Tesla shares inch higher after Musk sheds $5 billion in equity

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(Businesshala) – Tesla shares rose higher on Thursday after filings revealed that Chief Executive Officer Elon Musk had sold nearly $5 billion worth of stock in the past few days following his much-anticipated Twitter poll.

FILE PHOTO: A Tesla logo is seen at the Tesla Shanghai Gigafactory in Shanghai, China January 7, 2019. REUTERS/Aly Song

Shares of the electric-car maker were in earlier gains and were up 0.6% to $1,074.80 after falling earlier in the week.

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The share sale was his first since 2016 and came after his weekend poll of Twitter users sold 10% of his Tesla stake, which comprises the majority of his estimated $281 billion.

“I don’t think investors are reading the news negatively,” said Oliver Purse, senior vice president and advisor at Wealthspire Advisors in New York. “If you believe in Tesla’s story, it shouldn’t affect you or change your mind.”

Tesla stock is in the portfolio used by Wealthspire, Purse said.

The filing showed Musk’s trust sold approximately 3.6 million shares in Tesla, valued at about $4 billion, to cover tax obligations after he exercised options to acquire approximately 2.2 million shares for $1.1 billion. Sold another 934,000 shares.

The sale is equivalent to about 3% of Musk’s total holdings. The options-related portion of the sale was placed long before their Twitter poll in September.

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

Musk’s move to sell his Tesla shares comes at a time Washington has proposed taxing billionaires’ stockholdings to help fund President Joe Biden’s social spending plan.

“Elon Musk doesn’t take a salary, he’s paid in large chunks of stock. At some point you’re going to have to reduce some of that concentration,” said Art Hogan, chief market strategist at National Securities in New York.

“It’s not novel. It just gets more attention because it’s such a high market-cap type, attention-grabbing company.”

Tesla did not respond to a request for comment.

EV Frenzy

Tesla has lost more in market cap this week than the combined market capitalization of Ford Motor Co and General Motors, according to Wanda Research, with retail investors being net buyers, leading to net purchases of $157 million on Monday and Tuesday.

He’s also piled on the stocks of companies that are emerging as potential competitors to the electric-vehicle maker.

Fidelity’s brokerage website showed that Rivian Automotive Inc., Tesla and Lucid Group were the most traded stocks on Wednesday, with buy orders exceeding sell-offs.

Shares of Rivian jumped nearly 17% a day after a stellar market debut that sent the company’s valuation exceeding $100 billion. Lucid Group advanced 10%.

New players in the EV sector are also likely to take interest from institutions.

“Rivian’s valuation makes it a valid option for institutional investors, who previously only had Tesla in the electric vehicle space to play,” wrote Nicolas Kolas, co-founder of Datatrack Research, in a recent note.

Wall Street’s biggest institutional investors, including T. Rowe Price and BlackRock, bet on Rivian to become the next big player in the Tesla-dominated sector, amid mounting pressure on automakers in China and Europe to eliminate vehicle emissions. are.

Four former and current Tesla board members, including Musk’s brother Kimbal Musk, have sold shares worth nearly $1 billion since Tesla’s market value exceeded $1 trillion at the end of last month, according to filings and market data. has been filed.

The company’s stock price has posted staggering gains in recent years and is emblematic of the upbeat mood in US markets and the optimism of small-time traders, who helped it rise 51% this year and 1,300% from 2020 lows. is of.

Reporting by Tanvi Mehta, Medha Singh, Bansari Mayur Kamdar, Anisha Sarkar and Devik Jain in Bengaluru, Tom Westbrook in Sydney, Carolyn Valetkevich and Ira Iosbashvili in New York; Editing by Anil D’Silva and Nick Ziminsky

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