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Morgan Stanley sets eyes on Tesla stock, expects positive impact from Elon Musk

EditorEmilio Ghigini
Published 2024-06-14, 07:44 a/m
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TSLA
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On Friday, Morgan Stanley (NYSE:MS) reaffirmed its Overweight rating and $310.00 price target on Tesla (NASDAQ:TSLA) stock, as investors anticipate Elon Musk's continued leadership. The firm expects Musk to participate in the upcoming second-quarter conference call and to proceed with a robotaxi event planned for August 8th in Austin.

The reassurance of Musk's role follows recent developments surrounding a Delaware court case, which could see months of litigation in efforts to reverse Judge Kathaleen McCormick (NYSE:MKC)'s decision to rescind Musk's CEO compensation package from 2018. The reversal of this ruling is not assured, as formal legal approval is still pending.

Despite potential legal hurdles, Musk's influence in Tesla remains significant, although he has not yet reached the 25% blocking minority voting power he aims for. To bridge this gap, further purchases or strategic financial mechanisms may be necessary. Morgan Stanley points out that Musk's substantial personal wealth, possibly over $100 billion, could serve as collateral for future transactions to increase his stake in Tesla.

The unexpected shareholder approval for Tesla's reincorporation from Delaware to Texas also caught the firm by surprise. Such moves are rare among public companies, and they entail numerous legal, tax, and liability considerations, which the firm chose not to elaborate on in their commentary.

The upcoming months will be crucial for Tesla as the company navigates through the legal landscape and continues to push forward with its strategic initiatives under Musk's leadership.

In other recent news, Tesla Inc. has seen significant support from its shareholders, with CEO Elon Musk's $56 billion compensation package receiving approval from approximately 77% of votes cast at the annual shareholder meeting. This endorsement, which follows the nullification and subsequent reinstatement of the package, signals ongoing investor confidence in Musk's leadership.

Tesla has also announced the redomestication of the company from Delaware to Texas, a move approved by shareholders and potentially offering tax advantages and proximity to its new manufacturing hub.

The company has also addressed a software glitch affecting over 5,800 of its imported Model 3, Model S, and Model X vehicles in China, classified as a recall by the country's market regulator.

Despite the company's stock struggling to maintain its high market value, Musk's substantial pay package was re-approved, demonstrating continued confidence in his leadership.

However, Norway's sovereign wealth fund, a significant Tesla shareholder, opposed the compensation package but expressed commitment to maintain a constructive dialogue with the company. These developments underscore recent happenings within the electric vehicle manufacturer.

InvestingPro Insights

As Tesla (NASDAQ:TSLA) gears up for a pivotal period, recent data from InvestingPro offers a nuanced view of the company's financial health and market performance. Tesla holds a substantial market capitalization of $581.93 billion, indicative of its significant footprint in the automobile industry. Its position is further underscored by a robust revenue stream, with the last twelve months as of Q1 2024 reporting $94.75 billion, a growth of 10.12% year-over-year. However, investors should note the company's high earnings multiple, with a P/E ratio of 42.61, which suggests a premium valuation compared to earnings.

An InvestingPro Tip highlights Tesla's strong liquidity position, as its cash reserves exceed its debt, providing financial flexibility. Additionally, the company's liquid assets surpass its short-term obligations, which is a positive sign for its ability to meet immediate financial needs. For investors considering Tesla's stock, it is worth noting that the company has been profitable over the last twelve months and is a prominent player in its industry. On the flip side, Tesla's stock price has experienced volatility, with a 6-month total return of -27.32% as of the most recent data, reflecting market uncertainties and the potential impacts of ongoing legal proceedings.

For those looking to delve deeper into Tesla's financials and future prospects, InvestingPro offers additional insights and metrics. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a wealth of InvestingPro Tips—there are 18 additional tips available for Tesla that can help guide investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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