The downward trajectory of Tesla’s shares persists following Musk’s tweets
Tesla Inc’s shares continued their recent decline on Monday as investors responded to CEO Elon Musk’s substantial share sales totaling $6.9 billion and his latest tweets.
Tesla’s share price concluded nearly 2% lower at $1,013.39, resulting in the company’s market capitalization diminishing by approximately $207 billion since Musk initiated share sales last week.
This latest downturn in stock value occurred subsequent to a Twitter exchange on Sunday between Musk, the wealthiest individual globally, and Bernie Sanders, following the U.S. senator’s call for equitable taxation of the affluent.
Throughout Monday’s trading session, Tesla reached as low as $978.60, causing its market valuation to dip below the $1 trillion mark temporarily for the second time in four sessions, after having initially breached this milestone late last month.
“Tesla’s shares have been steadily declining since the recent share sale, accentuated by a Twitter poll last week. Musk’s tweet on Sunday, criticizing a senior political figure, could exacerbate downward pressure on the stock in the forthcoming weeks,” remarked Kunal Sawhney, CEO of equity research firm Kalkine Group.
“Elon Musk’s divestment of billions of dollars’ worth of shares is anticipated to result in a tax liability of approximately $15 billion.”
Last week, Musk sold 6.36 million Tesla shares after floating the idea via a Twitter poll. To fulfill his commitment to divest 10% of his holdings in the electric-vehicle manufacturer, he would need to sell an additional approximately 10 million shares.
Propelled by Wall Street’s enthusiasm for electric vehicle manufacturers, Tesla’s stock had surged by over 140% in the past 12 months. However, the recent decline has brought the stock to its lowest level since late October.
Also on Monday, Rivian Automotive experienced a nearly 15% surge, with the Amazon.com-backed electric vehicle manufacturer up approximately 90% since its initial public offering last week.
Illustrating the fervor among retail investors, Tesla and Rivian emerged as the most actively traded stocks on Fidelity’s online brokerage, with over twice as many buy orders as sell orders.
CHALLENGES WITH CHIP SUPPLY
On Saturday, Musk responded to a Twitter user, advising against overinterpreting PepsiCo CEO Ramon Laguarta’s remarks regarding the anticipation of its initial Tesla Semi truck delivery in the fourth quarter.
“As publicly stated, Tesla faces short-term constraints in chip supply and long-term constraints in cell supply,” Musk tweeted. “The production of additional vehicles at scale is not feasible until both constraints are addressed.”
Tesla has navigated the pandemic and the global supply-chain disruptions more effectively than its counterparts, achieving record revenue for the fifth consecutive quarter.
Meanwhile, investor Michael Burry, renowned for “The Big Short,” once again targeted Musk, tweeting, “@elonmusk borrowed against 88.3 million shares, divested all his mansions, relocated to Texas, and is questioning @BernieSanders whether he should divest more stock. He does not require cash; he simply desires to divest $TSLA.”