Tesla’s (NASDAQ: TSLA) stock outlook has been updated following the approval of CEO Elon Musk’s massive $1 trillion pay package.
In the latest assessment, Truist Securities analyst William Stein reiterated a ‘Hold’ rating and maintained a price target of $406 per share, implying a potential 7% downside from Tesla’s current trading level of about $439.
According to Stein, shareholder approval of Musk’s compensation plan removes a major uncertainty surrounding the company’s leadership.
However, he cautioned that Tesla’s most ambitious artificial intelligence (AI) projects, Full Self-Driving (FSD), robotaxis, and the Optimus robot, remain in early development and are still years away from generating meaningful revenue.
Stein noted that while Tesla’s FSD system continues to show progress, it is “not performing as expected,” and warned of ongoing execution risks in scaling its AI-driven technologies.
Despite optimism about Musk’s continued leadership, the analyst said near-term catalysts for the stock remain limited.
Truist maintained its discounted cash flow-based valuation of $406 per share, reflecting a neutral stance as investors await clearer results from Tesla’s AI and robotics efforts.
Musk’s pay package
It’s worth noting that unlike traditional executives, Musk receives no salary or cash bonus. Instead, his payout depends entirely on performance-based stock options that vest only if Tesla hits a series of ambitious milestones.
The latest pay package includes market capitalization targets from $2 trillion up to about $8.5 trillion, production of 20 million vehicles, 1 million robotaxis, and 1 million humanoid “Optimus” bots.
The new plan builds on Musk’s earlier $56 billion 2018 package, which was struck down by a Delaware court but later reinstated by shareholders.
While the $1 trillion figure represents potential value if all goals are achieved, analysts note that Musk could walk away with far less if Tesla fails to deliver on its lofty ambitions.
Wall Street bearish on TSLA stock
Across Wall Street, the American electric vehicle giant holds a consensus ‘Hold’ rating from 34 analysts tracked by TipRanks. Of these, 14 recommend ‘Buy’, 10 ‘Hold’, and 10 ‘Sell’. The average 12-month price target stands at $382.54, implying a 12.98% downside from the most recent closing price of $439.62.
Price targets range from a high of $600 to a low of $19.05, underscoring the deep divisions among analysts regarding the electric vehicle maker’s near-term trajectory.
Featured image via Shutterstock
