Use Spotify? Access BizNews podcasts here.
Use Apple Podcasts? Access BizNews podcasts here.
___STEADY_PAYWALL___
Tesla Stock Price Slides After Musk Promises on Twitter to Sell $21 Billion Stake
Car maker’s chief executive asked Twitter users whether he should sell one-tenth of his Tesla stock
Updated Nov. 8, 2021 5:15 pm ET
Tesla Inc. TSLA -4.84% shares fell after Chief Executive Elon Musk signaled he was open to selling 10% of his holdings.
Shares in the electric-vehicle maker lost 4.8% Monday after Mr. Musk, the company’s largest stockholder, launched a weekend poll of his 63 million followers on Twitter, asking them if he should sell the stake, worth around $21 billion at Friday’s market close, to pay taxes. About 58% of the 3.5 million participants voted in favor of the sale and Mr. Musk tweeted that he had been “prepared to accept either outcome.”
Monday’s slip took a sliver off a rally that has carried Tesla shares up 65% this year, propelling the company into a small group with market values topping $1 trillion and making Mr. Musk the world’s richest person. Investors often sell shares when insiders do because company executives are generally assumed to have greater awareness of the business’s direction and prospects.
Tesla’s shares remain notoriously volatile. They have a relatively small so-called free float, or the amount of shares regularly traded and not held by insiders. Tesla’s shares have fallen more than 5% nine times this year, according to FactSet. Tesla didn’t respond to a request for comment on the stock decline, Mr. Musk’s tweets and if anyone had vetted them. Mr. Musk is required under a 2019 court judgment to get internal preapproval before making statements about certain subjects that could affect Tesla’s share price.
Helping power Tesla’s stock surge this year: The car maker’s fortunes have picked up. The company posted a third consecutive record profit in the third quarter, thanks in part to its ability to navigate global supply-chain disruptions.
Tesla shares shot higher again in late October when car-rental firm Hertz Global Holdings Inc. said it had ordered 100,000 cars to be delivered by the end of 2022. Mr. Musk subsequently raised doubt over the deal, and The Wall Street Journal reported on Nov. 4 that the two companies were negotiating over how quickly Hertz would receive the vehicles.
A trading craze also has pushed Tesla shares higher. Last month, traders piled into call options that provide a levered wager that the stock would keep climbing. Purchases of the bullish contracts can feed back into gains for underlying shares. Tesla has for years been popular among individual investors, subjecting the stock to moves unexplained by fundamentals such as profits and losses long before day traders swarmed into shares of GameStop Corp. , AMC Entertainment Holdings Inc. and others in 2021.
