'Flexing of the Muscles’ Expected at Tesla’s Shareholder Meeting

Photo Credit: Jae C Hong/AP/Shutterstock
June 11, 2019

By Spencer Feingold

Tesla’s annual shareholder meeting is scheduled to kick off Tuesday afternoon in California and will offer CEO Elon Musk a chance to soothe investors and quell market concerns.

The meeting follows a difficult year for Tesla, which has struggled to meet delivery benchmarks for its electric vehicles and reach profit goals.

“It has been a tough year for Tesla and ultimately Musk is going to put on a good show today,” Dan Ives, managing director of the financial services firm Wedbush Securities, told Cheddar. “Investors are thinking there will be some flexing of the muscles around overall demand and what Musk is seeing.”

Tesla ($TSLA) delivered just 63,000 of its electric cars in the first quarter of 2019, a steep decline from the quarter prior, and reported a net loss of $702 million.

Investors and Tesla watchers, however, expect Musk to tout high delivery numbers in 2019's second quarter, so far, and increased global sales. In April, the company also reaffirmed its guidance of 360,000 to 400,000 vehicle deliveries this year.

“In the near term it all comes down to demand,” Ives said. “This is going to be a defining period for Tesla and Musk in terms of what happened over the next six months.”

Among other items, the meeting’s agenda includes proposals to approve the company’s employee stock purchase plan and to reduce director's terms from three years to two years, both of which are supported by Tesla. The company also backed another proposal to eliminate supermajority voting requirements to amend internal bylaws.

“Today they’ll put on their best face ... but right now there continues to be a very challenging period ahead for Tesla and their need to balance growth and profitability,” Ives said.

In the week ahead of Tuesday’s meeting, Tesla's shares were up roughly 12 percent but have been down nearly 35 percent year-to-date.

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