Tesla (NASDAQ:TSLA) is going all-in on Elon Musk, with its board sending a loud and clear message ahead of the annual shareholder meeting in early November: “Pay the Man!”.
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The proposed compensation package – which shareholders will need to approve – would award Musk another 423 million shares of common stock, bringing his total ownership of Tesla to roughly 25%. In exchange, Musk will be charged with driving Tesla’s valuation to an astonishing $8.5 trillion, quite the increase from its current market cap of $1.1 trillion.
The shares would be rewarded in tranches, corresponding to various benchmarks that Tesla will be required to meet along the path to riches. Translating this into product achievements, Tesla will need to achieve 20 million vehicle deliveries, 10 million active Full Self-Driving subscriptions, 1 million robotaxis in operation, and 1 million Optimus robots in circulation. Musk has until 2035 to reach these figures.
As it stands now, this would make the richest man alive the world’s first trillionaire, while pushing the company into a market cap more than twice the current size of Nvidia, the most valuable public-traded company at present.
Is wagering so much on one man a wise decision? Wedbush analyst Daniel Ives thinks it is.
“We believe this was the smart move by the Board as the biggest asset for Tesla is Musk,” asserts the 5-star analyst.
Ives further remarks that the company is entering a decisive stretch, one where Tesla’s ability to drive incredible technological progress is paramount. It is therefore beyond critical that Musk remains keenly motivated to propel Tesla to reach these great heights.
The analyst is also in favor of the proposed strategic investment in xAI, which Ives argues will further advance TSLA’s innovative push over the coming year and half. But, first things first, the company’s future successes rely on having a healthy and happy Musk at the helm.
“This represents a critical next step to keep Musk as CEO at least until 2030,” sums up Ives, who is assigning TSLA an Outperform (i.e. Buy) and a $500 price target. If met, the figure could yield returns of ~43% over the one-year timeframe. (To watch Daniel Ives’ track record, click here)
However, not everyone on Wall Street shares Ives’ enthusiasm. The broader analyst community is split, with 14 Buys, 14 Holds, and 8 Sells, leaving TSLA with a consensus Hold (i.e. Neutral) rating. The 12-month average price target of $309 implies ~12% downside from current levels. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.