Tesla's biggest challenges ahead of reporting Q1 earnings

Shares of Tesla (TSLA) are under pressure ahead of the company's first-quarter earnings results expected out next week, as it contends with a slew of mounting challenges.

Tesla is seeking shareholder approval for a $56 billion pay package for CEO Elon Musk, which was initially struck down by a Delaware Chancery Court judge in January. The EV company is now looking to move its incorporation from Delaware to Texas for this controversial compensation plan.

Compounding these issues, analysts at Barclays have taken a bearish stance on Tesla's stock, warning that the company's upcoming earnings results could drive the share price even lower. The investment bank has dropped its price target on Tesla shares to $180, down from the previous $225.

Additionally, Tesla is reportedly planning to lay off around 10% of its global workforce.

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This post was written by Angel Smith

Video Transcript

- Tesla's once again asked shareholders to vote on a $56 billion compensation plan and package for CEO Elon Musk. This is the same package that was voided earlier this year by a Delaware court. They are also calling for a vote to move the company's incorporation from Delaware to Texas. This comes as Barclays this morning warned that next week's Tesla earnings could drive the stock price even lower.

If you're taking a look at shares right now, they're up premarket by about 7/10 of a percent, but let's show a year-to-date chart, if we may, because it's been a slippity-slide here for TSLA shares, and its shareholders certainly wondering, OK, when will things start to turn around. Is it management decision?

Of course, this is the company that also just announced a layoff plan of about 10% of its workforce, and so that also something that investors have had to price in recent sessions too.

- Yeah, exactly. I think this is just really building up all the pressure that Tesla is going to be facing, not only in its earnings and earnings call here that's going to happen in just about a week from now, but also looking ahead to that shareholder meeting that's going to take place in two months.

And Dan Ives is out with a note here from Wedbush earlier this morning, and I think really just putting it into context here for everyone, just saying that there's fireworks right now into this shareholder meeting. Clearly, the performance has not been up to par, to say the least. You've got shares off more than 30% since the start of the year. He called the last two Tesla calls have been a, quote, "train. wreck. Bad comedy shows with no adult in the room."

He's talking about the lack of guidance, the lack of communication, and you can see that frustration, I think, clearly reflected in the stock price in shares, off 36% since January 1st. And really no stopping here this trend to the downside. We talk about the fact that a number of factors are obviously challenging Tesla's position at this point.

Obviously, one of the or the biggest factor is the lack of demand. That is something that not only Tesla's struggling with. Obviously, many of its rivals are struggling with as well. But you can clearly see that shareholders are frustrated at this point, and Ives saying that the clock has struck midnight for Musk now to lay out the growth strategy and get realistic a delivery and margin goalpost here for shareholders.

- I'm still just hung up on his use of the word fireworks. I mean, that's such an absolute value term coming from Ives there where it's either striking and amazingly brilliant to the eye when you see it go off in the sky, or it could drive your dog crazy.