There never seems to be a shortage of news items, opinions, and scuttlebutt surrounding Elon Musk and his various undertakings, with Tesla, Inc. (NASDAQ:TSLA) often front and center. Recent history has not bucked this trend one iota.
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Earlier this month, Tesla’s board of directors decided to present Musk with a $30 billion stock-based compensation package – an interim step to award the CEO while a previously struck deal winds its way through the court system. In a letter published on X, the board explained the decision as “an important first step in compensating Elon Musk for his extraordinary work at Tesla.”
The board clearly recognizes that Musk is the lynchpin on which future growth is resting, and they are doing their utmost to keep the CEO committed and focused on the company’s largescale AI ambitions. Arguably, it is this vision of robots and robotaxis which serve as the reason that TSLA shares trade at such a high premium above other automakers. This remains true despite the share price falling some 17% year-to-date amid weakening year-over-year EV sales figures in both Q1 and Q2 2025.
One investor known by the pseudonym Bay Area Ideas believes that the future growth is enough to justify sticking around, but only for those who with an ample supply of patience.
“I believe Tesla shares are quite obviously overvalued relative to current financials, but for investors that trust the growth story and have an extremely long investment horizon, the valuation is not completely outrageous,” explains the investor.
Bay Area further details that the TSLA bull narrative is dependent on advancements in robotaxis, affordable models, and other autonomous ventures. That’s keeping the “growth story” alive and kicking. This is especially important due to the near-term headwinds, which include the removal of the $7,500 EV consumer tax credit that is expiring at the end of September.
Amid falling growth and squeezed margins, one could therefore be a bit squeamish regarding the Musk compensation package. Bay Area nips these doubts in the bud.
While acknowledging the stock’s award size is “outrageous,” the investor also argues that the company simply needs to keep Musk onboard.
“If he were to leave Tesla, the long-term direction of sales and innovation could be negatively affected,” adds Bay Area.
Of course, the emphasis is indeed on the “long-term.” Bay Area does not foresee a bonanza just around the corner, leading the investor to offer a word of caution for those expecting gains post haste.
“The unlikeliness for stock outperformance in the near future leads me to downgrade the stock to a Hold,” concludes Bay Area Ideas. (To watch Bay Area Ideas’ track record, click here)
That’s where Wall Street seems to find itself as well. With 14 Buys, 15 Holds, and 8 Sells, TSLA has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $307.23 has a downside of ~8%. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.