A prominent voice in the realm of Tesla Inc TSLA has presented a new blueprint to ameliorate the current negative perception surrounding the company’s stock.
Addressing the Issue: Analyst Daniel Ives pointed out that Tesla has been the target of widespread skepticism over the years.
“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 expressed in a recent research note.
The analyst, who maintains an Outperform rating and a price target of $315, emphasized how Tesla and its CEO Elon Musk have endured relentless criticism, from doubts about electric vehicles (EVs) being a fleeting trend to skepticism about Tesla’s ability to revolutionize the automotive landscape.
“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 highlighted the impact of a 2018 compensation plan being invalidated by a Delaware judge, adding to the strain and compounding the concern for Tesla investors and its board.
“We could not disagree more with the ultra negative Tesla narrative building and forming a black cloud over the stock.”
Ives outlined three measures that Tesla’s board could take to address the current “Category 5 hurricane” unsettling Tesla’s stock.
- Devise a new compensation package that supersedes the 2018 plan invalidated by the judge.
- Create a revised compensation package that grants Musk the 25% voting share of Tesla he has been advocating for, subject to shareholder approval at the next shareholder meeting.
- Relocate Tesla’s incorporation 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.”
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Significance: The proposal from Ives follows a letter from a group of 5,821 Tesla shareholders, collectively representing 23,337,127 TSLA shares, who voiced their support for Musk and the Tesla board.
The letter advocates for:
- Moving Tesla’s state of incorporation from Delaware to Texas
- Exploring options to preserve Musk’s 2018 pay plan
- Formulating a new plan akin to the 2018 compensation plan that was invalidated.
The shareholders envisage a fresh compensation plan for Musk, contingent on achieving company milestones such as attaining level five autonomy for full self-driving, unveiling the Optimus bot, and propelling Tesla’s market capitalization beyond $1 trillion.
Ives previously proposed 10 strategies that could potentially bolster Tesla’s stock following the fourth-quarter earnings report.
TSLA Price Action: On Thursday, Tesla shares demonstrated a 1% uptick to reach $189.56, within a 52-week trading range of $152.37 to $299.29. Year-to-date, Tesla shares have declined by 24% in 2024.
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