- Elon Musk's pay package approval removes a burden on Tesla's stock, Wedbush Securities said.
- In a bull case, that could take Tesla up to $350 a share in the next 12-18 months.
- Next, Tesla should give Musk his 25% ownership stake, Dan Ives wrote.
Tesla shares are on track to race higher with the firm's pay package dispute finally out of the way, Wedbush Securities wrote.
With CEO Elon Musk approved to receive his $46 billion compensation package, the stock is at last unshackled from the uncertainty surrounding the compensation sage. After a Delaware court blocked the pay earlier this year, Musk indicated that he could leave the firm if shareholders didn't greenlight it. On Thursday, shareholders gave Musk what he wanted.
"This removes a $20- $25 overhang on the stock in our opinion that has weighed on shares since the head scratching Delaware ruling set this Twilight Zone soap opera on earlier this year," analyst Dan Ives wrote on Friday.
With the headwind evaded, Tesla could now climb up as much as $350 over the next 12-18 months, Ives wrote. This bull case indicates a nearly 90% rise from the stock's current price.
A securities filing shows that retail shareholders led Musk's victory. Around 1.76 billion votes were cast in favor of the proposal, overwhelming the 528.9 million votes against the pay deal.
To Ives, it's proof that Musk is a key component to Tesla's growth story and that the firm needs to ensure he remains at the helm.
"Tesla is Musk and Musk is Tesla....shareholders spoke loudly today."
In that spirit, Ives called for Tesla's board of directors to ensure that Musk receives a 25% ownership stake in the firm, something the CEO has called for. Musk has threatened to pull Tesla's artificial intelligence projects away from the company if he's not given more control.
If followed through, the company's AI initiatives, as well as its full self-driving tech, will help cement its growth story and fuel its stock momentum. Tailwinds are on the near-term horizon, Ives said, and Tesla's valuation should pop above $1 trillion next year.
Tesla's robotaxi day in early August is the next potential catalyst for the stock, Ives. said.
Wedbush Securities rates Tesla as "outperform." Its base case is a $275 price target, around 48% from current levels.