Though Tesla (TSLA) shareholders voted to reinstate Elon Musk's pay package on Thursday afternoon, some investors and analysts told Yahoo Finance they remain skeptical.

“The whole thing is a game of chicken and the shareholders blinked,” early Tesla investor Ibrahim AlHusseini said. “Fear of loss is a big motivator and Elon wielded that psychological mechanism to his benefit.”

The venture capitalist said he unenthusiastically voted in favor of the $56 billion package.

“The deal was set in 2018 when the milestones seemed virtually impossible and he met them," said AlHusseini, who first invested in Tesla in a Series C funding round. "He made a deal, he delivered, and this is his reward.”

Tesla's stock has been down nearly 30% year to date, and dropped roughly 2.5% on Friday. Now that the vote is over, AlHusseini said the stock should remain steady until its next quarterly earnings, where he forecasts that “shares will drop due to another miss on deliveries and margin.”

Tesla said 77% voted to support Musk’s pay package. According to the filing, investors who held 1.76 billion shares voted to approve the deal, while 528.9 million shares voted against it. 20.6 million shares did not vote.

“I just want to start off by saying, hot damn, I love you guys,” Musk said onstage at the shareholder meeting. The package, comprised of options, was originally valued at up to $56 billion but is now worth roughly $46 billion due to a fall in Tesla's market capitalization.

In January, Delaware Chancery Court Judge Kathaleen McCormick ruled that the original pay package, which was approved by 73% of voted shares in 2018, was not negotiated fairly.

The vote to reinstate the package doesn’t necessarily mean that Musk will get the historic pay. A favorable vote doesn't resolve the legal challenge, and likely won’t change the judge’s mind. Legal experts say the final decision will be tied up with the Supreme Court and Delaware Chancery Court.

New York City Comptroller Brad Lander, who was among the shareholders urging for a vote against the package, calls the approval “a mistake.” Lander overseas several pension funds that own about 3.4 million Tesla shares.

“We’ll see how Musk moves forward, if this leads to him focusing on Tesla and developing clear plans for growth,” Lander told Yahoo Finance. “But if it becomes one more battle, distraction, Twitter feud, and more ego — that won’t be a good thing.”

Tesla’s largest outside institutional shareholder, Vanguard, was pivotal in the deal's passage. Vanguard, which holds 7% of Tesla stock, initially voted no in 2018, citing concerns over the size in relation to the company’s performance.

Longtime Tesla investor Ross Gerber has questioned Vanguard's move. "Index funds are supposed to represent the public and often have corporate governance expectations for the companies. It seems a little bit weird that they voted for the pay package and said it aligns with shareholder incentives — which it does, but at an outrageous value,” he told Yahoo Finance.

Gerber, who co-founded investment firm Gerber Kawasaki, voted yes in 2018 but advocated for a no this time. He started investing in Tesla in 2014, and his firm holds 332,000 shares as of March 31.

“The package is outrageous and his performance has been horrendous for the last three years,” said Gerber. “But I believe in elections, so if that's what shareholders want, that’s fine.”

Investors also passed a proposal to reincorporate Tesla from Delaware to Texas, which Musk pushed for after the judge voided his pay deal.

“This is part of the distraction problem,” Lander said. “Delaware has a set of relatively conservative laws that are the foundation of shareholder capitalism. To then pack up your marbles and move to Texas because you’re pissy about a judge who said you have to follow the rules, the question is how are you going to reset?”

Lander says he sees a strong foundation for Tesla to build on despite some worrying signs, adding that they have no immediate plans to change their investment strategy.

“Elon deserves a great share of the credit,” Lander said. “Not a $56 billion share, but a very great share.”

Analysts say shareholders' decision to restore Musk’s compensation package is a win for investors.

Canaccord Genuity managing director George Gianarikas, who has a Buy rating on the stock, told Yahoo Finance he is “very encouraged” by the vote of confidence in Musk’s leadership.

“Elon Musk is critical to the success of Tesla in the past and in the future,” Gianarikas explained.

Gianarikas said Tesla’s prospects of developing full self-driving set the automaker apart from competitors, putting the company in an “incredibly enviable position.”

Wedbush’s Dan Ives, a longtime Tesla bull, described the approval as a “pop-the-champagne moment” for Musk and shareholders. He said the pay package approval removes a $20 to $25 overhang on shares.

“This is just the start of the next chapter, as Musk calls it, in the Tesla growth story. It's one of the best disruptive names in the world,” Ives said. “It's one of the best AI plays in the market.”

Ives, who cautions a no vote could have resulted in Musk leaving Tesla, sees Tesla’s valuation surpassing $1 trillion in 2025 as Musk dedicates more time and focus to the automaker.

"You're seeing old-school Musk return now ... Tesla needs Musk and Musk needs Tesla,” Ives added.

But Dave Harden, chief investment officer of Summit Global, cautioned against buying Tesla shares at this time.

"It's significant dilution possibilities for shareholders, and it causes one to want to do things that are risky," said Harden.

The company has not proven itself in AI and robotics, and its major growth burst in EVs has already happened, Harden argues.

"I think that there's going to be much more chatter and much more opportunity to get in when you can see clearly that the growth is going to happen," said Harden.

"I would recommend to hold on Tesla and wait. If you're in the shares, I'd probably sell," he added.

Yasmin Khorram is a Senior Reporter at Yahoo Finance. Follow Yasmin on Twitter/X @YasminKhorram and on LinkedIn. Send newsworthy tips to Yasmin: yasmin.khorram@yahooinc.com

Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email seanasmith@yahooinc.com.

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