. The unique passion and fervor of Tesla‘s individual shareholder base sets it apart from most other publicly traded companies.

According to research from Vanda Track, individual investors have poured over $200 billion into Tesla stock since January 2020, far more than any other company during that period. At the peak of the Reddit-fueled trading frenzy in January 2021, retail investors were snapping up nearly $700 million of Tesla shares per day on a net basis.

This flood of retail buying helped drive an incredible surge in Tesla‘s stock price and valuation. From the beginning of 2020 to its all-time high in November 2021, Tesla stock soared by over 1,400%. The company‘s market cap peaked around $1.2 trillion, making it more valuable than the next 10 largest automakers combined.

Of course, this retail-driven rally also had its share of volatility and controversy.
Some critics argued that Tesla‘s valuation had become completely detached from fundamentals and that the stock was caught up in speculative mania comparable to the dot-com bubble of the late 1990s.

Tesla bears also pointed to the growing influence of social media platforms like Twitter and Reddit in driving retail investor behavior. Elon Musk‘s own tweets and online antics often added fuel to the fire, whipping his followers into a frenzy and goading his critics and short sellers.

The GameStop short squeeze saga of early 2021 brought even more attention to the power of retail investors in moving markets. In January 2021 alone, Tesla stock experienced three single-day moves of 20% or more—an incredibly rare level of volatility for a large cap stock.

Since then, the retail craze around Tesla has cooled somewhat along with the broader market downturn. As of April 15, 2023, Tesla stock was trading around 50% below its all-time high. However, the company‘s retail investor base remains highly engaged and continues to drive significant trading activity.

Implications of Tesla‘s Ownership Structure

So what does Tesla‘s unique mix of institutional, insider, and retail ownership mean for the company going forward? Here are a few key implications to consider:

  1. Volatility is likely here to stay. With such a high proportion of retail investors, Tesla stock is likely to remain prone to sentiment-driven swings and hype cycles. Musk‘s public statements and actions will continue to have an outsized impact on the share price.

  2. Governance challenges persist. Tesla‘s ownership structure—with Musk maintaining effective control while institutions remain relatively underweight—has long raised questions about the strength of corporate governance at the company. The board‘s ability to rein in Musk‘s worst impulses and provide effective oversight is limited.

  3. Divergence from fundamentals is a risk. The combination of heavy retail ownership and Musk‘s cult of personality creates the potential for Tesla‘s stock price to diverge significantly from underlying company fundamentals, both to the upside and downside. This makes it difficult for investors to value the company based on traditional metrics.

  4. Engaged shareholder base can be an advantage. Despite the potential downsides, having a large and passionate retail investor community can also be a strength for Tesla. These individual shareholders serve as loyal customers, vocal brand ambassadors, and a source of grassroots support when the company faces challenges or negative press.

  5. Institutional investors still matter. While Tesla‘s institutional ownership percentage is lower than many other large companies, professional money managers still control over 40% of outstanding shares. They will likely become more influential over the long-term as Tesla grows and matures as a public company.

Looking Ahead

In conclusion, Tesla‘s ownership structure is a complex mosaic that reflects the unique characteristics and challenges of this pathbreaking company. From Elon Musk‘s controlling stake and outsize influence, to the high level of retail investor passion and engagement, to the evolving role of institutional shareholders, each element plays a role in shaping Tesla‘s identity and future prospects.

As the EV market matures and competition intensifies, Tesla will need to navigate its ownership dynamics carefully. Balancing the competing interests and demands of different shareholder groups while executing on ambitious growth plans is no easy task.

However, if Tesla can harness the energy and enthusiasm of its retail base while building trust and support among institutional investors, it will be well positioned to maintain its leadership position in the EV revolution. As always with Tesla, expect plenty of twists and turns along the way.