Tesla (TSLA) opened in the red this morning after the electric vehicle titan’s shareholders approved a record-breaking $1 trillion pay package for its chief executive Elon Musk.
The package grants Musk up to 423 million shares of Tesla if it hits ambitious milestones, including an $8.5 trillion market cap and mass deployment of robotaxis and humanoid robots.
Despite today’s decline, Tesla stock is up a whopping 100% versus its year-to-date low in April.
While shareholders have approved the enormous pay package, there still are a few concerns tied to it, including those of dilution and Musk’s growing influence over Tesla.
While the pay package is performance-based, the sheer scale, potentially boosting Musk’s stake to 29%, signals risks of overconcentration.
Proxy firms like ISS and Glass Lewis had urged shareholders to reject the deal, calling it a threat to shareholder value. Plus, some institutional investors, including Norway’s sovereign wealth fund, voted against it.
TSLA shares are slipping today on renewed valuation concerns as well. The EV stock is going for over 400x forward earnings, a multiple that makes it one of the most expensive S&P 500 Index ($SPX) names at writing.
The pullback in Tesla shares offers a tactical entry point for long-term believers in its artificial intelligence (AI) and robotics roadmap.
Bulls argue the vote solidifies Musk’s commitment, reducing leadership uncertainty and aligning incentives with shareholder value.
In fact, Wedbush Securities’ senior analyst Dan Ives called the approval “a green light for Tesla’s autonomous future.” He maintained his $600 price target on TSLA stock today, indicating potential upside of another 30%.
Meanwhile, bullish options traders are also pricing in a further increase in the company’s share price to $520 by mid-January. According to Barchart, implied move through the end of next week is also 5.8%, which could see Tesla trading at about $454 by Nov. 14. On the bearish end, shares could fall to the $404 level.
Not all Wall Street analysts share Ives’ optimism on Tesla stock. For some, the firm’s AI ambitions remain distant and valuation concerns are more pressing in the near-term.