Tesla Shares Break Lower As Shareholder Vote Looms

Tesla shares face a pivotal week with the Musk pay shareholder vote on Thursday.

TSLA – Daily Chart

TSLA – Daily Chart

TSLA was trading at the $169.75 level after a breakout lower. Support is around $160, but the larger target is $130 if the vote goes against Musk.

If Tesla shareholders vote against Elon Musk’s $44.9 billion pay package on Thursday, the CEO could back up his recent threats to take his AI capabilities to his other companies. He may even threaten to sell shares or walk away.

If shareholders vote for the all-stock compensation package that a judge tossed out in January, it would almost guarantee that he will remain at the company and push ahead with its autonomous future.

Musk wants a 25% stake in Tesla with the Thursday vote. His xAI recently received $6 billion in funding to develop artificial intelligence.

Wedbush Analyst Dan Ives said he expects the package to be overwhelmingly reapproved, ending much uncertainty about Musk. “This issue has been an overhang on Tesla’s stock, and it will be important to move this distraction in the rearview mirror,” Ives wrote in an investment note.

Tesla shares are down more than 30% this year, and the company is warning of “notably lower” sales growth ahead.

Erik Gordon, a business and law professor at the University of Michigan, said private investors, who own more than 50% of the company, are likely to vote for the package.

Norway’s sovereign wealth fund, operated by Norges Bank Investment Management, was a large investor who opposed the package. The group said last weekend that it would vote no.

“While we appreciate the significant value generated under Mr. Musk’s leadership since the grant date in 2018, we remain concerned about the total size of the award, the structure given performance triggers, dilution, and lack of mitigation of key person risk,” Norges Bank Investment Management said.

A positive vote for Musk could trigger a rally in the company as it prepares to release its following production guidance and earnings results. Tesla shares remain around 60% lower than their 2021 all-time highs.

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