Investor's Corner
Op-Ed: Tesla faces a unique challenge–a growing number of investors who no longer believe in Elon Musk
Tesla’s (TSLA:NASDAQ) Proxy Statement 2024 revealed that the company is asking shareholders to approve two big proposals at the upcoming annual meeting of stockholders in June: Tesla’s reincorporation to Texas and the ratification of Musk’s 2018 compensation plan, which was rescinded by a Delaware judge in late January. Considering the sentiments of the Tesla community online today, it would appear that the electric vehicle maker will be facing a rather unique situation in June — a growing group of shareholders who have grown to dislike Elon Musk.
Elon Musk has never really behaved like a conventional CEO, not for Tesla or any company that he leads or has led in the past. Tesla will also never have 100% of his time, as he is also the CEO of SpaceX, and he is involved with his other companies like Neuralink, The Boring Company, xAI, and X, formerly Twitter. For years, Musk and the Tesla community seemed to have maintained an agreement that such a setup was agreeable. But with Tesla stock down 40% year-to-date, sentiments surrounding Musk have become quite negative.
Negative Sentiments
These sentiments became quite evident after Tesla announced that it was looking to ratify Musk’s 2018 compensation package, and they became even more prominent when the company went live with https://www.supportteslavalue.com/, a dedicated website that encourages shareholders to support the company’s proposals. Such sentiments were quite notable in the r/TeslaMotors subreddit, a group with over 2.7 million members. When a user posted a link to https://www.supportteslavalue.com/, the vast majority of the comments claimed that they would be voting against the ratification of Musk’s 2018 compensation package.
Support Tesla!
byu/cicada57 inteslamotors
The same is true on social media platform X. Musk has become more polarizing than ever as he continued to express his opinions on political and societal matters, and this has resulted in a growing number of Tesla community members seemingly getting disillusioned with the CEO. This was quite evident with Leo KoGuan, a prominent retail shareholder who claims to hold over 27 million TSLA shares. While KoGuan has been very supportive of Musk in the past, his recent posts showed a notable disdain for the CEO. “I fell in love with the crafted image, I was naĩve,” KoGuan wrote. He also noted that if Musk only spends more time at Tesla, the company would be so much better off.
If Elon just spends 50% of his working hours at Tesla, none can beat Elon and Tesla. I just want him to spend 50% of his waking hours on Tesla bc he is Tesla tyrant CEO. If he doesn’t want to or has no time for Tesla, he should graciously fade away and appoint his replacement. https://t.co/ROZCtKLCTM— KoGuan Leo (@KoguanLeo) April 18, 2024
A look at the overall sentiments of alleged TSLA shareholders that seem inclined to vote against Musk’s 2018 compensation plan suggests that investors are most frustrated about the company’s stock price, which has never really recovered since Musk sold part of his personal shares when he purchased Twitter. Many are also notably frustrated at Musk’s polarizing and controversial posts on X, some of which seem to be targeting the very demographic that initially supported Tesla and ensured its survival in its early years. The volume of Musk’s posts about topics like DEI, the US border, and politics has also given the impression that he is simply not focused on Tesla anymore.
Elon Musk: Strength to Liability
Overall, the situation could be summarized as follows: In 2018, most TSLA shareholders seemed secure in the belief that Musk was the company’s biggest strength. In 2024, a growing number of shareholders seem to believe that Musk has become Tesla’s biggest liability. So prominent are these sentiments today that some have seemingly adopted the idea that Musk is now weighing Tesla down and driving it to the ground, so the EV maker’s best chance of survival is to kick Musk out of Tesla and replace him with a more level-headed and focused CEO — someone like Tim Cook, who is arguably not as innovative as Steve Jobs, but is the leader that brought Apple to a $2.55 trillion valuation.
Making EVs profitably and at scale is extremely difficult. pic.twitter.com/KZenPfZBwt— ALEX (@ajtourville) April 21, 2024
As noted by Tesla community members on social media, TSLA stock, after accounting for the stock splits that the company has implemented over the years, was trading at less than $20 per share when Musk’s 2018 compensation package was initially approved. Thus, even in its current state, it should be noted that TSLA shares are still up over 800%. While Tesla has fallen significantly from its peak, when the company was worth over a trillion dollars, it is still more than eight times more valuable than it was when investors approved Musk’s compensation plan.
For those who don’t know, the stock was under $20 when it was first approved in 2018. pic.twitter.com/QmbcNcgaLF— John Shoemaker (@RealJohnShoe) April 22, 2024
In a way, voting against the ratification of Musk’s 2018 compensation plan will probably ensure that Tesla becomes a competent, predictable carmaker — and that’s not so bad at all. Tesla will still be one of the few American automotive startups that survived and thrived in a very long time. That’s a whole lot of accomplishments that can never be taken away from the company, no matter what happens moving forward. Voting in support of the company’s proposals would likely mean that Tesla, under Musk’s leadership, will continue to wager its future on risky innovations that hold world-changing potential, like AI and humanoid robots, all while Musk is focused on multiple, high-profile projects like SpaceX’s Starship program.
History will ultimately determine which of these choices will be the better option for Tesla.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
Tesla Cybercab tests are going on overdrive with production-ready units
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