Wedbush top analyst Daniel Ives stated in a research note that Tesla (TSLA) CEO Elon Musk remains its “big asset” and that the approval of his interim pay package “removes an overhang on the stock.” The analyst also believes the compensation will ensure that Musk remains CEO of Tesla at least until 2030. TSLA stock jumped 2.2% on the news yesterday.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Tesla’s board of directors appointed a special committee, consisting of disinterested directors, to decide on the CEO’s interim award. On Sunday, the board approved the committee’s proposed grant of 96 million shares of restricted stock to Musk. The shares are worth about $29 billion, based on Friday’s closing price of $302.63.
Here’s Why Ives Is Optimistic About Tesla’s Future
Ives has been a long-time bull on Tesla and has full faith in founder and CEO Musk’s leadership. He maintained his “Buy” rating on TSLA stock, with a Street-High price target of $500, implying an impressive 61.7% upside potential from current levels. Ives is encouraged that Tesla’s board has stepped in to resolve the matter and ensure Musk remains committed to the company over the next few years.
He highlighted that the AI talent war is “fully underway across Big Tech,” and approving the compensation was a strategic move to keep Tesla’s top asset onboard. Ives believes that the framework for Musk’s pay package and greater voting control will prove beneficial for Tesla in the long run. Musk’s compensation has been one of the biggest and most constant concerns of shareholders, especially since the “Delaware soap opera began,” referring to the court’s block on Musk’s 2018 compensation plan.
Tesla’s sales have been declining due to growing competition and a heated price war in one of its biggest market China. Additionally, weak global demand and backlash over Musk’s politics led to its largest quarterly sales drop in over ten years during the second quarter. Importantly, the new pay package was designed to keep Musk as the head of the electric vehicle (EV) company, reflecting the board’s strong belief in his crucial role in Tesla’s future success.
Is TSLA a Buy, Hold, or Sell?
Not all analysts share the same enthusiasm about Tesla’s long-term outlook as Ives. On TipRanks, TSLA stock has a Hold consensus rating based on 13 Buys, 15 Holds, and eight Sell ratings. The average Tesla price target of $305.37 implies 1.3% downside potential from current levels. Meanwhile, TSLA stock has lost 23.4% so far this year.
