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Tesla (TSLA) shares trended lower on Tuesday, falling below a key support level ahead of Thursday’s annual shareholder meeting and a vote on Chief Executive Officer Elon Musk’s $56 billion compensation package for 2018.




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TSLA shares fell below their 50-day moving average on Tuesday for the first time since May 13, as investors appeared to hedge their positions ahead of the electric car giant’s annual shareholder meeting later this week.

Late Monday, CNBC reported that the California State Teachers’ Retirement System (CalSTERS) opposed Musk’s severance agreement. According to its website, CalSTRS held about 4.7 million Tesla shares at the end of June 2023.

A number of institutional investors have voted against accepting Musk’s 2018 salary, currently worth around $45 billion. The Norwegian sovereign wealth fund, which manages assets of around $1.7 trillion, just announced that it voted against the proposal.

Norges Bank Investment Management, the fund’s official name, owns nearly 1% of TSLA shares. The sovereign wealth fund said its decision was “consistent with our vote on the same award in 2018.”

However, Musk claims that the vast majority of retail investors who have already voted support his pay deal. In 2018, Tesla’s board of directors received 73% of the vote to approve Musk’s 2018 pay package.

Since Tesla asked its shareholders on April 17 to approve Musk’s 2018 pay package, even though a Delaware court voided the plan earlier this year, the electric car giant has been trying to gain support from its private investors.

Retail investors currently own about 40% of Tesla shares. Institutional investors own a much larger share of Tesla shares than they did in 2018. Vanguard voted against Musk’s pay package in 2018, while BlackRock and many others supported it.

The current vote comes after a Delaware judge ruled against the 2018 package, ruling that the package was excessive and unfair to Tesla investors. The judge criticized Musk’s “extensive ties” to Tesla board members.

Tesla shareholders will also vote on whether to move Tesla from Delaware to Texas.

Analysts comment

Bernstein analyst Toni Sacconaghi wrote Monday that shareholders are unlikely to approve the compensation package. If that happens, Sacconaghi believes TSLA shares would fall more than 5%.

Meanwhile, Baird analyst Ben Kallo wrote this week that the proposal would be accepted “despite opposition from select shareholders and advisers.”

“If the proposal is rejected, we expect a share price decline,” Kallo wrote, noting that this would add fuel to the fire that Musk could dissuade Tesla from its AI and robotics efforts.

Kallo added that approval of the compensation package could “reduce an overhang of stock” and ease concerns about Musk’s lack of focus on the electric car company.

Performance of Tesla shares

TSLA shares fell 2.9% to 168.71 during trading activity on Tuesday, falling below their 50-day moving average. They had already fallen 2% on Monday. Before this week, Tesla shares had closed plus or minus 1% for three consecutive weeks.

Prior to Monday, shares had also been in tight trading for nine consecutive days, closing within that 1% range.

Last week, Tesla shares fell 0.3 percent to 177.48, and in June shares are now down 4.5 percent.

TSLA fell 2.8% in May and is down about 30% so far this year.

However, Tesla has rebounded since reporting first-quarter earnings and revenue on April 23, finding support just above its 50-day moving average, according to MarketSurge analysis. On April 22, Tesla stock hit a 52-week low of 138.80.

The electric car giant will announce its second-quarter results in mid-July.

Tesla stock ranks seventh in the 35-member IBD Automakers industry group. The stock has a weak Composite Rating of 47 out of a best possible 99. The shares have a Relative Strength Rating of 15 and an EPS Rating of 62.

Please follow Kit Norton on X @KitNorton for more coverage.

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