Investor's Corner
Tesla (TSLA) starts recovering amid Outperform rating, $430 price target from Wall St firm
While Tesla stock (NASDAQ:TSLA) ended Monday’s trading at a nearly 18-month low, the electric car maker has nonetheless received an optimistic outlook from Macquarie Capital Inc. In a recently published note, the Wall Street firm gave the company an Outperform rating and a $430 price target, citing the electric car maker’s unique position to “lead in ecosystem platforms.”
Macquarie analyst Maynard Um wrote in a recent note that in the long term, Tesla would likely enjoy an edge against competitors due to the strength and integration of its vehicle hardware and software systems. The analyst pointed out that the auto industry is currently “on the precipice of a multi-decade transformation driven by disruptive innovation and technology.” Thus, companies focused on highly disruptive ecosystem platforms such as Tesla would likely be successful. Um also took a particular focus on Tesla’s real-world Autopilot data as pivotal in establishing the company’s place in the emerging autonomous driving industry.
The Macquarie analyst noted that in the short-term, he sees enough levers to fund Tesla’s debt maturity events, particularly if the company’s stock reaches $360 per share by 3/1/2019. Um did note, though, that it would be beneficial for Tesla to raise equity, as it would further strengthen the company’s longer-term outlook and provide a cushion for any unexpected events or periods of “economic softening.” The analyst also stated that there are two key demand drivers which provide comfort around Tesla’s sales.
“Our thesis is also predicated on TSLA having enough levels to get over the debt maturity hump including cash flow from ZEV credit (estimate potential for $500-$600 million in 2H 18) & Model 3 sales, access to $1.2 billion unused debt commitment, potential for credit amendments, et al. We see two demand drivers into year-end (key to achieving profits) that provide comfort around sales: 1) pent-up demand before the end of lifetime Supercharging on 9/18, and 2) pent-up demand before year-end when US subsidies diminish. TSLA appears on track for production targets & should be able to achieve profitability in 2H.”
The analyst concluded that ultimately, Macquarie’s Outperform rating and $430 price target for Tesla is driven by five primary factors – the electric car maker’s accelerating vehicle growth, the company’s “unique” potential among OEMs, its technology integration and differentiation, the expansion of its energy storage business, and its opportunity to lead in the autonomous driving field.
Amidst the release of the Macquarie analyst’s recent note, TSLA stock started showing some recovery, trading up 3.36% at $258.98 per share when markets opened on Tuesday.
The steep plunge of Tesla stock over the past week comes amidst the company’s improving fundamentals and even more accolades for its latest vehicle, the Model 3. Apart from showing impressive Q3 vehicle delivery and production results, Tesla has also been exhibiting signs that its ramp for the Model 3 ramp is getting even better. Since October began, for example, Tesla has registered more than 17,000 new Model 3 VINs, with the majority of the filings corresponding to Dual Motor vehicles. This Sunday, Tesla also shared an update stating that the NHTSA has found the Model 3 to be the car with the “lowest probability of injury” among the vehicles the agency has tested so far. Immediately following the Model 3 was Tesla’s two other cars – the Model S and the Model X.
Tesla’s vehicle assembly line in Fremont, CA.
Admittedly, some of the stock’s volatility could be attributed to Elon Musk’s behavior on Twitter last Thursday. Less than a week after agreeing to a settlement with the SEC regarding the commission’s lawsuit over his “funding secured” tweet last August, Musk opted to troll the SEC on Twitter. Tesla was down 4.4% on Thursday, but after Musk’s tweets, TSLA fell by 2% more. Friday and this past Monday were equally unkind to Tesla stock.
Fellow billionaire and iconic philanthropist Richard Branson recently expressed his thoughts on what Elon Musk could do to reduce his stress in Tesla. While speaking to CNBC, Branson noted that it would be best if Musk, a hands-on leader who has a tendency to overdo his work, learns the art of delegation.
“I think he maybe needs to learn the art of delegation. It’s important that he’s got to find time for himself, he’s got to find time for his health, and for his family. He’s a wonderfully creative person, but he shouldn’t be getting very little sleep. He should find a fantastic team of people around him and still jump in on all the major issues. And I think the reason that I have such an enjoyable life – a long life – has been finding wonderful people to run our companies on the key issues I can then get involved. So if I was to sit down with him – I have talked to him about it – but I think learning the art of delegation better would be his one flaw,” Branson said.
As of writing, Tesla shares are trading up 5.24% at $263.69 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Investor's Corner
Michael Dell points out practical advantage of Elon Musk’s proposed pay package
As pointed out by the Dell Technologies CEO, Musk will only be rewarded if he delivers extraordinary value to shareholders
Michael Dell has weighed in on Elon Musk’s controversial 2025 CEO Performance Award, offering a grounded perspective amidst the noise surrounding the pay package today.
As pointed out by the Dell Technologies CEO, Musk will only be rewarded if he delivers extraordinary value to shareholders. Musk would quite literally receive no compensation if he fails to achieve his targets.
Dell emphasizes results over rhetoric
Dell shared his thoughts about Musk’s 2025 CEO Performance Award in a post on X.“Vote FOR Elon Musk. The award is only achieved IF he hits exceptionally ambitious market-cap and operational milestones—if he falls short, he gets nothing,” Dell wrote in his post.
