Investing.com -- The big vote on whether to reapprove Tesla Inc (NASDAQ:TSLA) CEO Elon Musk's $56 billion pay package is likely to win "overwhelming" approval from shareholders at next week's annual meeting and could help lift one the overhangs on the stock, Wedbush said in a Thursday note.
The pay package for Musk was approved in 2018, but a Delaware court ruling against the shareholder-approved compensation package earlier this year, forced the EV maker to out the pay package back on the agenda for reapproval.
While some shareholders such as Institutional Shareholder Services have recommended that shareholders vote against the $56 billion comp package, Wedbush believes that the package "will be overwhelming reapproved" at the Jun. 13 shareholder meeting.
As well as the pay package, plans to reincorporate Tesla out of Delaware and into Texas will also be up for a vote, which if approved.
The ongoing pay-package saga has been an one of many overhangs on Tesla's stock, Wedbush says, but approval would be an important step to move this "distraction in the rearview mirror," at a time when many are questioning demand for Tesla amid rising competition in China and slowing EV sales.
At the shareholder meeting, however, there is an opportunity for Musk to wrestle back the narrative from bears by talking up who autonomous and full self driving is the future of Tesla.
"We believe autonomous and FSD is key to Tesla's future and Musk needs to making this crystal clear at the shareholder meeting next week," Wedbush says, while flagging the importance of the launching a lower cost vehicle.
"Execution of the lower cost vehicle and driving incremental demand in the key China market must be flawless....otherwise this could derail the bull thesis in the next 6 to 12 months," it added.
A positive shareholder meeting would help carry momentum into the expected Aug. 8 Tesla event, when the long-promised robotaxi is expected to be unveiled.