Zinger Key Points
- A ruling by a Delaware judge over a compensation plan for Elon Musk could be an overhang on the stock, an analyst says.
- The analyst lays out three ideas for Tesla's Board of Director to get over the compensation overhang.
- Get New Picks of the Market's Top Stocks
A leading Tesla Inc TSLA analyst has outlined a new plan for the board of directors to work on improving the sentiment around the stock.
What Happened: Tesla has drawn its share of bears over the years, Wedbush analyst Daniel Ives said in a new research note.
"We believe the Tesla narrative is as negative we have seen in the last few years with Musk and Tesla getting attacked by the bears from all directions," Ives said.
The analyst, who has an Outperform rating and price target of $315, said Tesla and Elon Musk have been attacked many times over the last 10 years with comments like electric vehicles (EVs) being a fad and Tesla not being able to change the automotive sector.
"Fast forward to today and coming off an earnings conference call that was one to forget the Street is now piling on saying this is the last chapter of the Tesla growth story and watch out below."
Ives brought up the overhang on a 2018 compensation plan being voided by a Delaware judge. That added to the fire and brought a new worry for Tesla investors and its board, he says.
"We could not disagree more with the ultra negative Tesla narrative building and forming a black cloud over the stock."
Ives outlines three things that Tesla's board can do to fix the current "Category 5 hurricane" over Tesla's stock.
- Create a new compensation package that would supersede the 2018 plan voided by the judge.
- Create a new compensation package that takes Musk to the 25% voting share of Tesla he has been requesting. Have shareholders vote on the new plan at the next shareholder meeting.
- Move incorporation of Tesla from Delaware to Texas.
"In summary: For Tesla we believe moving out of Delaware to Texas is the only decision and should resolve the Musk comp package and at the same time take out the uncertainty of Musk and his AI initiatives going anywhere else except under the Tesla hood."
Related Link: Tesla Q4 Earnings Highlights: Revenue Miss, EPS Miss, Model Y A Global Bestseller, Next-Gen Vehicle Update And More
Why It's Important: The update from Ives comes after a group of 5,821 Tesla shareholders representing 23,337,127 TSLA shares recently sent a letter to Tesla's board in support of Musk and the Tesla board.
The letter centers on three points:
- Shifting Tesla's state of incorporation from Delaware to Texas
- Exploring options to keep Musk's 2018 pay plan in place
- And designing a new plan along the same lines as the 2018 compensation plan that was struck down.
The shareholders envision a new compensation plan for Musk that includes hitting company milestones like full self-driving reaching level five autonomy, launching the Optimus bot and getting Tesla's market capitalization to pass $1 trillion.
Ives previously shared 10 ideas that could help Tesla stock after the fourth-quarter earnings report.
TSLA Price Action: Tesla shares were up 1% to $189.56 on Thursday versus a 52-week trading range of $152.37 to $299.29. Tesla shares are down 24% year-to-date in 2024.
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