Electric vehicle maker Tesla’s (TSLA) board has proposed a humongous $1 trillion compensation package for its CEO, Elon Musk, if he meets extremely ambitious targets over the next decade. The news has drawn both critical and supportive views on Wall Street, as analysts view the move as a strategy to keep Musk tied to the company for the long term.
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Stifel Nicolaus analyst Stephen Gengaro reiterated his “Buy” rating on TSLA stock, citing the milestones needed to reach that payout as “very aggressive.”
Meanwhile, William Blair analyst Jed Dorsheimer maintained his “Hold” rating on Tesla without assigning a price target, stating that the incentive plan for Musk “signals he is here to stay and win.”
On the other hand, UBS analyst Joseph Spak, a long-time TSLA bear, reiterated his “Sell” rating on the stock and his price target of $215, which implies 38.7% downside potential from current levels.
Here Are Analysts’ Divided Views on TSLA
Gengaro specified that for Musk to meet the required milestones, he would need “sustained executional excellence”, strong growth in auto deliveries, the successful rollout of full self-driving, momentum in the robotaxi business, and major achievements with the Optimus humanoid robot. Additionally, he noted that the long-term pay plan “clearly incentivizes” Musk to lead Tesla well for the long term. Gengaro kept his $440 price target on TSLA, implying 25.4% upside potential from current levels.
Meanwhile, Dorsheimer highlighted that achieving an $8.5 trillion market cap for Tesla would be an “incredible achievement and aligned with shareholders’ interest.” He believes the new incentive plan will be approved in the same way as the 2018 plan, with shareholders excited that Musk is incentivized for the next decade. Dorsheimer added that this news, combined with Tesla’s public rollout of its robotaxi service, is expected to boost investor sentiment.
Overall, analysts view the trillion-dollar pay package as the most effective way to keep Musk motivated to achieve Tesla’s ambitious milestones.
Is TSLA Stock a Buy, Hold, or Sell?
On TipRanks, TSLA stock has a Hold consensus rating based on 13 Buys, 14 Holds, and eight Sell ratings. The average Tesla price target of $306.42 implies 12.7% downside potential from current levels. Year-to-date, TSLA stock has lost 13.1%.
