In the end, as has happened many times before, Elon Musk eventually got what he wanted after all. The Tesla (NASDAQ:TSLA) CEO’s $56 billion pay package won approval from 77% of shareholders last week.
The results had Musk in a good mood and ensured he would stay on as CEO and not take any AI activities elsewhere. Or have they?
As noted by Morgan Stanley analyst Adam Jonas, the results have yet to actually provide Musk with his target of attaining a 25% blocking minority voting power.
“To offset tax impacts and to close the gap to 25% will require further purchases or other mechanisms (capital or voting) to raise Mr. Musk’s stake,” says Jonas. “We note that Mr. Musk has substantial assets outside of Tesla we estimate to may be valued in excess of $100bn that could be possibly used as collateral in subsequent potential transactions.”
Additionally, the vote still needs “formal legal approval,” and there’s no guarantee that will happen. According to a Reuters report, months of litigation are likely in the cards as the attempt to overturn Judge Kathaleen McCormick’s ruling to nullify Tesla’s CEO 2018 compensation package takes shape.
Nevertheless, Jonas expects Musk will stay in his CEO role and will be present on the Q2 earnings call, with the robotaxi event in Austin on August 8th offering further prospects.
The analyst also lays out several key items the company must address both in the here and now, and looking ahead. The near-term priority is to reset the cost and capacity bar in the auto business, given shareholder votes alone won’t drive consumer adoption of EVs. In the medium term, Tesla needs to introduce new products in both its auto biz and beyond, leveraging its strengths in AI, robotics, computing, and renewable energy. Long-term, Tesla must unify strategies across Elon Musk’s ventures, including xAI, X, and Tesla, and start planning for “eventual succession.”
“While we believe this recent period of uncertainty around the leadership of the company has weighed heavily on the stock, we look ahead to the full measure of having Elon Musk’s fuller attention and energy behind the company’s strategy as it undertakes the biggest metamorphosis in its history,” Jonas summed up.
The Morgan Stanley analyst remains the Street’s biggest TSLA bull, rating the stock an Overweight (i.e., Buy), with a Street-high price target of $310. If achieved, his target could offer a potential return of 74% from current levels. (To watch Jonas’s track record, click here)
All in all, 9 other analysts join Jonas in the bull camp but with an additional 14 Holds and 9 Sells, the stock only claims a Hold (i.e. Neutral) consensus rating. The average price target stands at $176.96, implying the shares have no room to run right now. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
