Tesla’s [TSLA] share price stood out in market headlines this year. The stock started 2020 strong, climbing 119.2% to an all-time high of $183.48 on 19 February, before the market crash sent it down to a low of $72.24 on 18 March.
Since then, Tesla’s share price has regained its momentum, rallying by a massive 589.8% to a record high of $498.32 on 31 August.
News of the company’s five-for-one stock split and a fourth consecutive profitable quarter has kept the market’s focus firmly on Tesla’s share price, which as of 18 September was up 428.4% for the year at $442.15.
All eyes are on the company’s forthcoming annual general meeting (AGM), which — after being postponed twice — will finally take place on 22 September. How can investors best play Tesla’s share price ahead of the meeting?
Board reshuffle could put Tesla’s share price on new path
This year’s AGM will be a little different from 2019 — which saw Tesla’s share price jump 4% on news that the company was set to have a record quarter — as it will be live-streamed to most shareholders, with only a few attending in person.
One item on the agenda which is likely to impact Tesla’s share price is the election of the Tesla board for the next three years. Elon Musk, CEO of Tesla, should be a shoo-in, as should Hiromichi Mizuno who, prior to joining Tesla’s board of directors in April, was the CIO of Japan’s Government Pension Investment Fund — the world’s largest asset owner.
There are more question marks, however, over the third and final name. Robyn Denholm succeeded Musk as Tesla’s chair in November 2018, when the SEC demanded the latter step down, but Denholm has her own critics.
A report by Institutional Shareholder Services (ISS) has recommended investors vote against her because of her failure to reasonably justify excessive director salaries, Bloomberg reports. ISS is also “significantly concerned” about why directors are pledging increasing amounts of stock as collateral against personal loans.
“The increase in pledging activity at the company with the absence of a clear rationale and lack of a more robust anti-pledging policy call into question the audit committee's ability to effectively oversee risk,” ISS stated.
“The increase in pledging activity at the company with the absence of a clear rationale and lack of a more robust anti-pledging policy call into question the audit committee's ability to effectively oversee risk” - Institutional Shareholder Services (ISS)
Musk himself may not get a free pass either. Pensions and Investment Research Consultants called for his removal in June over his record bonus deal of $55.8bn.
According to a regulatory filing, Antonio Gracias, CEO at Valor Equity Partners, and Steve Jurvetson, an early-stage venture capitalist, will be standing down by the end of 2020.
There is speculation that other directors may want to step down over the company’s unique liability insurance arrangements. Tesla has refused to pay its insurers increased premiums and in typical fashion, Musk instead stepped in to “personally provide coverage substantially equivalent to such a policy”.
Such an unorthodox approach could shake up the board — and Tesla’s share price. “It interferes with director independence,” author Ruerd Heeg wrote in Seeking Alpha. “That is a big red flag for governance.”
Heeg believes Larry Ellison, chairman of Oracle [ORCL], may be one Tesla director who sees this as the time to cash in. “It is a mystery to me why he volunteered to be a director of Tesla,” he wrote. “[But] now that the share price has risen so much, he has a strong monetary incentive to leave.”
“It is a mystery to me why he volunteered to be a director of Tesla. [But] now that the share price has risen so much, he has a strong monetary incentive to leave” - Larry Ellison, chairman of Oracle
What’s up with Tesla’s batteries?
Other big news for Tesla’s share price is the company’s Battery Day on 22 September, during which many exciting things will be unveiled according to a Tweet from Musk.
The event is likely to include any breakthroughs in Tesla’s long-life battery tech, updates on the Roadrunner project and details about the first 24-hour battery production site. Making battery production more efficient is crucial for Tesla to increase the margin on its electric vehicles.
Other announcements could centre on Tesla’s electric-powered move into China, including the completion of its Shanghai Gigafactory —where the company’s eagerly anticipated Model 3 is already rolling off production lines — and the near completion of the company’s Model Y factory for the Chinese market.
As the company continues to expand its reach beyond vehicles to the energy sector, the rise of Tesla’s share price shows no sign of stopping.