Investor Ross Gerber, the Co-Founder, President, and CEO of Gerber Kawasaki Wealth and Investment Management, has warned Tesla shareholders about the consequences of stock-based compensation (SBC). Gerber quoted a Wall Street Journal report about Meta spending an estimated $23.6 billion on share buybacks to offset dilution as a cautionary example.
Tesla’s Increasing Stock Compensation and Gerber’s Concerns
Ross Gerber’s concerns are rooted in the fact that employee stock-based compensation reduces the value of existing shares by increasing the total count of shares. According to the financial reports, Tesla’s stock-based compensation for the twelve months ending December 31, 2025, reached $6.477B, a 32.02% increase year-over-year.
This is a major concern for the existing shareholders, such as Ross Gerber, as it is causing major dilution of stock value. Tesla currently has approximately 3.75 billion outstanding shares in total, of which nearly 60 million shares are reserved as employee compensation and another 208 million shares are reserved for CEO Elon Musk, whose current direct holdings total 519 million shares.
Unlike the other “Magnificent Seven” companies, Tesla rarely buys back shares to neutralize this dilution, and shareholders often bear the consequences. Analysts at Goldman Sachs recently predicted a negative free cash flow for Tesla in 2026. This is due to its massive CapEx (Capital Expenditure) of over $20 billion, to shape the company’s future around artificial intelligence and robotics. Given the current financial outlook, it is highly unlikely that Tesla would allocate funds for buybacks in the near future.
The Meta Comparison: A $23.6 Billion Cautionary Tale
As one of the members of the “Magnificent Seven,” Mark Zuckerberg’s Meta serves as a fitting example for explaining the situation regarding Tesla. Companies often buy back these shares to offset dilution, which results in a significant financial burden.
A recent Wall Street Journal article, cited by Gerber, reported that Meta spent nearly $23.6 billion on repurchasing shares in 2025 alone. Crucially, this massive expenditure is made simply to stay even by neutralizing the dilution, rather than increasing the stock prices. When the company fails to take steps to fix the dilution problem, the existing investors face the consequences. Although the number of stocks held by the investors remains the same, the relative value of those shares declines sharply as the increasing stock-based compensation expands the total supply.
The Bottom Line for Tesla Investors
The combination of increasing share counts and massive capital requirements for future projects is putting Tesla in a unique position among its peers. While companies like Meta are spending billions to “buy their way out” of a dilution problem, Tesla is prioritizing its future projects around robotics and artificial intelligence.
Although Tesla is taking measures to protect its share prices through these technological means, the lack of effort in reducing stock-based compensation or initiating a repurchase program has raised concerns among investors like Ross Gerber. The fear remains that, without a strategy to neutralize the expanding share supply, the dilution treadmill could weigh heavily on Tesla’s stock price in the long term, regardless of its technological breakthroughs.
