Tesla shares rebound after selloff briefly took valuation below $1 trillion

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(Businesshala) – Shares of Tesla Inc rebounded on Wednesday, after a multi-day sale that jeopardized the electric-carmaker’s position in the $1 trillion club, when top boss Elon Musk told Twitter users his 10% About the stake sale.

FILE PHOTO: Tesla Inc. CEO Elon Musk walks next to a screen showing an image of a Tesla Model 3 car during the opening ceremony of the Tesla China-made Model Y event in Shanghai, China January 7, 2020. Businesshala / Ellie Song / FILE PHOTO

Tesla shares were up nearly 4.6% recently at $1,070.63. They fell 3.5% to $987.31 in volatile early trading on Wednesday, pushing the company’s market cap below the $1 trillion mark.

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By the end of Tuesday, the company had lost nearly $200 billion in market value since Monday, more than the combined market capitalization of General Motors Co and Ford Motor Co.

Despite the recent sell-off, the stock is still up more than 50% for the year, with shares hovering around the level in their late-October rally, which propelled the company above the trillion-dollar threshold.

The world’s most valuable carmaker entered elite territory last month after securing its largest-ever order from rental car company Hertz for 100,000 Tesla vehicles.

Musk was sold off over the weekend by polls asking his Twitter followers if he should sell his 10% stake in Tesla. About 58% of them supported the sale.

Investors are keeping a close eye on Tesla filings with the US Securities and Exchange Commission (SEC) for any clues on the share-sale plans. SEC rules give companies four business days to report major incidents.

Analysts at Wanda Research wrote Wednesday that record buying of short-term bullish call options on Tesla in recent weeks has helped fuel the stock’s swings.

The hedging activity of market makers, who may have taken the other side of at least a portion of these trades, was responsible for intensifying the rally and the latest decline in Tesla, the report said.

With the bulk of open Tesla call options expiring this week and next week, there is a “not negligible” risk that further options-driven sales will result in a major pullback for the stock, Wanda analysts wrote.

Tesla shares come in a pullback while Wall Street awaits the debut of Amazon.com Inc.-backed EV maker Rivian Automotive Inc., which was set to receive a valuation of about $107 billion on Wednesday, adding to its shares. More than 60% opening was indicated. Above their offer price on Nasdaq.

Wall Street’s biggest institutional investors are betting 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.

Insiders sold nearly $1 billion in stock

Four former and current Tesla board members, including Musk’s brother Kimbal Musk, filed to sell shares worth nearly $1 billion late last month, according to filings and market data.

“A CEO asking his followers whether he should sell a large number of shares is never going to be well reflected in the share price. Selling a large number by his brother,” said Craig Erlam, market analyst at Oanda. Doing so after a day only adds to the fear of investors.”

“That said, we need to take Musk with a pinch of salt and investors may quickly see this as an opportunity to take the plunge.”

“The reaction to Musk’s potential sale of 10% of its stock has put pressure on stocks,” said Tim Griskey, a senior portfolio strategist at New York-based investment management firm Ingels & Snyder, adding that the company itself is under fire, with strong results. . “It’s not going to fade away anytime soon.”

Reporting by Shruti Shankar and Subrata Patnaik in Bengaluru Additional reporting by Medha Singh and Bansari Mayur Kamdar in Bengaluru; Katanga Johnson in Washington, Saqib Iqbal Ahmed and Ira Iosbashvili in New York Editing by Arun Koyur and Matthew Lewis


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