Investing.com – A big vote on whether to reauthorize Tesla Inc (NASDAQ:) CEO Elon Musk’s $56 billion pay package is likely to receive “overwhelming” shareholder approval at next week’s annual meeting and could help eliminate overhangs on the stock, Wedbush said Thursday.
Musk’s pay package was approved in 2018, but a Delaware court ruling against the shareholder-approved compensation package earlier this year forced the electric vehicle maker to put the pay package back on the agenda for reapproval.
While some shareholders, such as Institutional Shareholder Services, have recommended shareholders vote against the $56 billion stake, Wedbush believes the package “will be re-approved by an overwhelming majority” at the June 13 shareholder meeting.
In addition to the pay package, Tesla’s reorganization plans from Delaware to Texas will be put to a vote if approved.
Wedbush said the ongoing pay package saga was one of many overhangs on Tesla shares, but the approval would be an important step to remove this “distraction in the rearview mirror” at a time when many are questioning demand for Tesla amid rising demand. competition in China and slowing electric vehicle sales.
However, at the shareholder meeting, Musk has an opportunity to push back the narrative from the bears by declaring that autonomous and fully self-driving is the future of Tesla.
“We believe autonomy and FSD are key to Tesla’s future, and Musk needs to make that clear at the shareholder meeting next week,” Wedbush says, while noting the importance of launching a cheaper car.
“The implementation of a lower-cost vehicle and driving demand growth in the key market of China must be flawless… otherwise it could undermine the bullish thesis over the next 6-12 months,” it added.
A positive shareholder meeting will help build momentum for Tesla’s highly anticipated Aug. 8 event, when it is expected to unveil its long-promised robotaxi.