Tesla Shares Slide in Premarket After Musk Talks About AI Plans on X
Elon Musk said Monday he would not be comfortable pursuing Tesla’s (NASDAQ: TSLA) artificial intelligence (AI) and robotics ambitions unless he acquired 25% voting control. The carmaker’s shares fell 2.2% in premarket trading Tuesday.
Musk’s Tweet Sends Tesla Tumbling in the Premarket
Shares of Tesla slipped 2.2% in Tuesday premarket trading after automaker’s CEO Elon Musk said he would feel uncomfortable growing the company in AI and robotics without having at least 25% voting control, almost double his current stake.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned.”
– Musk wrote in the tweet.
The billionaire said that unless he owned such a significant portion of the stock, he “would prefer to build products outside of Tesla.”
Musk, who owns roughly 13% of Tesla stock, faces a lawsuit over a compensation package he received in the past. Notably, the automaker’s shareholder, Richard Tornetta, sued Musk and the board in 2018, alleging the CEO used his dominance over the board to acquire a substantial compensation package that did not require him to work at the company full-time.
The businessman said there was no dispute with the board over his new compensation package on X, adding that the pending lawsuit was holding back the talks.
“I should note that the Tesla board is great. The reason for no new “compensation plan” is that we are still waiting for a decision in my Delaware compensation case. The trial for that was held in 2022, but a verdict has yet to be made.”
– he wrote in the post.
In another post on X, Musk claimed he would be open to adopting a duar-class share structure to attain 25% voting control. However, he was told it was impossible following Tesla’s initial public offering (IPO).
Firms employing dual-class structures issue multiple share types with varying voting rights. Typically, founders or early investors hold shares with greater voting influence, while other shareholders possess shares with diminished voting power.
Tesla Trails as the Weakest Performer Among the Magnificent Seven Stocks in 2024
Tesla’s premarket dip is set to deepen the carmaker’s stock declines it suffered since the start of 2024. Tesla is the only Magnificent Seven company with a negative year-to-date performance.
The stock is down nearly 12% since January 1 as challenges for the world’s largest electric vehicle (EV) maker mount. The company was forced to recall 1.6 million vehicles due to a software issue earlier in the month. More recently, Tesla had to halt most of the production at its factory near Berlin due to shipping disruptions caused by the recent Red Sea conflict.
Moreover, the automaker has also lost its position as the leading EV manufacturer to its Chinese competitor, BYD. After registering a notable profit margin decline in Q3, analysts expect Tesla to continue facing challenges this year, primarily due to the challenges that its core EV business and the broader auto industry will likely face.
Do you expect Tesla stock to continue a downtrend in the coming months, or is this just a temporary setback? Let us know in the comments below.
Disclaimer: The author does not hold any securities discussed in the article.
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