Source: Caixin.
Tesla's pre-market stock price once rose more than 7%, reaching the highest level since the end of April; Tesla's long-term "big bull" Ives pointed out that the challenges facing the company do exist - the fluctuating demand for electric vehicles in the market, and the arduous task of building a truly self-driving car.
On Thursday, June 13th pre-market trading of the USA stock market, CEO Elon Musk announced that his $56 billion compensation plan was approved with great advantages at the annual shareholder meeting, and the meeting decided to relocate Tesla's legal domicile from Delaware to Texas.$Tesla (TSLA.US)$On Thursday, June 13th pre-market trading of the USA stock market, CEO Elon Musk announced that his $56 billion compensation plan was approved with great advantages at the annual shareholder meeting, and the meeting decided to relocate Tesla's legal domicile from Delaware to Texas.
This marks a significant victory for Musk in his confrontation with major investors. After the news was announced, Tesla's U.S. stock price rose more than 7% in early trading, reaching its highest level since the end of April. Media analysis suggests that even with this imminent risk removed, the electric automaker still faces broader challenges.
Prior to this, analysts and investors had been warning of a major risk: Musk had threatened to transfer the potential artificial intelligence (AI) program to another company if his compensation package was vetoed. This would be disastrous for an expensive stock, as Tesla's valuation mainly comes from its CEO's AI promise.
In his report, Daniel Ives, an analyst at the U.S. investment bank Wedbush, wrote that today's shareholders' meeting eliminated the risk of a $20 to $25 drop in the stock price. As a long-term "bull" on Tesla, Ives pointed out that the company does face real challenges - fluctuating demand for electric cars and the difficult task of building a true self-driving car.
The debate over whether Tesla is a car maker or a technology company has been going on for a long time, and as demand for electric vehicles slows and competition intensifies, this distinction becomes more critical, as Tesla's era of earning huge profits from EV sales has essentially passed.
Whether Tesla can transform itself into an AI company depends on its ability to develop self-driving cars. Musk promised eight years ago that the "self-driving technology will be available in the near future.", but the company has yet to establish most of the infrastructure needed for such a service and has not received approval from U.S. regulators.
While Tesla's software is currently capable of performing most driving tasks, it still requires human drivers to pay attention to road conditions and intervene when necessary. For truly self-driving cars, many believe it will take several years or even decades to achieve.
But Tesla's investors believe the company can achieve this goal in a relatively short period of time. Musk also announced earlier this year that the company will launch robotaxis (self-driving taxis) on August 8. Currently, Tesla's 12-month P/E ratio is about 70 times, the highest among U.S. tech giants.
JPMorgan analyst Ryan Brinkman has said that Tesla's shareholders meeting has similarities to the SolarCity acquisition years ago. "Most investors we spoke with back then didn't support the SolarCity acquisition, but they were concerned that if the deal was voted down, there would be a more negative reaction to the stock price, as it was more like a vote of no confidence."
Some investors worry that even if they vote in favor, it will not be enough to help Tesla's stock maintain its upward momentum. As of Wednesday's close, the stock had already fallen 29% this year, lagging behind the S&P 500 index's gain of 14% and the Nasdaq 100 index's gain of 16%.
David Wagner, a portfolio manager at Aptus Capital Advisors, said that regardless of the voting outcome, shares that have already been under tremendous pressure are facing a list of issues that Tesla must address.
"Ultimately, investors want to see earnings growth. Once Tesla proves this ability to investors, the stock is likely to be back in favor," said Adam Sarhan, founder and CEO of 50 Park Investments.
Before the shareholders meeting, Cathie Wood, the star investor of Wall Street's Ark Invest, updated Tesla's valuation and set a new target price of $2,600 by 2029. At this target price, Tesla's market capitalization will exceed $8 trillion.
Wood believes that most of Tesla's value comes from its planned self-driving cars. "Tesla's business model is expected to shift from one-time car sales to recurring revenue models as each car becomes an AI-driven cash flow generator."
Editor/tolk