Investor's Corner
Tesla stock named ‘Top Pick’ by Morgan Stanley, citing future growth
Morgan Stanley named Tesla one of its three top picks for 2023, citing its future growth opportunities.
Despite Tesla’s recent challenges with its stock valuation, many analysts still see the automaker’s stock as an opportunity for value growth. Forbes and the Motley Fool have recently published pieces putting forward similar arguments, while U.S. Congressmen have yet to sell their stock in the company. Now, Morgan Stanley has named Tesla as one of its “Top Picks” for 2023.
CNBC initially reported on Morgan Stanley’s Tesla pick, and the analysts quickly highlighted the investment group’s optimism. Not only did it maintain its price target for Tesla at $330, counter to moves from Goldman Sachs, but Morgan Stanley doubled down, stating, “while we see 2023 as a challenging year for the EV market categorically, we believe Tesla’s gap to competition can widen.”
Some believe Tesla’s inclusion on Morgan Stanley’s list is a questionable choice; as pointed out by CNBC, many are worried about the company’s growth in the near future, particularly relating to Tesla CEO Elon Musk. Many investors have argued that Mr. Musk has become too divisive or that he may be dedicating too much time to his newest acquisition, Twitter. And as mentioned above, these concerns were exemplified in Goldman Sach’s most recent Tesla stock price target cut from $305 per share to $235.
Tesla is familiar with the separation of its stock price from more tangible measurements, even Mr. Musk at times claiming that the stock’s price was inflated. However, we may be seeing a disconnect in the opposite direction.
Looking at Tesla’s financials and the company’s future, investors can get a better idea of the condition (and perhaps opportunity) of the stock. Tesla has solid fundamentals; high earnings and profitability, low amounts of debt relative to competitors, and continuous growth in demand for all of its products. Looking at future product offerings offers more good news.
Tesla has yet another opportunity to become a disruptor within the automotive industry with its Semi truck, which it has already started to deliver. The brand’s hotly anticipated Cybertruck is finally coming to fruition, with pre-fabrication work already occurring. And the next generation of the brand’s golden goose, the Model 3, is just on the horizon.
This is not to say that Tesla’s stock success is guaranteed, far from it. As pointed out by numerous market analysts and even Elon Musk himself, the global economy is in a very precarious situation currently, especially as the United States Federal Reserve continues to push interest rates ever-higher to battle climbing inflation. At the same time, supply shortages may only be getting worse instead of better as the tension between the U.S. and China continues to build, leading to numerous tech suppliers facing challenges in producing essential parts.
Instead, Morgan Stanley might be arguing for a healthy dose of cautious optimism. In the short term, it remains pretty evident that many tech stocks could continue to fall. Still, for those willing to hold their position, perhaps until recession worries pass by, they may be in for a fantastic opportunity.
William owns stock in Tesla and index funds that include the stock.
What do you think of the article? Do you have any comments, questions, or concerns? Shoot me an email at william@teslarati.com. You can also reach me on Twitter @WilliamWritin. If you have news tips, email us at tips@teslarati.com!
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.
Investor's Corner
Tesla investor Calpers opposes Elon Musk’s 2025 performance award
Musk’s 2025 pay plan will be decided at Tesla’s 2025 Annual Shareholder Meeting, which will be held on November 6 in Giga Texas.
One of the United States’ largest pension funds, the California Public Employees’ Retirement System (Calpers), has stated that it will be voting against Elon Musk’s 2025 Tesla CEO performance award.
Musk’s 2025 pay plan will be decided at Tesla’s 2025 Annual Shareholder Meeting, which will be held on November 6 in Giga Texas. Company executives have stated that the upcoming vote will decide Tesla’s fate in the years to come.
Why Calpers opposes Musk’s 2025 performance award
In a statement shared with Bloomberg News, a Calpers spokesperson criticized the scale of Musk’s proposed deal. Calpers currently holds about 5 million Tesla shares, giving its stance meaningful influence among institutional investors.
“The CEO pay package proposed by Tesla is larger than pay packages for CEOs in comparable companies by many orders of magnitude. It would also further concentrate power in a single shareholder,” the spokesperson stated.
This is not the first time Calpers has opposed a major Musk pay deal. The fund previously voted against a $56 billion package proposed for Musk and criticized the CEO’s 2018 performance-based plan, which was perceived as unrealistic due to its ambitious nature at the time. Musk’s 2018 pay plan was later struck down by a Delaware court, though Tesla is currently appealing the decision.
Musk’s 2025 CEO Performance Award
While Elon Musk’s 2025 performance award will result in him becoming a trillionaire, he would not be able to receive any compensation from Tesla unless aggressive operational and financial targets are met. For Musk to receive his full compensation, for example, he would have to grow Tesla’s market cap from today’s $1.1 trillion to $8.5 trillion, effectively making it the world’s most valuable company by a mile.
Musk has also maintained that his 2025 performance award is not about compensation. It’s about his controlling stake at Tesla. “If I can just get kicked out in the future by activist shareholder advisory firms who don’t even own Tesla shares themselves, I’m not comfortable with that future,” Musk wrote in a post on X.
Elon Musk’s 2025 pay package gets support from Tesla’s biggest bull
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