ANALYSIS-Musk’s Tesla sales cause a stir, but billionaires sell stock all the time

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NEW YORK, Nov 11 (Businesshala) – If trading in the shares of Amazon, Microsoft, Facebook and other billionaire-owned companies is any indication, Tesla co-founder Elon Musk may not be bad at offloading part of his stake in the company. Shares of the electric car maker over the long term.

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Musk, who sold nearly $5 billion worth of Tesla shares over the past few days, will remain by far the largest single shareholder in Tesla, with about 15.5% of the company’s outstanding shares after the entire sale is complete. Amazon founder Jeff Bezos, by comparison, owns about 14% of the online retailer, while Mark Zuckerberg owns about 14% of Facebook parent Meta Platforms Inc. and controls the majority of its Class B stock.

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Bezos, Zuckerberg and Microsoft’s Bill Gates have sold billions of dollars worth of stock this year, analysts and investors said, with little effect on their companies’ stock prices.

Tesla, of course, isn’t easily comparable to those companies, nor is Musk to their billionaire founders. Tesla shares have risen more than 1,400% over the past two years and trade at 346 times earnings, and the company receives overwhelming opinion from institutional and retail investors.

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Musk, for his part, is notoriously active on Twitter — where he asked polled users if he should sell his 10% stake — and is at least as divisive as the company he co-founded. Was. His recent activity raised questions about a possible breach of a 2018 agreement with the Securities and Exchange Commission that required him to have content tweets by an attorney.

Still, many on Wall Street believe the impact of Musk’s potential stock sale could be overwhelming. Tesla shares are down about 15% from their November 4 peak, falling after a Twitter poll and rebounding later in recent sessions. They were down 0.5% in choppy trading on Thursday.

Tesla did not respond to a request for comment.

‘smart move’

Musk selling his 10% stake in the company is prudent given a jump in the company’s shares, which are up more than 50% year-on-year, said Ross Gerber, president of wealth management firm Gerber Kawasaki and a longtime shareholder. said. in Tesla.

“Every major tech entrepreneur and bitcoin owner is pulling out huge amounts of capital for huge profits right now, so it is a smart move for Musk to take some money off the table and he announced it in a very Muskian way,” Gerber said.

Meanwhile, “Bezos sells for $2 billion and no one blinks,” he said, referring to Bezos’s sale of Amazon stock worth nearly $2 billion in early November.

Bezos has sold about $8.8 billion worth of Amazon stock this year, and about $10 billion in Amazon stock last year, using the proceeds to prop up his space tourism company, Blue Origin.

Anthony Chukumba, an analyst at Loop Capital, said those sales are likely to have a “negligible” impact on Amazon.com’s share price. Amazon shares are up 7.8% this year, beating the S&P 500’s 23.8% gain as investors have moved to cyclical stocks and are taken out of last year’s strong performance.

“No one really… thinks Bezos has less confidence in the company’s prospects. Amazon is so big and so liquid that it doesn’t really move the needle,” he said.

Meanwhile, Zuckerberg has sold shares almost every day this year through a periodic sale agreement. Those sales had no “detectable” effect on the company’s share price, said Joe Bonner, an analyst at Argus Research. The company’s shares are up 20.7% this year.

Analysts said the closest comparison to Musk’s decision to sell part of his stake may be Bill Gates, who sold his ownership in Microsoft by selling more than 20 million shares each quarter for more than a dozen years.

Dan Ives, an analyst at Wedbush Securities, said Microsoft’s shares continued to rise despite continued selling because investors saw the sale as part of Gates’ plan to give to charities and did not indicate their confidence in the company. Rating on Tesla shares.

Musk’s sales aside, investors who opted in with Tesla have got plenty of targets.

George Schultz, head of Schultz Asset Management, said the stock sale, along with Tesla’s higher valuations at a time when automakers such as General Motors are expanding into the electric vehicle market, suggest Tesla’s rally may be calming.

“If you put this all together this is an indication of a potential market top in Tesla stock,” he said.

Reporting by David Randall; Editing by Ira Iosebashvili and Nick Ziminsky

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