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Wall St’s reaction to Daimler’s reduced earnings guidance highlights critical eye on TSLA

The new Mercedes-Benz EQC. (Credit: Mercedes-Benz)

Published

6 years ago

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German automaker Daimler AG had a pretty tough Monday. Following an announcement on Sunday that it is cutting its 2019 earnings guidance over the effects of an ongoing diesel emissions scandal at Mercedes-Benz, the company’s shares declined 3.6% in Frankfurt. The carmaker has noted that it is currently facing a “high three-digit million” euro increase in charges related to the diesel scandal, which would likely result in its 2019 earnings being about the same as 2018’s.

Daimler’s diesel troubles were highlighted on Friday, when Germany’s vehicle authority, the Federal Motor Transport Authority (KBA), issued a forced recall against the automaker for allegedly using an illegal shut-off device for the diesel-powered Mercedes-Benz GLK 220. The KBA is looking to extend its investigation into the carmaker further, as the cheating devices were reportedly used in Daimler’s OM642 and OM651 engines, which are equipped in popular vehicles such as the Mercedes-Benz C-Class and E-Class. The initial recall currently covers 60,000 units of the GLK, though the number could be as high as 700,000 vehicles if it covers other vehicles using the OM642 and OM651 engines, according to German publication Bild am Sonntag.

Apart from the KBA investigation in Germany, Daimler has noted in its first-quarter earnings release that it is facing an emissions probe by the US Justice Department. The company is also facing a consumer-class action lawsuit in the United States along with Bosch, one of its suppliers, for allegedly conspiring to deceive US regulators. These could prove to be a stumbling block for the company, particularly as it attempts to breach the premium electric vehicle market with the Mercedes-Benz EQC, which is expected to compete against EV veterans such as the Tesla Model X.

The new Mercedes-Benz EQC. (Credit: Mercedes-Benz)

Amidst these recent headwinds, Wall St. analyst Dan Ives from Wedbush Securities noted in a statement to CNBC that Daimler currently needs to perform a “balancing act” as it attempts to weather these challenging times. “This really handcuffs them a bit. It’s going to be a balancing act, they really need to hold investor’s hands on this, and the question is ‘Can they navigate these headwinds?’ It’s an arms race in the electric vehicle world right now,” Ives said.

The Wedbush analyst’s reaction to the developments at Daimler is quite compelling. The automaker’s challenges today are serious, yet Ives’ comments were quite restrained. Considering that the automaker is facing another diesel emissions scandal and a “high three-digit million” euro increase in charges that will result in reduced 2019 profits, the circumstances might very well handcuff Daimler more than “a bit.” Ives’ tempered response to the German automaker’s update ultimately stands in stark contrast with his reactions to Tesla. Following Tesla’s Q1 earnings call, which revealed yet another loss for the company, Ives practically bordered on the subjective, seemingly mocking Musk’s continued optimism in future quarters.

“We view this quarter as one of (the) top debacles we have ever seen, while Musk & Co., in an episode out of the Twilight Zone, act as if demand and profitability will magically return to the Tesla story. As such, we no longer can look investors in the eye and recommend buying this stock at current levels until Tesla starts to take its medicine and focus on (the) reality around demand issues which is the core focus of investors” Ives wrote in a note to Wedbush’s clients.

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Tesla’s Supercharger Network continues to grow. (Credit: Tesla)

Following a leaked email from Elon Musk urging employees to cut costs, Ives also issued a note describing the electric car maker’s circumstances as a “code red situation,” adding that Tesla faces a “Kilimanjaro-like uphill climb” as it attempts to hit its profitability targets this 2019. Quite interestingly, Ives’ comments likely helped push TSLA stock down over 4% then, which was more than Daimler’s drop on Monday. It should be noted that none of these dramatic tones were present in Ives’ comments about the German automaker’s recent updates. This is quite ironic considering his colorful reactions to Tesla’s developments were rooted only in speculations, while Daimler’s current headwinds are the result of an actual investigation by Germany’s Federal Motor Transport Authority (KBA).

