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Elon Musk's $56B Payday Wins In Landslide: 'Next Chapter In The Tesla Growth Story'

Author: Chris Katje | June 14, 2024 11:58am

Tesla Inc (NASDAQ:TSLA) shareholders overwhelmingly approved a proposal for Elon Musk’s $56 billion pay compensation package.

The approval comes after the same 2018 plan was previously voided by a Delaware judge earlier this year.

While many speculated that the vote would be close, Tesla reported that 77% of votes cast were in favor of approving the pay compensation package.

For months, a mix of public support from several key shareholders and investors along with several funds announcing they were voting against the pay package have been trending stories with the vote expected to be close. Due to the expectation that the vote would be close, analysts have also shared whether they thought Musk would leave the company if the resolution didn't pass.

With the pay package approved, analysts now share their updated take on the company with Musk secured in place as the CEO.

Cantor Fitzgerald on Tesla: Along with the pay package approval, Musk's comments on autonomous technology accelerating quickly was the key takeaway for Cantor Fitzgerald analyst Andres Sheppard.

The analyst, who has an Overweight rating and $230 price target, said the vote should help "re-solidify" Musk's commitment to Tesla's long-term plan.

"Recall that investors were divided among this issue (pay package), with some arguing that rewarding Mr. Musk is crucial in retaining his leadership and driving Tesla's long-term growth, while others believe the package could lead to dilution of shares and raise questions about fiscal prudence," Sheppard said.

Sheppard called the news of autonomous driving technology accelerating and Cybertruck production increasing as "encouraging." The analyst said the August robotaxis event is highly anticipated and could help provide more details on Tesla's future.

"Although we don't expect this segment launch prior to 2027, we do expect it to be a meaningful business segment for the company over the long term. We also expect future revenues from FSD and Robotaxi to be fundamental to TSLA's bullish thesis over the long term."

Related Link: Elon Musk Thanks Shareholders, Says Tesla ‘Starting A New Book,’ Could Hit $30 Trillion Valuation: “Hot D***, I Love You Guys’

Wedbush on Tesla: The shareholder vote removes an overhang on Tesla shares and the future storyline, Wedbush analyst Daniel Ives said.

The analyst, who has an Outperform rating and $275 price target, called the shareholder meeting and vote a "pop the champagne moment" for the company.

"This removes a $20-$25 overhang on the stock in our opinion that has weighed on shares since the head scratching Delaware ruling set this Twilight Zone soap opera on earlier this year," Ives said.

Ives said the bull case on Tesla is now $350 for the next 12 to 18 months.

"We believe the next chapter in the Tesla growth story around autonomous and FSD is now on the near-term horizon set to take Tesla's valuation to north of $1 trillion in 2025 in our view."

Ives said the risk of voting no on the pay package came with the potential consequence of Musk leaving the company as CEO, which outweighed any reward in shareholders voting yes to show frustration with the CEO.

"We have been perplexed this week when some sell side peers said this package would not pass as the groundswell momentum to get this done was crystal clear among retail and institutional investors."

Ives said with the pay package approved, the Tesla Board can look to get Musk's ownership to 25% to help resolve any threat of AI initiatives from the CEO going elsewhere.

The analyst said Musk was optimistic on autonomous and new vehicle launches.

"We believe the August 8th robotaxi day will be a key historical moment for the Tesla story that we see as a near-term catalyst."

TSLA Price Action: Tesla shares are down 2.8% to $177.31 on Friday versus a 52-week trading range of $138.80 to $299.29.

Now Read: Elon Musk’s $56B Pay Package Now Needs Green Signal From Delaware Judge Who Earlier Voided It: Report

Image generated using artificial intelligence via Midjourney.

Posted In: TSLA