We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tesla (TSLA) Stock Slumps as Investors Question Musk's Ties to Board
Read MoreHide Full Article
Shares of Tesla Motors Corp. (TSLA - Free Report) closed more than 3.8% lower on Wednesday after a group of investors urged the company to add new independent directors to its board that do not have any prior ties to Elon Musk.
In a letter penned by representatives from several major Tesla investor groups, the corporate governance of the Silicon Valley-based electric carmaker was called into question.
“We expect that as companies make the transition to publicly traded status, the governance structures and practices in place at the time of the IPO will evolve to align with the company’s changing strategy,” the note said. “However, Tesla’s seven-member board is largely unchanged from its pre-IPO days. In fact, only one of the current directors has been appointed since the IPO in 2010.”
The group suggested that the board appoint two new directors that have no prior “personal or professional relationships” with Elon Musk, and it also called on the directors to hold staggered annual elections for the board.
As mentioned in the letter, several of Tesla’s directors were brought on board many years ago and have previously worked with Musk in some way.
For example, Tesla’s board currently includes Elon’s brother Kimbal Musk, as well as Brad Buss, the former chief financial officer of SolarCity. Elon Musk served on the SolarCity board for several years before Tesla purchased the solar energy company last year.
Elon Musk, never afraid to stick up for his company, took to Twitter to not only defend Tesla, but also promise that new members of the board were coming:
@Reuters This investor group should buy Ford stock. Their governance is amazing ...
News of the letter, which was dated on Monday, broke the same day of the release of a new study suggesting that Tesla’s Model S is one of the hottest used cars on the pre-owned market.
According to Autolist.com’s data, used Model S cars tend to sell about 5% faster than their peer group average. The study also described the Model S as being in “a league of its own” for sale prices compared to listing price expectations. In short, used Model S vehicles are selling quicker, and for more money, than their industry rivals.
And it’s exactly these types of results that keep many investors confident in the leadership of Elon Musk. Tesla has shown remarkable growth over the past several years, and the company consistently delivers quality cars.
Sure, there are still plenty of question marks surrounding the carmaker’s debt load, but I’m not sure it is time to start turning on Musk quite yet.
Looking for Ideas with Even Greater Upside?
Most of Zacks’ investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Tesla (TSLA) Stock Slumps as Investors Question Musk's Ties to Board
Shares of Tesla Motors Corp. (TSLA - Free Report) closed more than 3.8% lower on Wednesday after a group of investors urged the company to add new independent directors to its board that do not have any prior ties to Elon Musk.
In a letter penned by representatives from several major Tesla investor groups, the corporate governance of the Silicon Valley-based electric carmaker was called into question.
“We expect that as companies make the transition to publicly traded status, the governance structures and practices in place at the time of the IPO will evolve to align with the company’s changing strategy,” the note said. “However, Tesla’s seven-member board is largely unchanged from its pre-IPO days. In fact, only one of the current directors has been appointed since the IPO in 2010.”
The group suggested that the board appoint two new directors that have no prior “personal or professional relationships” with Elon Musk, and it also called on the directors to hold staggered annual elections for the board.
As mentioned in the letter, several of Tesla’s directors were brought on board many years ago and have previously worked with Musk in some way.
For example, Tesla’s board currently includes Elon’s brother Kimbal Musk, as well as Brad Buss, the former chief financial officer of SolarCity. Elon Musk served on the SolarCity board for several years before Tesla purchased the solar energy company last year.
Elon Musk, never afraid to stick up for his company, took to Twitter to not only defend Tesla, but also promise that new members of the board were coming:
News of the letter, which was dated on Monday, broke the same day of the release of a new study suggesting that Tesla’s Model S is one of the hottest used cars on the pre-owned market.
According to Autolist.com’s data, used Model S cars tend to sell about 5% faster than their peer group average. The study also described the Model S as being in “a league of its own” for sale prices compared to listing price expectations. In short, used Model S vehicles are selling quicker, and for more money, than their industry rivals.
And it’s exactly these types of results that keep many investors confident in the leadership of Elon Musk. Tesla has shown remarkable growth over the past several years, and the company consistently delivers quality cars.
Sure, there are still plenty of question marks surrounding the carmaker’s debt load, but I’m not sure it is time to start turning on Musk quite yet.
Looking for Ideas with Even Greater Upside?
Most of Zacks’ investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information>>