During Tesla’s annual shareholder meeting, several TSLA shareholders brought up the issue of the negative narrative and misinformation surrounding the company. Elon Musk noted that these misconceptions are distressing, though he admitted that he is at a loss as to how to change the negative narrative surrounding Tesla. For the electric car maker, perhaps the best way to address all the skepticism is to simply hit its self-imposed, ambitious targets, such as delivering over 90,000 vehicles to customers this quarter, or reclaiming profitability in the second half of 2019.

Disclosure: I have no ownership in shares of Tesla or Daimler, and have no plans to initiate any positions within 72 hours.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Elon Musk

Tesla executes ‘a must’ with Musk as race to AI supremacy goes on: Wedbush

Dan Ives of Wedbush says Tesla made the right move getting Elon Musk his pay package.

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5 hours ago

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August 4, 2025

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elon musk
Steve Jurvetson, CC BY 2.0 , via Wikimedia Commons

Tesla (NASDAQ: TSLA) executed what Wedbush’s Dan Ives called “a must” this morning as it finalized a new pay package for its CEO Elon Musk.

The move helped give Musk his first meaningful compensation at Tesla since 2017, when the company offered a pay package that was based on performance and proven growth. That package was approved by shareholders on two separate occasions, but was denied to Musk both times by the Delaware Chancery Court.

On Monday, Tesla announced on X that it had created a new package that would give 96 million shares of restricted stock to Musk to compensate him for the “immense value generated for Tesla and all our shareholders.”

The details of the pay package are designed to retain Musk, who has voiced some concerns about his control of Tesla, as “activist shareholders” have used lawsuits to disrupt the previously approved package.

You can read all the details of it here:

Tesla rewards CEO Elon Musk with massive, restricted stock package

Ives says Musk’s retention is ‘a must’

Ives said in a note to investors on Monday that with the raging AI talent war that Tesla made a smart move by doing what it could to retain Musk.

He wrote:

“With the AI talent war now fully underway across Big Tech, we believe this was a strategic move to keep TSLA’s top asset, Musk, would stay focused at the company with his priority being to bolster the company’s growth strategy over the coming years. With this interim award increasing Musk’s voting rights upon this grant, which Musk honed in on and mentioned was increasingly important to incentivize him to stay focused on the matters at hand, this was a strategic move by the Board to solidify Musk as CEO of Tesla over the coming years with this framework for Musk’s pay package and greater voting control removing a major overhang on the story.”

He went on to say:

“While the groundwork is now in place for the next few years, it will be critical for the Tesla Board of Directors to get this long-term compensation strategy in place prior to the company’s November 6th shareholder meeting which would address the elephant in the room and remove a significant overhang on the stock.”

Wedbush maintained its Outperform rating and its $500 price target on the stock.

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Elon Musk

Tesla rewards CEO Elon Musk with massive, restricted stock package

Tesla announced a new pay package for Elon Musk that is restricted and will award him nearly $30 billion for contributions to the company.

Published

10 hours ago

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August 4, 2025

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Justin Pacheco, Public domain, via Wikimedia Commons

Tesla has rewarded CEO Elon Musk with a massive, restricted stock package that equates to about $29 billion in shares in an effort to retain him as the head of the company.

It is also a package that aims to reward Musk for leading numerous Tesla projects that have brought billions in value for shareholders over the past seven years. After his 2018 pay package was rejected by a Delaware Chancery Court, Musk started to question his future at the company.

This move, performed by a Special Committee of the Tesla Board, should retain him for several years.

On Monday morning, Tesla shared on X that it had approved a recommendation from a Special Committee comprised of Board Chair Robyn Denholm and fellow board member Kathleen Wilson-Thompson. It aimed to compensate Musk for his “extraordinary work” and reward him after not receiving “meaningful compensation” for the last eight years.

The post stated that “Tesla is committed to honoring its promises in the 2018 CEO Performance Award and intends to compensate its CEO for his future services commensurate with his contributions to our company and shareholders, we have recommended this award as a first step, ‘good faith’ payment to Elon.”

