In the aftermath of Tesla falling sharply in Monday's stock market action, with the EV giant leading the downside among S&P 500 stocks, a longtime Tesla stock bull called on Tuesday for the Tesla board of directors to "act now" as CEO Elon Musk appears to be continuing to focus on politics.
Wedbush Securities analyst Dan Ives outlined on Tuesday "three steps" the Tesla board should take as Musk looks to increase his involvement U.S. politics following the Tesla head's weekend announcement that he is forming the "America Party" to challenge President Donald Trump and the two-party system.
"We believe this is a tipping point in the Tesla story and ultimately the Tesla Board needs to act now and set the ground rules for Musk going forward around his political ambitions and actions," Ives wrote early Tuesday.
Ives add that Tesla is "heading into one of the most important stages of its growth cycle with the autonomous and robotics future now on the doorstep and cannot have Musk spending more and more time creating a political party which will require countless time, energy, and political capital."
Musk, responding Tuesday, to Ives' thoughts on X, said: "Shut up, Dan."
Tesla stock fell 0.7% to 295.88 at the close of Wednesday's stock market. On Tuesday, TSLA jumped as high as 304.05 intraday, but pared those gains, ending the trading session up 1.3% to 297.81.
Tesla stock on Monday sank 6.8% to 293.94. The session marked a decisive move below the stock's 200-day moving average and its 50-day moving average.
Last week, Tesla stock fell 2.6% to 315.35, also undercutting those key levels.
TSLA shares have work to do before forging what had started to look like a possible base.
Ives Outlines Needed Tesla Board Action
In Ives' view, the Tesla board should put forward a new incentive pay package for Musk that increases his ownership of Tesla up to around 25% voting power. Ives wrote Tuesday that part of this new pay package would "lay out the amount of time" Musk must spend on Tesla operations to fulfill his pay package.
Ives' third suggestion is that the Tesla board create a "special Board oversight committee for Musk around his political ambitions and ground rules that would violate his pay package."
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"The Board cannot control Musk's donations ... but they can have oversight if his political ambitions/endeavors interfere with his role as CEO of Tesla," Ives said.
Meanwhile, Morgan Stanley analyst Adam Jones, another longtime Tesla bull, noted Tuesday that Musk's foray into politics and war of words with Trump "remains fluid."
Jonas warned Tesla investors that they should be "prepared for further devotion of resources (financial, time/attention) in the direction of Mr. Musk's political priorities which may add further near-term pressure to TSLA shares."
Tesla Stock Performance
It remains to be seen what Tesla stock's retail investors will do this week with TSLA under pressure from Musk's plans to form a new political party.
In early June, as Tesla stock sank while Musk and Trump publicly feuded, trading insults and threats on social media, Tesla's retail investors poured more than $650 million into Direxion Daily TSLA Bull 2x shares, according to Bloomberg data. The fund delivers twice TSLA's daily return.
Reflecting retail investor interest in TSLA, Tesla stock was the top-tracked name by the subreddit investor group r/WallStreetBets. Website ApeWisdom shows TSLA is the top-trending issue on r/WallStreetBets as of Tuesday.
TSLA rallied from late April to late May in part because Musk said he was backing away from politics and the Trump administration. However, since then, Tesla stock has tumbled and rebounded on the Musk-Trump news cycle.
The July 1 low of 293.21 is a short-term level to watch as is the June 5 low of 273.21.
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Tesla stock at Wednesday's stock market close was up 24% since the April 22 Q1 conference call, lifted by robotaxi bets. Shares are down about 27% for the year, and 39% below their all-time high of 488.54.
Tesla Deliveries And The Stock Market
Last week, the EV giant reported second-quarter vehicle deliveries of 384,122, slightly below analyst consensus but not as low as some feared. The total was down 13.5% compared to a year ago while overall vehicle production ran nearly flat vs. a year earlier, when Tesla produced 410,831 EVs.
Before the deliveries release, Forbes reported that Musk fired Omead Afshar, Tesla's head of operations in North America and Europe. Afshar began at Tesla in 2011 and, during his tenure, reportedly became one of Musk's top lieutenants and most trusted allies.
At the end of last year, as Tesla predicted 20%-30% EV delivery growth in 2025, the Q2 consensus was 502,000. In a May 20 interview at Bloomberg's Qatar Economic Forum in Abu Dhabi, Musk said Tesla was not having any demand issues.
"We've lost some sales perhaps on the left but we've gained them on the right," Musk said, referring to where consumers place along the political spectrum. Musk's involvement with the controversial Department Of Government Efficiency had stirred protests and boycotts among those on the left.
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"The sales numbers at this point are strong and we see no problem with demand," he said.
"Our stock wouldn't be trading near all-time highs if things weren't in good shape, they're fine, don't worry about it," Musk added at the time when TSLA shares were 29% below the all-time high of 488.54.
Tesla reports Q2 earnings and revenue late on July 23.
Tesla stock has a 21-day average true range of 4.77%. The ATR metric, available on IBD's MarketSurge charting tool, gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily stock market action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
Investors can keep tabs on the IBD Leaderboard watchlist, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
Tesla stock has a 53 Composite Rating out of a best-possible 99. The stock also has a 69 Relative Strength Rating and a 59 EPS Rating.
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