The bears are in the Tesla (NASDAQ:TSLA) house. It has been almost exclusively bad news for the EV leader recently. There was a car crash of sorts in its Q4 earnings release and that was followed by a negative ruling for CEO Musk in a lawsuit filed by a shareholder regarding his pay package set by the board in 2018. Meanwhile, demand for EVs has stalled with many concerned the Tesla growth story has hit a brick wall.
However, one long-standing Tesla bull is having none of it. Wedbush’s Daniel Ives, a 5-star analyst rated in the top 3% of the Street’s stock pros, acknowledges the current wave of negativity surrounding Tesla as perhaps the most severe in recent memory. However, he stands firm in his conviction, resolutely refusing to join the ranks of the naysayers.
“We could not disagree more with the ultra negative Tesla narrative building and forming a black cloud over the stock,” the 5-star analyst went on to say. “While the next few months are clearly a bit cloudy for the Tesla story and overall EV demand, longer term our view is that by the end of the decade ~20% of autos will be EV with autonomous and FSD a reality and not a dream/aspiration.”
Considering the stock’s recent poor performance (down 26% year-to-date), Ives believes the stock is “baking in a tremendous amount of bad news here.”
That said, it is now up to the Board to outline a strategy investors can get behind, with Musk front and center of it. In Ives’ view, the Tesla Board must undertake three actions to “stop this Category 5 hurricane over Tesla’s stock.”
For one, it needs to introduce a fresh compensation package to replace the 2018 one, alongside a “new package post proxy” to be voted upon at the upcoming shareholder meeting in May. Secondly, the new compensation package should aim to achieve Musk’s targeted 25% voting share. Lastly, Ives supports the idea of Tesla relocating its legal base to Texas, which he believes would facilitate granting Musk the 25% voting rights and the implementation of a revised compensation plan. Moving to Texas, says the analyst, will “take out the uncertainty of Musk and his AI initiatives going anywhere else except under the Tesla hood with a key 3-5 years ahead for the Tesla story.”
All in, Ives maintained an Outperform (i.e., Buy) rating on Tesla shares, to go along with a $315 price target, implying the stock will climb 71% higher over the one-year timeframe. (To watch Ives’ track record, click here)
Ives is certainly among the Street’s bull contingent but not all are quite as confident. The stock gets a Hold consensus rating, based on a mix of 12 Buys, 17 Holds and 5 Sells. Going by the $220.26 average target, a year from now, the shares will be changing hands for a 20% premium. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
