Hardly a day goes by when Elon Musk refrains from making some sort of controversial comment and on Monday night, the Tesla (NASDAQ:TSLA) CEO was at it again. In a X/Twitter post, Musk said that unless he gets to have 25% of its voting shares, he is “uncomfortable growing Tesla to be a leader in AI & robotics.”
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Musk’s current stake stands at almost 13%, but it should be noted that he owned around 22% before he decided to offload a big chunk of his holdings to fund the $44 billion acquisition of Twitter in late 2022. Musk also said that he desires a level of control at Tesla that allows him to exert influence, yet not to the extent that he cannot be overruled and that should he not get what he wants, he would “prefer to build [AI] products outside of Tesla.”
That is obviously going to be an issue for the Tesla bull case, says Wedbush’s Daniel Ives, a 5-star analyst rated in the top 3% of the Street’s stock pros.
“It’s no secret and a key to our bullish thesis that all AI initiatives be kept within Tesla from Dojo to Optimus to FSD to various robotaxi and other robotic developments,” the 5-star analyst explained. “The Street views Tesla correctly (in our view) as a disruptive tech leader and if Musk ultimately went down the path to create his own company (separate from Tesla) for his next generation AI projects this would clearly be a big negative for the Tesla story.”
A new executive compensation package for Musk is set to be introduced, however, the process is being held up by a pending decision in a lawsuit concerning his 2018 compensation package. The lawsuit, initiated in 2018 by Tesla shareholder Richard J. Tornetta, alleges that the compensation committee lacked independence and was swayed by Musk’s influence when granting him stock options.
While Musk airing his Tesla dirty laundry in public amounts to a bad look, Ives is confident that over the next 3-6 months, the Board and Musk will be able to resolve the issue and that all AI initiatives “will be kept within Tesla.”
“Musk is Tesla and Tesla is Musk and AI is a key to the future of Tesla,” he summed up. “We believe this is just more drama in the Tesla story that will not bear fruit however it’s not what the bulls want to see as it creates noise and gives the bears something to run with.”
All told, Ives reiterated an Outperform (i.e., Buy) rating on Tesla shares along with a $350 price target, implying shares will deliver returns of 59% over the next 12 months. (To watch Ives’ track record, click here)
Ives is evidently one of the Street’s biggest TSLA bulls, but not all are showing the same degree of confidence. Overall, the stock claims a Hold (i.e. Neutral) consensus rating, based on a mix of 13 Holds, 12 Buys and 5 Sells. The average price target stands at $249.92, implying shares will climb ~13% higher in the months ahead. (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.
