- Wedbush said Tesla investors' reapproval of Musk's compensation package put the company back on track.
- The firm reiterated its price target of $275, suggesting that Tesla could be valued at $1 trillion.
- Analysts predicted the stock price could recover as early as later this year.
Tesla is on track to hit a $1 trillion market cap, according to Wedbush Securities, and the electric car maker's shares could quickly soar if the company unveils major artificial intelligence and robotics initiatives this year.
The financial services firm reiterated its “outperform” rating and $275 price target on Tesla shares, suggesting the stock could rise by another 50%. Analysts say this is largely due to Tesla shareholders recently reapproving Elon Musk's $56 billion compensation package, paving the way for Musk to re-work on the company's AI and robotics projects.
“With this finalized compensation package, we expect Tesla's board will provide an incentive for Musk to take a 25% ownership stake in Tesla, resolving the AI threat turmoil of the past few months,” the analysts said in a Friday note, referring to Musk's suggestion that he could take AI projects outside Tesla unless he took at least 25% ownership in the company.
“Once Tesla formally navigates the final stretch of this Twilight Zone legal spider web in Delaware, we expect the board will create a new incentive-driven AI compensation package for Mr. Musk and increase Mr. Musk's ownership stake to 25% while keeping all AI initiatives Tesla confidential,” the memo added.
Tesla appears poised to unveil some of its major AI and robotics projects soon, including its self-driving software and the Model 2.5. The company's Robotaxi Day, when a fully self-driving taxi is expected to take to the roads, could be a “major historical moment” and a big boost to the stock, Wedbush said.
Importantly, a key headwind for the stock is abating: Demand for Tesla is starting to pick up again in China, despite increased competition from rival electric vehicle makers.
“While the market is not expecting any big fireworks in the second quarter, we see signs of demand recovering and it's time for Musk and Tesla to execute as we look towards the second half of the year and 2025. After a Cinderella ride over the past few years, the share price has found itself in a nightmare and now it's time for Musk to turn this around,” the analysts said, adding that the stock could recover later in the year.
Tesla shares are down 27% this year as the company continues to struggle with weak demand for electric vehicles and posted first-quarter deliveries that fell far short of expectations.
