Tesla (NASDAQ:TSLA) stock is in full focus following a post from CEO Elon Musk regarding his voting control of the electric vehicle (EV) company over the weekend. Musk stated that he is “uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control.”
If Musk is unable to have 25% voting control, then he would rather build artificial intelligence (AI) and robotics products outside of the company, according to the post. The CEO also took a jab at Fidelity due to its large stake in TSLA stock and asked why it doesn’t participate in the company’s affairs.
Musk currently has a 13% stake in Tesla, equivalent to about 411 million shares. He sold billions of dollars worth of shares in 2022 in order to fund his acquisition of X, the platform formerly known as Twitter.
TSLA Stock: Musk Requests 25% Voting Control
In a follow-up post, Musk noted that Tesla’s new compensation plan has been placed on hold pending a decision from the Delaware compensation case. He added that a 25% stake in Tesla would give him strong influence over the company with the possibility to be overturned by other shareholders. A 15% or lower stake “makes a takeover by dubious interests too easy.”
“I would be fine with a dual class voting structure to achieve this, but am told it is impossible to achieve post-IPO in Delaware,” said Musk. A dual-class voting structure can provide founders and early investors with shares that hold more voting power than other shares.
It’s possible for Musk to achieve 25% voting control. He could do this through buying shares on the open market (which doesn’t seem likely), receiving newly issued shares, or increasing the voting power of his current shares. Receiving newly issued shares would be problematic for shareholders due to its dilutive effects.
According to Wedbush Managing Director Dan Ives, the voting control situation is a manageable process and will likely be resolved within three to six months, with the outcome of Musk continuing to build AI and robotics products within Tesla.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
