Wedbush Reaffirms Outperform on Tesla, $500 Price Target

Wedbush analyst Daniel Ives reiterated an Outperform rating and $500 price target on Tesla (NASDAQ: TSLA).

“Earlier this morning, Tesla filed a Form 8-k with the Board of Directors approving an award of 96 million shares of restricted stock under the company’s 2019 Equity Incentive Plan which was recommended by a special committee comprised of disinterested directors Robyn Denholm and Kathleen Wilson-Thompson.

This grant was made under the company’s Long-Term Incentive Program which will further motivate Musk as CEO of TSLA to lead TSLA through this inflection point within the company’s growth story with Tesla now in the process of becoming an AI-first company.

This unanimously approved recommendation gives Musk a grant in the award of restricted stock equal to ~1/3 of the compensation earned under the 2018 Incentive Package subject to whether Musk remaining in continuous service as CEO or an executive officer responsible for product development or operations to further incentivize Musk to lead the company moving forward.

For this award, Musk must pay Tesla $23.34 per share of restricted stock that vests, equal to the exercise price of the 2018 CEO Award, where the accounting grant-date fair value of the Interim Award would have been ~$23.7 billion.

We also note that the company will not “double dip” meaning that if the Delaware courts reinstate Musk’s 2018 pay package, this award would be viewed as an interim and would be forfeited.

This was all included in our 3 step list mentioned in early July where the Board of Directors had to step in to ensure Musk would commit to Tesla over the next few years with some general guardrails put in place to keep TSLA’s most important asset.

We believe this grant will now keep Musk as CEO of Tesla at least until 2030 and removes an overhang on the stock.

Musk remains Tesla’s big asset and this comp issue has been a constant concern of shareholders once the Delaware soap opera began.”

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