Wall Street analysts have been reacting this Friday to the Board’s announcement of a new compensation plan for Tesla’s CEO Elon Musk.
According to the compensation plan set to be voted in the November shareholder meeting, Elon Musk needs to drive Tesla to a new phase of exponential growth in order to fully receive it.
“In 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions — to be exact, he must create nearly $7.5 trillion in value for shareholders for him to receive the full award,” the Board stated in the shareholder letter.
William Blair analyst Jed Dorsheimer commented on a new research note — obtained by PriceTarget — that Tesla‘s new incentive plan for Elon Musk “signals he is here to stay and win.”
“If he can pull off the long-term goal of an $8.5 trillion market cap company, this would be an incredible achievement and aligned with shareholders,” Dorsheimer wrote, adding that the plan will pass such as the 2018 plan did.
The analyst noted that “Tesla shareholders will be excited today that Musk is incentivized for the next decade and can potentially be awarded 25% ownership, a point he has mentioned many times.”
Musk said in early 2024 that he wanted around 25% voting power to feel secure in pursuing AI and robotics projects, otherwise he would “prefer to build products outside of Tesla.”
Since then, Musk has focused on xAI, his artificial intelligence company, for which Tesla has now officially filed to invest in.
Dorsheimer concluded that, “paired with the public rollout of robotaxi on Thursday, this news is pushing Tesla sentiment higher,” reiterating the firm’s Market Perform rating on the company’s stock.
Wedbush analyst Daniel Ives also maintained the firm’s Outperform rating on Tesla, according to a new note published on Friday.
The analyst has a bullish view on Tesla, with a $500 price target on the EV maker’s stock.
As of the time of writing, Tesla is trading 2.6% up at $347 on Friday’s market session.
Considering Thursday’s close at $338.53, Wedbush’s price target on the company implies an upside potential of 47.7%.
Following the Board’s announcement, Ives reminded in a new research note that the “majority of these incentives were mostly included in our 3 step list mentioned in early July.”
As the analyst asked the Board to give the CEO Elon Musk 25% voting control with “oversight on political endeavours” and controlled time allocation to the EV maker, Musk responded curtly on X, telling him to “shut up.”
“With the groundwork now in place for Musk to accelerate its current path and capitalize on the opportunities ahead, this represents a critical next step to keep Musk as CEO at least until 2030,” Ives stated.
He added that “Tesla is heading into one of the most important stages of its growth cycle with the autonomous and robotics future now on the doorstep.”
Tesla rolled out on Thursday its Robotaxi app for iOS devices across the US and Canada as it plans to remove safety operator from the vehicles by the year end.
