Tesla Stock Price Slides After Elon Musk Sells $5 Billion Worth of Shares

Tesla's stock declined slightly on Thursday after filings revealed Chief Executive Elon Musk sold about $5 billion (roughly Rs. 37,223 croree) worth of his shares this week following his much-hyped Twitter poll.

The electric-car maker's stock ended the session down 0.4 percent at $1,063.51 (roughly Rs. 79,100) after tumbling earlier in the week.

Musk's share sale was his first since 2016 and comes after his weekend poll of Twitter users about offloading 10 percent of his Tesla stake, which comprises most of his estimated $281 billion (roughly Rs. 20,91,964 crore) fortune.

"I don't think investors are reading in to the news negatively," said Oliver Pursche, senior vice president and adviser at Wealthspire Advisors in New York. "If you believe in the Tesla story, this should not impact you or change your mind."

Tesla's stock is in portfolios utilized by Wealthspire, Pursche said.

Filings showed Musk's trust sold nearly 3.6 million shares of Tesla, worth around $4 billion (roughly Rs. 29,779 crore), while he also sold another 934,000 shares for $1.1 billion (roughly Rs. 8,189 crore) to cover tax obligations after exercising options to acquire nearly 2.2 million shares.

The sale equates to about 3 percent of Musk's total holdings. The options-related part of the sale was put in place in September, well before his Twitter poll.

Before the sale, Musk owned a 23 percent stake in Tesla, including stock options. He also owns other companies including SpaceX.

Musk's move to sell his Tesla shares comes as US Senate Democrats propose taxing the stock holdings of billionaires to help finance President Joe Biden's social spending plan.

"Elon Musk doesn't take a salary, he's paid in big chunks of stock. At some point in time you have to take some of that concentration down," said Art Hogan, chief market strategist at National Securities in New York.

"This is not novel. It just gets more attention because it's such a high market-cap type, attention-grabbing kind of company."

With nearly 800,000 options, or about 12 percent of Tesla's open contracts, set to expire at the close of trading on Friday, some analysts have pointed to the potential for additional near-term volatility as investors and options dealers make adjustments to account for expiring positions.

Tesla did not respond to a request for comment.

EV mania

Tesla this week has lost $157 billion (roughly Rs. 11,68,846 crore) in stock market value, more than the combined market capitalizations of Ford and General Motors. At the same time, demand for shares of electric vehicle makers has heated up.

Shares of Rivian jumped 22 percent a day after a stellar market debut that sent the company's valuation over $100 billion (roughly Rs. 7,44,581 crore). Lucid surged 10 percent.

Underscoring retail investors' thirst for EV stocks, Rivian, Tesla, and Lucid made up three of the four most-traded stocks on Fidelity's brokerage website on Thursday, with buy orders outnumbering sell orders.

Wall Street's biggest institutional investors, including T. Rowe Price and BlackRock, are betting on Rivian to be the next big player in a sector dominated by Tesla, amid mounting pressure on automakers in China and Europe to eliminate vehicle emissions.

"Rivian's valuation makes it a legitimate option for institutional investors who have previously only had Tesla to play the electric vehicle space," wrote Nicholas Colas, co-founder of DataTrek Research, in a recent note.

Four former and current Tesla board members, including Musk's brother, Kimbal Musk, have filed to sell nearly $1 billion (roughly Rs. 7,445 crore) worth of shares since Tesla's market value surpassed $1 trillion (roughly Rs. 74,45,165 crore) late last month, according to filings and market data.

Tesla's share price has made staggering gains over recent years and has epitomized the ebullient mood in US markets and the optimism of small-time traders who have helped drive it up 51 percent this year and 1,300 percent from 2020 lows.

© Thomson Reuters 2021