Tesla stock angled lower Tuesday, breaking below a key level of support ahead of Thursday's annual shareholder meeting and the vote results on Chief Executive Elon Musk's 2018 $56 billion pay package.
TSLA shares dropped below its 50-day moving average for the first time since May 13 on Tuesday as investors appear to be hedging in the run-up to the EV giant's annual shareholder meeting later this week.
Late Monday, CNBC reported that California State Teachers' Retirement System (CalSTERS) opposes Musk's compensation deal. CalSTRS held about 4.7 million shares of Tesla as of the end of June 2023, according to its website.
A number of institutional investors have voted against giving Musk his 2018 pay deal, currently valued at around $45 billion. Norway's sovereign wealth fund, which manages around $1.7 trillion in assets, just announced it voted against the proposal.
Norges Bank Investment Management, the official name of the fund, owns nearly 1% of TSLA shares. The sovereign wealth fund said its decision is "consistent with our vote on the same award in 2018."
However, Musk has claimed the vast majority of retail investors who have already voted, support giving him his compensation deal. In 2018, the Tesla board won approval for Musk's 2018 pay package with 73% of the vote.
Since Tesla on April 17 requested shareholders ratify Musk's 2018 pay package despite a Delaware court voiding the plan earlier this year, the EV giant has been attempting to drum up support among its retail investor base.
Retail, or individual investors, currently own around 40% of Tesla shares. Institutional investors hold a much-larger share of Tesla stock than they did in 2018. Vanguard voted against the Musk pay package in 2018, while BlackRock and many others supported it.
The current vote comes after a Delaware judge ruled against the 2018 package, deciding that the package was excessive and unfair to Tesla investors. The judge criticized Musk's "extensive ties" with Tesla board members.
Tesla shareholders are also voting on whether to incorporate Tesla in Texas, moving from Delaware.
Analysts Weigh In
Bernstein analyst Toni Sacconaghi on Monday wrote that shareholders are unlikely to approve the pay package. In that case, Sacconaghi believes TSLA shares will fall more than 5%.
Meanwhile, Baird analyst Ben Kallo wrote this week that the proposal will "pass despite noise from select shareholders and advisors."
"If the proposal is rejected, we expect shares to trade down," Kallo wrote, noting it would add fuel to the fire that Musk could move AI and robotics efforts away from Tesla.
Kallo added that if the pay package is approved it could "reduce an overhang on the stock" and reduce concerns about Musk's lack of concentration on the EV company.
Tesla Stock Performance
TSLA shares fell 1.8% to 170.66 during Tuesday's stock market action, falling below its 50-day moving average. That followed a 2% drop on Monday. Before this week, Tesla stock had booked three-consecutive weeks closing with a plus/minus 1% spread.
Before Monday, shares also had nine straight days of trading tightly, closing within that 1% range.
Last week, Tesla stock fell 0.3% to 177.48 and shares are now down 4.5% in June.
TSLA declined 2.8% in May and have sunk around 30% so far this year.
However, Tesla has rallied 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 EV giant will report second-quarter earnings in mid-July.
Tesla stock ranks seventh in the 35-member IBD Auto Manufacturers industry group. The stock has a weak 47 Composite Rating out of a best-possible 99. Shares have a 15 Relative Strength Rating and a 62 EPS Rating.
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