Investor's Corner
Tesla (TSLA) shows volatility after Elon Musk hints at record Q2, strong Model 3 demand
Tesla shares (NASDAQ:TSLA) proved volatile after the opening bell on Wednesday, as both bullish and bearish analysts took their stance following the electric car maker’s annual shareholder meeting. During the investor event, Tesla CEO Elon Musk, CTO JB Straubel, and VP for Tech Drew Baglino discussed the company’s expansion, its product lineup, and the company’s projects for the coming years.
Musk directly addressed concerns about the Model 3’s alleged weakening demand, a bearish thesis that has gained ground since the company reported its lower-than-expected Q1 2019 figures. During the shareholder meeting, the CEO noted that sales are still exceeding Tesla’s production capabilities, and the company has a pretty fair chance at setting new records this second quarter. “I want to be clear that there is not a demand problem… absolutely not. Sales have far exceeded production, and production has been pretty good. We have a decent shot at a record quarter,” Musk said.
Apart from highlighting the strong demand for the company’s vehicles, Musk also covered Tesla’s lead in electric car technology over more experienced rivals. Showing a slide that compared the efficiency of Tesla’s vehicles compared to the competition such as the Audi e-tron, Musk joked that while he does not want to poke fun at rivals, “there’s room for improvement.” Other projects, such as the Solar Roof, Gigafactory Europe, the Tesla Truck, and Full Self-Driving (among many) were also discussed.
Tesla’s annual shareholder meeting was received positively by the company’s supporters on Wall Street. Baird analyst Ben Kallo, for one, maintained his $340 price target while reiterating his “Outperform” rating on Tesla. “Management indicated demand is not a concern; we believe the narrative is overly negative and think Bear arguments will be disproven in the coming weeks and months,” the firm noted.
True to form, Tesla bears interpreted the recent shareholder meeting in a negative light. Gabe Hoffman of Accipiter Capital, a longtime TSLA bear, claimed that the event saw Elon Musk dialing down on the company’s plans for a network of full self-driving robotaxis. “Elon already started backtracking on the whole 2020 robotaxi thing,” Hoffman noted, claiming that Musk’s statements were indicative of shifting narratives that the CEO employs to distract investors from the company’s deeper problems.
Hoffman’s comments about the annual shareholder meeting appear to be misplaced, as Musk only reiterated Tesla’s plans to have a fleet of around 1 million robotaxi-capable vehicles by next year during the shareholder meeting. Considering that Tesla equips all its new cars with its custom FSD computer, this goal is more than feasible. This point appears to have been misinterpreted by Hoffman, who seems to have taken Musk’s statements during the previous Autonomy Day to mean that Tesla will have a fleet of Robotaxis by 2020.
The annual shareholder meeting was, in many ways, a show of strength from the electric car maker. Musk, together with the CTO and VP for Tech, exuded confidence in the company’s current and future plans. Straubel, in particular, was very involved, seemingly debunking the speculations that he is starting to distance himself from Tesla. With Musk assuring investors that demand is strong and Q2 could be poised to pleasantly surprise, TSLA stock could very well see more green days before the end of the quarter.
As of writing, TSLA stock is trading -1.57% at $213.70 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Tesla has scheduled its Earnings Call for Q4 and Full Year 2025 for next Wednesday, January 28, at 5:30 p.m. EST, and investors are already preparing to get some answers from executives regarding a wide variety of topics.
The company accepts several questions from retail investors through the platform Say, which then allows shareholders to vote on the best questions.
Tesla does not answer anything regarding future product releases, but they are willing to shed light on current timelines, progress of certain projects, and other plans.
There are five questions that range over a variety of topics, including SpaceX, Full Self-Driving, Robotaxi, and Optimus, which are currently in the lead to be asked and potentially answered by Elon Musk and other Tesla executives:
- You once said: Loyalty deserves loyalty. Will long-term Tesla shareholders still be prioritized if SpaceX does an IPO?
- Our Take – With a lot of speculation regarding an incoming SpaceX IPO, Tesla investors, especially long-term ones, should be able to benefit from an early opportunity to purchase shares. This has been discussed endlessly over the past year, and we must be getting close to it.
- When is FSD going to be 100% unsupervised?
- Our Take – Musk said today that this is essentially a solved problem, and it could be available in the U.S. by the end of this year.
- What is the current bottleneck to increase Robotaxi deployment & personal use unsupervised FSD? The safety/performance of the most recent models or people to monitor robots, robotaxis, in-car, or remotely? Or something else?
- Our Take – The bottleneck seems to be based on data, which Musk said Tesla needs 10 billion miles of data to achieve unsupervised FSD. Once that happens, regulatory issues will be what hold things up from moving forward.
- Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?
- Our Take – Optimus is going to have a larger role in factories moving forward, and later this year, they will have larger responsibilities.
- Can you please tie purchased FSD to our owner accounts vs. locked to the car? This will help us enjoy it in any Tesla we drive/buy and reward us for hanging in so long, some of us since 2017.
- Our Take – This is a good one and should get us some additional information on the FSD transfer plans and Subscription-only model that Tesla will adopt soon.
Tesla will have its Earnings Call on Wednesday, January 28.
Elon Musk
Tesla locks in Elon Musk’s top problem solver as it enters its most ambitious era
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla has granted Senior Vice President of Automotive Tom Zhu more than 520,000 stock options, tying a significant portion of his compensation to the company’s long-term performance.
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla secures top talent
According to a Form 4 filing with the U.S. Securities and Exchange Commission, Tom Zhu received 520,021 stock options with an exercise price of $435.80 per share. Since the award will not fully vest until March 5, 2031, Zhu must remain at Tesla for more than five years to realize the award’s full benefit.
Considering that Tesla shares are currently trading at around the $445 to $450 per share level, Zhu will really only see gains in his equity award if Tesla’s stock price sees a notable rise over the years, as noted in a Sina Finance report.
Still, even at today’s prices, Zhu’s stock award is already worth over $230 million. If Tesla reaches the market cap targets set forth in Elon Musk’s 2025 CEO Performance Award, Zhu would become a billionaire from this equity award alone.
Tesla’s problem solver
Zhu joined Tesla in April 2014 and initially led the company’s Supercharger rollout in China. Later that year, he assumed the leadership of Tesla’s China business, where he played a central role in Tesla’s localization efforts, including expanding retail and service networks, and later, overseeing the development of Gigafactory Shanghai.
Zhu’s efforts helped transform China into one of Tesla’s most important markets and production hubs. In 2023, Tesla promoted Zhu to Senior Vice President of Automotive, placing him among the company’s core global executives and expanding his influence beyond China. He has since garnered a reputation as the company’s problem solver, being tapped by Elon Musk to help ramp Giga Texas’s vehicle production.
With this in mind, Tesla’s recent filing seems to suggest that the company is locking in its top talent as it enters its newest, most ambitious era to date. As could be seen in the targets of Elon Musk’s 2025 pay package, Tesla is now aiming to be the world’s largest company by market cap, and it is aiming to achieve production levels that are unheard of. Zhu’s talents would definitely be of use in this stage of the company’s growth.
Tesla analyst Andrew Percoco of Morgan Stanley teased the company’s dominance in its self-driving initiative, stating that its lead over competitors is “not even close.”
Percoco recently overtook coverage of Tesla stock from Adam Jonas, who had covered the company at Morgan Stanley for years. Percoco is handling Tesla now that Jonas is covering embodied AI stocks and no longer automotive.
His first move after grabbing coverage was to adjust the price target from $410 to $425, as well as the rating from ‘Overweight’ to ‘Equal Weight.’
Percoco’s new note regarding Tesla highlights the company’s extensive lead in self-driving and autonomy projects, something that it has plenty of competition in, but has established its prowess over the past few years.
He writes:
“It’s not even close. Tesla continues to lead in autonomous driving, even as Nvidia rolls out new technology aimed at helping other automakers build driverless systems.”
Percoco’s main point regarding Tesla’s advantage is the company’s ability to collect large amounts of training data through its massive fleet, as millions of cars are driving throughout the world and gathering millions of miles of vehicle behavior on the road.
This is the main point that Percoco makes regarding Tesla’s lead in the entire autonomy sector: data is King, and Tesla has the most of it.
One big story that has hit the news over the past week is that of NVIDIA and its own self-driving suite, called Alpamayo. NVIDIA launched this open-source AI program last week, but it differs from Tesla’s in a significant fashion, especially from a hardware perspective, as it plans to use a combination of LiDAR, Radar, and Vision (Cameras) to operate.
Percoco said that NVIDIA’s announcement does not impact Morgan Stanley’s long-term opinions on Tesla and its strength or prowess in self-driving.
NVIDIA CEO Jensen Huang commends Tesla’s Elon Musk for early belief
And, for what it’s worth, NVIDIA CEO Jensen Huang even said some remarkable things about Tesla following the launch of Alpamayo:
“I think the Tesla stack is the most advanced autonomous vehicle stack in the world. I’m fairly certain they were already using end-to-end AI. Whether their AI did reasoning or not is somewhat secondary to that first part.”
Percoco reiterated both the $425 price target and the ‘Equal Weight’ rating on Tesla shares.
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