Equities Update: Tesla, Petrofac – and a potential ECB rate cut

Record number of Tesla retail investors turn out to back Musk pay deal following firm’s rallying cry

• Tesla AGM sees biggest ever proxy vote turnout by eToro users, with three weeks left to vote
• Votes have been exercised on over a quarter (30%) of all Tesla shares held by eToro users
• More than 80% have voted in favour of Elon Musk compensation package

A record number of retail investors have already voted on the key proposals being addressed at Tesla’s upcoming Annual General Meeting (AGM), with the majority backing Elon Musk’s much-talked about compensation package, according to latest data from trading and investing platform eToro.

eToro users holding Tesla stock have been casting proxy votes on several motions to be decided on at the June 13 AGM, one of which is whether or not to approve Elon Musk’s $56 billion pay plan. With almost two weeks still to go in which investors can cast proxy votes, the AGM has already seen the biggest ever turnout by eToro users, beating the previous record set by GameStop by more than 20%.

So far, votes have been exercised on around a quarter (30%) of all Tesla shares held by eToro users. For comparison, at Microsoft’s recent AGM, the equivalent figure was 1.7%, whilst for Apple it was 1.9%.

Yoni Assia, CEO and co-founder of eToro, said: “Tesla is the most popular stock on the eToro platform and it’s a company that eToro users are deeply passionate about. I’m thrilled that so many of them are getting the chance to take part in what’s probably the most anticipated company AGM in years. We are excited to see retail investors have the opportunity to influence the corporate governance of the brands they invest in and care about.”

Tesla has been urging its retail investing community to participate in the AGM, and CEO Elon Musk expressed his concern in a post on X that a significant number of Tesla retail investors have not been able to cast proxy votes.

Tesla shareholders have been asked to vote on a number of questions for the upcoming AGM. With regards to Elon Musk’s compensation, the vote was specifically on ‘a Tesla proposal to ratify the 100% performance-based stock option award to Elon Musk that was proposed to and approved by our stockholders in 2018’. Amongst the eToro users who have cast votes on this proposal, more than 80% have voted in favour of the motion.

eToro enables its users to cast proxy votes through its partnership with Broadridge Financial Solutions. eToro users, including those holding fractional shares, are able to participate in AGMs for stocks listed all over the world by casting a proxy vote on issues such as mergers, executive pay and environmental, social and governance targets.
 

Benign inflation gives green light to historic ECB rate cut

Ben Laidler, Global Markets Strategist, eToro said: “European inflation came in a little higher than hoped at 2.6%, but it’s still near three-year lows and this gives the green light to a historic first rate cut from the European Central Bank (ECB) next week. This will act as a positive catalyst for the continent’s economy and stock markets.

“May’s inflation rose modestly versus the prior month’s 2.4%, with regional unemployment near record lows and services inflation outpacing subdued goods and energy price pressures. There will be comfort that prices are well anchored in the three EU heavyweights, with Germany at 2.4%, France at 2.2%, and Italy at 0.8%.

“This morning’s update opens the door to the ECB’s first interest rate cut since 2008 at its June 6th meeting, providing crucial support to the stagnant and indebted European economy. This will likely come with a ‘go slow on further cuts’ message, until we see a more definitive price trend to the ECB’s 2% inflation target.”

The losses are staking up for Petrofac as shares remain suspended

Mark Crouch, analyst at investment platform eToro, says: “Petrofac’s fall from grace has been gut-wrenching for shareholders. The energy service company has seen its share price plummet 97% even after the COVID oil crash. And when you consider that Petrofac generates billions of dollars in annual revenues, investors will be left scratching their heads, asking, where did it all go wrong?

“The company recently announced they were unlikely to make a critical bond payment due in May and so shares were suspended pending these results. Unfortunately for investors, the situation has not improved. The company reported a full year loss of $393m and are in discussions with the FCA seeking a reinstatement of trading in its shares. Once a well-regarded player in the energy services sector, Petrofac now finds itself in a desperate fight for survival.

“A drawn-out bribery case was finally put to bed in 2021, and it was hoped Petrofac could at last begin to rebuild its reputation. However, despite recent wins in the renewable energy sector, striking new business deals and rebuilding their sales pipeline, glaring inefficiencies remain ingrained throughout the business.

“Ultimately Petrofac has assets they can sell to help balance the books, but that might not be enough, and with debt levels verging on out of control, the situation looks bleak.”