“If he succeeds, shareholders will win big through unprecedented value creation, and he will earn added voting rights to continue driving Tesla’s long-term vision.”
Musk replied with a short “Thanks Michael,” acknowledging Dell’s support. Dell’s framing cuts through the debate surrounding Musk’s compensation, as he simply focused on the incentive structure’s risk-reward balance.
Musk’s ambitious pay package
Elon Musk’s 2025 CEO Performance Award requires Tesla’s market capitalization to rise from roughly $1.1 trillion today to $8.5 trillion within a decade. This would make Tesla more valuable than any company in history.
Apart from this, Tesla’s operating profit must also grow from $17 billion to $400 billion annually. Musk must also lead the company to several product-related milestones, such as 20 million cumulative vehicle deliveries, 10 million Full Self-Driving subscriptions, 1 million Tesla Bots, and 1 million operating Robotaxis.
So far, proxy advisors Glass Lewis and ISS have urged shareholders to vote against the plan. Some prominent investors, including ARK Invest CEO Cathie Wood, however, have voiced strong support for the plan. Wood called Musk “the most productive human being on earth,” arguing that his vision and ability to attract talent are central to Tesla’s success.
Investor's Corner
Elon Musk’s 2025 pay package gets support from Tesla’s biggest bull
ARK Invest founder Cathie Wood has previously stated that she is quite confident that the vote on Elon Musk’s 2025 Performance Award would pass.
Cathie Wood, CEO of ARK Invest and one of Tesla’s most ardent bulls, reiterated her support for Elon Musk’s 2025 CEO Performance Award.
Wood highlighted that Musk’s leadership attracts incredible talent, and it has allowed the companies he leads such as Tesla to become disruptors in their respective fields.
ARK Invest supports Musk’s leadership
Elon Musk’s 2025 CEO Performance Award has received a mixed reception. Proxy firms such as Glass Lewis and Institutional Shareholder Services (ISS) have stated that they would be voting against Musk’s pay package. Other entities, such as the State Board of Administration of Florida (SBA), have stated that they would be voting in favor of Tesla’s proposals.
ARK Invest founder Cathie Wood, for her part, has previously stated that she is quite confident that the vote on Elon Musk’s 2025 Performance Award would pass. She also stated that a favorable result to the vote for Musk’s 2025 pay plan would be beneficial for Tesla.
“Elon Musk is the most productive human being on earth. And a human being who attracts incredible talent, people who want to solve the world’s hardest problems. This is a win-win for all of us if Elon succeeds this time,” Wood stated. Musk appreciated Wood’s comments, stating, “Thanks Cathie!” In a post on X.
ARK Invest has been one of Tesla’s most loyal bulls
Tesla is ARK Invest’s single largest holding, with the firm holding an estimated $1 billion worth of TSLA, as noted in an Insider report. Wood previously said she expects the approval of Musk’s pay package to trigger “super-exponential growth” for the automaker, as new products like the Cybercab and Optimus expand Tesla’s offerings.
“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI, and it’s not stopping with Robotaxis. There’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” Wood stated during an appearance at Steven Bartlett’s podcast The Diary Of A CEO.
Investor's Corner
Tesla VP for AI software makes a case for upcoming Elon Musk shareholder vote
Elluswamy reiterated the idea that Tesla is indeed at a critical point in its history.
Tesla’s Director of Autopilot Software and VP of AI Software Ashok Elluswamy has shared his thoughts about CEO Elon Musk’s 2025 performance award. While the executive typically discusses topics related to the company’s tech and AI initiaives, Elluswamy made it a point to make a case for Musk’s proposed pay package.
Tesla’s VP for AI Software shares his insights
In a post on X, Elluswamy reiterated the idea that Tesla is indeed at a critical point in its history. This is because the company is changing from a leader in electric vehicles and a major player in the energy storage market to a powerhouse pioneer in robotics that are powered by real-world AI. As per the executive, Elon Musk’s leadership of Tesla is more relevant now more than ever. He also reported an X article he previously wrote about Elon Musk and Tesla.
“This note regarding the importance of Elon leading Tesla is more relevant now than ever. Tesla is at a critical juncture, as it is metamorphosing into the world leader in robotics. Creating large-scale, useful robots requires expertise across engineering design, manufacturing, real-world AI software, chips for AI, and more. Elon is, quite likely, the only person on Earth with deep skills and the right instincts across all these domains,” Elluswamy stated.
A push to support Musk’s 2025 performance award
In recent weeks, Tesla executives such as Board Chair Robyn Denholm have been encouraging TSLA shareholders to vote in favor of Elon Musk’s 2025 performance award, as well as other proposals that the company’s directors have argued are critical to the future of the company. These proposals, Tesla executives noted, are necessary to ensure that the company can achieve the ambitious targets of Elon Musk’s Master Plan Part IV.
Elon Musk’s pay package, as well as the company’s proposals, would be decided at the upcoming 2025 Annual Shareholders Meeting, which would be held at Giga Texas on November 6, 2025. Needless to say, Tesla’s future might very well be decided during the event.
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