The award includes the following:

  • 96 million restricted shares of stock, subject to Elon paying a purchase price upon meeting a two-year vesting term, to be delivered after receipt of antitrust regulatory approval
  • The purchase price will be equal to the split-adjusted exercise price of the stock options awarded to Elon under the 2018 CEO Performance Award ($23.34 per share)
  • A requirement that Elon serve continuously in a senior leadership role at Tesla during the two-year vesting term
  • A pledging allowance to cover tax payments or the purchase price
  • A mandatory holding period of five years from the grant date, except to cover tax payments or the purchase price (with any sales for such purposes to be conducted through an orderly disposition in coordination with Tesla); and
  • If the Delaware courts fully reinstate the 2018 CEO Performance Award, this interim award will be forfeited or returned or a portion of the 2018 CEO Performance Award will be forfeited. To put it simply, there cannot be any “double dip.” Elon will not be able to keep this new award in addition to the options he will be awarded under the 2018 CEO Performance Award, should the courts rule in our favor

The board added:

“The Special Committee believes now is the right time to take decisive action to recognize the extraordinary value that Elon created for Tesla shareholders. As such, the Board (with Elon and Kimbal Musk recusing themselves) has unanimously approved a recommendation from the Special Committee of the Board to grant Elon an award of restricted stock equal to approximately one-third of the compensation he earned under the 2018 CEO Performance Award.”

Musk and his brother, Kimbal, are both members of the Tesla board. However, both Musk brothers recused themselves from any voting on this pay package.

The move comes as Musk has hinted on several occasions that he is concerned about his control of the company. His current stake in Tesla stands at about 12.8 percent. He has said a few times he would be more comfortable with a 25 percent stake to protect himself against “activist shareholders.”

He commented on it during the Q2 Earnings Call in late July:

“That is a major concern for me, as I’ve mentioned in the past. I hope that is addressed at the upcoming shareholders’ meeting. But, yeah, it is a big deal. I want to find that I’ve got so little control that I can easily be ousted by activist shareholders after having built this army of humanoid robots. I think my control over Tesla, Inc. should be enough to ensure that it goes in a good direction, but not so much control that I can’t be thrown out if I go crazy.”

The pay package should alleviate any concerns that Tesla would lose Musk as its CEO. Retaining him is perhaps the biggest step in ensuring consistent progress is made on several fronts, including AI and Robotics.

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Investor's Corner

Tesla tailwinds could drive momentum-filled finish to 2025: analyst

Tesla is heading toward some momentum to finish out the year, one Wall Street firm believes.

Published

4 days ago

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July 31, 2025

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Credit: @heydave7/X

Tesla has some tailwinds that could drive it toward a momentum-filled finish to the year, one Wall Street analyst is predicting.

The tailwinds are joined by some minor risks that have impacted the broader electric vehicle market, but overall, this firm believes Tesla has many catalysts moving forward.

Emmanuel Rosner of Wolfe Research believes that Tesla has plenty of things that could drive the stock upward as we approach the end of the year. With Q3 well underway, Tesla has about five months of catalysts to rely on to erase the roughly 18 percent drop in stock price it has so far this year.

At first glance, it is easy to see the things that would have investors bullish on Tesla for the rest of 2025 and even beyond. Initially, the Robotaxi launch and expansion, which spread to Northern California last night, provide potentially huge tailwinds for the company moving forward.

Tesla expands Robotaxi operation to California’s Bay Area

Along with that, and slightly related, are the advancements in Full Self-Driving that the company has made over the past few months.

This includes the potential launch of the FSD suite in regions like Europe and Australia, where the company believes it will make some progress on regulatory approval in the coming months.

Finally, Wolfe says the company’s Optimus project, which is expected to enter scale production sometime next year, is the third catalyst for Tesla moving forward.

With these three projects in motion, Tesla truly can begin to work on rebounding from a rough 2025 on the market.

Rosner writes:

“This name trades more around the narrative than the numbers. And net-net, we tactically see an improving narrative from here. Tesla has several catalysts coming up w/r/t FSD and Robotaxi, including an expansion of their AV service into several new U.S. markets (San Francisco, Nevada, Arizona, Florida, etc.). The company plans to unlock hands-free/eyes-off autonomy for FSD owners in select U.S. locations by YE25. Supervised FSD in China and Europe is expected to launch over the next ~12 months. And, Optimus is expected to enter scale production in 2026.”

Tesla is currently trading around $310 at around 3:20 p.m. on the East Coast.

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