Truist Securities reiterated its $406 price target and Hold rating on Tesla‘s stock on Tuesday, saying it has “a tricky set-up” even after shareholders approved Elon Musk’s compensation package.
The investment bank reaffirmed the bearish stance on Tesla, implying a downside of nearly 9% based on Monday’s closing price of $445.23.
Truist had raised its target by 45% (from $280) on October 23, a day after Tesla reported its third-quarter financial results.
In a new note published on Tuesday — and obtained by PriceTarget — analyst William Stein commented on Tesla‘s Annual Shareholder Meeting, in which Musk’s controversial pay package of up to $1 trillion was approved.
The analyst noted that the approval eliminates uncertainty about the chief executive’s future with the company.
However, Stein noted that “the set-up is still tricky,” as “physical AI products are still a long way off.”
CEO Award Approval
The shareholder approval removed “a big overhang — that Musk could leave Tesla to develop Physical AI products elsewhere (naturally, at xAI).”
Tesla‘s Chairwoman of the Board Robyn Denholm had repeatedly warned that Elon Musk could leave the company if the package wasn’t approved — an idea that the CEO himself had expressed before and reiterated on the latest earnings call.
“My fundamental concern with regard to how much voting control I have in Tesla is, if I go ahead and build this enormous robot army, can I just be ousted at some point in the future?,” Musk said in late October.
One of the proposals submitted for shareholder voting included a potential investment from Tesla in xAI, but it was rejected.
On Monday, Morgan Stanley analyst Adam Jonas wrote in a new note that the company will need to “revisit” the idea.
Responding to Tesla shareholder Sawyer Merritt on X, who shared Jonas’s note, Musk said, “My companies are, surprisingly in some ways, trending towards convergence.”
Tesla Valuation
Stein reiterated that Truist attributes most of Tesla’s valuation to its progress on autonomy.
“We continue to see the vast majority of Tesla‘s future (and even current) value in the development of physical AI tech,” the analyst said, referring to Full-Self Driving (FSD), the Robotaxi service, and the Optimus humanoid robot.
After Musk announced last week that the company expects to produce 1 million Optimus units in Fremont and 10 million in Texas, construction has begun on a new factory at Giga Texas dedicated to humanoid production.
However, the analyst remains cautious as “all of these projects are quite unproven” and have “close to zero revenue” as of the time of writing.
The robotaxi service, launched in late June, is still facing regulatory hurdles, and the company is prioritizing safety before rolling out FSD Unsupervised.
Production of the Cybercab, which will be used in the robotaxi service, is set to begin in 2026 — and mass production of the Optimus robot is only scheduled for 2027, after smaller batches next year.
Tesla reported a revenue of over $25.1 billion in the third quarter, of which $20 billion came from automotive sales.
Earlier this week, several employees linked to vehicle program teams have left the company, including Program Managers Siddhant Awasthi and Emmanuel Lamacchia.
Awasthi handled the Cybertruck and Model 3, while Lamacchia drove the team responsible for the best-selling Model Y.
