An endorsement for
CEO Elon Musk from a longtime shareholder and new sales data from China were positives for Tesla, but not good enough for shares to break out of their recent range.
Wednesday morning, Ron Baron, CEO of
said he would vote yes to reinstate Musk’s 2018 compensation package, which was worth some $56 billion at the time of the award. A Delaware judge voided the pay package in January, citing inadequate disclosures to shareholders.
“Elon is the ultimate ‘key man’ of key man risk. Without his relentless drive and uncompromising standards, there would be no Tesla,” reads part of Baron’s emailed statement. “If shareholders want to protect and grow their investment, they must AGAIN approve his compensation contract….our [view] is clear, loud, and unequivocal: Tesla is better with Elon. Tesla is Elon.”
Baron’s view isn’t a big surprise. His firm favors shares of growth companies run by founders and leaders with significant stakes in the companies they lead. Musk, a co-founder of the electric-vehicle pioneer, owns about 13% of Tesla shares. The options in the 2018 award represent another 7% or so of the company.
Still, Baron’s comments are positive for Tesla shareholders worried that a no vote would introduce more volatility into the company’s stock.
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Also, new data from China were another positive for the company.
In May, Tesla delivered 72,573 vehicles from its Chinese plant in Shanghai, according to the Chinese Passenger Car Association. Tesla itself doesn’t disclose monthly or regional sales.
That number includes exports. Local sales figures typically are available later in the month.
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The May figure is up almost 17% from April, but marks a decline of roughly 7% year over year. Year to date through May, Tesla has sold about 356,000 vehicles from its Shanghai plant, down about 7% year over year.
The trend in China largely mirrors what’s happening around the world. Tesla delivered about 387,000 units in the 2024 first quarter, down almost 9% year over year. Wall Street projects about 450,000 units for the second quarter, down about 3% from the year-ago period, according to FactSet.
Falling sales have weighed on investor sentiment. Coming into Wednesday’s trading, Tesla stock has tumbled about 30% so far this year. In recent trading Wednesday, shares were little changed at $174.59. The
and
were up about 0.5% and 1.1%, respectively.
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Tesla shares have settled between their 50- and 100-day moving averages since the company reported better-than-feared first-quarter earnings in late April. Just before that earnings report, Tesla stock hit a 52-week low of $138.80 on April 22, and was down more than 40% year to date at that point.
Investors are waiting for what’s next, and that likely will be the shareholder meeting on June 13. Along with the vote on Musk’s pay, the meeting will be a chance to hear from management. After that, second-quarter deliveries and earnings are coming in July. An August Robotaxi event could also move the stock: There, Tesla should showcase progress made in getting cars to drive themselves.
Despite the shares’ recent lull, Tesla’s stock chart is looking better, wrote Piper Sandler technical analyst Craig Johnson in a Tuesday report. He added he could see shares trending toward $190.
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Johnson isn’t making a fundamental call on Tesla. Rather, he’s looking at stock charts to get a sense of where investors and traders are likely to buy and sell shares.
Technical analysts also can help investors figure out where shares will go after big events like the June 13 annual meeting. A yes vote will settle the issue of Musk’s compensation for a while, while a no vote will introduce uncertainty, which is the one thing investors don’t want.
Write to Al Root at allen.root@dowjones.com
