If there is one thing we have discovered over the years, it is that electric vehicle giant Tesla (TSLA) seems to operate at its best when its CEO, Elon Musk, is at his desk and focused. We remember the confusion and losses that sprang from his acquisition of Twitter, now X. We also remember the recent confusion and losses from his work with the Department of Government Efficiency (DOGE). And now, Wedbush analyst Daniel Ives—who has a four-and-a-half-star rating on TipRanks—is calling for the Tesla board to step in. Investors, however, are unconcerned; Tesla shares are up over 2.5% in Tuesday afternoon’s trading.
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Ives made his position about as clear as he could, saying, “We believe this is a tipping point in the Tesla story and ultimately the Tesla Board needs to act now and set the ground rules for Musk going forward around his political ambitions and actions.” To that end, Ives brought out three steps that the Tesla board needs to take in particular.
First, Ives suggested a new pay package for Tesla that increases his ownership to about 25% of its voting power. Second, this package would also detail how much time he must spend on Tesla operations in order to get paid. Third, Ives suggested that the Tesla board set up a specific “oversight committee” that would focus entirely on its CEO and his time spent at the Tesla job. Ives pointed out that Tesla cannot control what its CEO donates, but can at least establish oversight of its CEO’s performance.
More Trouble Ahead
Further reports suggest that Tesla is in trouble, and not just from the obvious problem of a distracted visionary CEO. While certainly, noted a CNN report, the distraction is not helping, Tesla’s problems run deeper than Elon chasing shiny things.
One of the biggest problems is the upcoming loss of a major revenue stream: the $7,500 tax credit that goes to electric vehicle buyers. The total value of those credits from 2019, the report noted, represents $10.6 billion to Tesla’s bottom line. Without that support, Tesla may actually return to being a money-losing proposition. But with Elon noting that Tesla’s future lies in a lot more than just electric vehicles, now Elon is more vital than ever. Thus, keeping Elon focused is also more vital than ever.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 13 Holds, and nine Sells assigned in the past three months, as indicated by the graphic below. After a 12.05% rally in its share price over the past year, the average TSLA price target of $294 per share implies 2.5% downside risk.
