Tesla shares fell after Elon Musk's $4 billion sale was revealed

Tesla (TSLA) shares fell on Wednesday after CEO Elon Musk disclosed Tuesday night that he sold $4 billion worth of stock in the first two weeks of November.


Musk sold 19.5 million shares for $3.95 billion on Nov. 4, 7 and 8, according to SEC filings late Tuesday. The decision to sell some of his Tesla shares comes after Musk finalized the $44 billion purchase of Twitter.

Tesla stock

Tesla shares fell 1.7% on Wednesday market trade. Shares fell 2.9% to 191.30 on Tuesday, but were well above a session low of 186.75 as the broader market gained momentum. According to MarketSmith analysis.

Tesla shares sell off sharply after Musk’s takeover of Twitter Musk’s recent share sales likely helped Tesla’s stock drop recently. Increased Chinese subsidies and concerns over Elon Musk’s Twitter handle could also weigh on TSLA stock.

Clash Of The Titans: Tesla Vs. BYD

Tesla is also recalling more than 40,000 Model S and Model X vehicles from 2017-2021 because of a possible power steering assist feature, Reuters reported on Tuesday. Tesla is handling the recall via an over-the-air update.

Could Insurance Subsidy Boost Tesla Shares?

Tesla on Tuesday restored the insurance subsidy for vehicles bought in China until the end of the year, after cutting prices in late October, as the EV giant tries to boost demand amid rising production.

The EV giant announced that the insurance subsidy for November is worth 8,000 yuan ($1,100) for people who buy its vehicles in stock as the company looks to increase orders. In December, the subsidy will be reduced to 4,000 yuan ($550). Tesla shares fell on Tuesday.

Tesla previously introduced an insurance subsidy of 7,000 yuan for all vehicles at the end of September as waiting times for its electric cars dropped to almost zero. Starting October 1, Tesla offers 0% down payments and preferential interest rates on loans. These incentives served as de facto price reductions.

Tesla cut actual Model 3 and Model Y prices in China on October 24 by as much as 9%. Following those price cuts in October, Tesla briefly removed the insurance subsidy it had introduced in September before resuming it on Tuesday.

Tesla Stock: Shipping in China

Tesla delivered 71,704 vehicles from its newly upgraded Shanghai plant in October, according to the China Automobile Association. That’s up 32% from a year earlier, but down nearly 14% from last year a record 83,135 in September. Tesla shipped a record 54,504 cars from its Shanghai factory in October and sold 17,200 in China.

The global EV giant reported Q3 deliveries of 343,830 vehicles, up 42% from a year earlier and above Q1’s record 310,048. However, this was well below analysts’ forecasts.

The company said it faced logistical challenges throughout the quarter and had vehicles in transit.

Tesla makes the Model S luxury sedan, the Model X SUV, as well as the Model 3 sedan and the Model Y crossover. Other vehicles in the works include the Semi and Cybertruck. Musk said the Cybertruck is on track for a mid-2023 launch and that the Tesla Semi will begin shipping by the end of 2022.

Semi-production begins

Musk tweeted in October that Tesla was starting production of Tesla Semi trucks. Deliveries to PepsiCo (PEP) were supposed to start on December 1. Musk says the electric semi-trucks will have a range of 500 miles on a single charge.

Tesla’s production is ramping up, especially in China, so demand should pick up significantly in Q4 and beyond to match supply. China’s subsidies for electric cars expire on December 31, while Germany will reduce its subsidies from January 1. That should boost demand for Tesla and other EV makers, but could mean weaker demand in the new year.

Unofficial data on vehicle registrations in China for the first week of the month shows the US EV giant lagging behind the rival BYD (BYDDF) with a large margin for total car unit sales. New vehicle insurance registrations in China between Oct. 31 and Nov. 6 totaled 110,539, up 43% from last year but down 12% from the previous week, CnEVPost reported on Tuesday.

BYD, the world’s largest manufacturer of electric vehicles and plug-in hybrids and China’s largest seller of clean electrics, led the way with 37,168 insurance registrations. Elon Musk’s Tesla is second with 11,195 registrations.

Chinese EV startups Nio (NIO), Li Auto (LI) and XPeng (XPEV) were far behind, but among the top 14 car manufacturers.

Twitter distraction

From Elon Musk has taken over Twitter on Oct. 28, he laid off roughly half of the social media site’s staff, while tweeting frequently about his plans, politics and more. There are concerns that Musk is distracted from running Tesla, as well as concerns that he could damage his image, which could spill over to the Tesla brand. Tesla shares are down about 17% since October 28.

Tesla stock has 45 Composite rating of 99. TSLA stock has a dismal 16 relative strength rating. The EPS rating for Tesla stock is 75.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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