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HIGHLIGHTS
- Tesla shares set to extend recovery from the two-day slide of more than 16%
- The stock of Tesla advanced more than 4% on Wednesday, 10 November
- Musk selling $5 billion shares translates into 3% of his total holdings in the company
Shares of Tesla Inc (NASDAQ:TSLA), the California-headquartered clean energy corporation and electric vehicle manufacturer, are set to extend the recovery from the two-day slide of more than 16% as Co-founder and CEO Elon Musk offloads ordinary shares worth nearly equivalent to $5 billion.
The news of the fresh stake sale by Musk came after the man himself asked the Twitter community to offload as much as 10% stake in the corporation through a poll on Saturday, 6 November.
Any marginal change in the shareholding pattern, especially coming from the early-stage investor and Co-founder attracts millions of big-pocket participants and institutional investors across the globe as the car maker trades with a market capitalisation of more than $1 trillion.
Tesla set to extend recovery as Musk sells $5bn worth shares
The stock of Tesla advanced more than 4% on Wednesday, 10 November, partly offsetting the massive losses incurred on Monday and Tuesday. During the three-day drop from Friday to Tuesday, Tesla lost approximately $150 billion in its stock market value.
According to the data available with Nasdaq, shares of Tesla added as much as 4.34% to $1,067.95 on Wednesday from the previous closing price of $1,023.50 as on Tuesday. In the pre-market deals on Thursday, the stock of Tesla surged over 3%, indicating a higher opening for shares, effectively continuing the recovery from the recent plunge.
Tesla shares (1-month performance)
Source: EODHD/Others
At the moment, the company is on the brink of losing the tag of a trillion dollar company, if the market price of shares falls further from here, while market leading corporations including Alphabet, Amazon, Apple and Microsoft continue to hover with a market capitalisation well over $1 trillion. Out of these companies, Apple leads the list with a market capitalisation of over $2.5 trillion, followed by Microsoft.
Musk selling $5 billion of Tesla stock nearly translates into 3% of his total holdings in the company. Of the total sale, 934,000 equity shares (nearly equal to $1.1 billion) were sold under the options agreement following which Musk is qualified to buy over 2.1 million shares at a price of $6.24 per share.
This arrangement was already under the pipeline before the Co-founder started the Twitter poll. The rest, $4 billion worth of shares, translating into over 3.5 million shares are sold separately.
According to the forms filed with the US Securities and Exchange Commission (SEC), the sale of more than 3.5 million shares was not scheduled, however, the sale of 934,000 shares was carried out according to a “pre-arranged trading plan” finalised in September of 2021. Even after the massive share sales, Musk continued to hold more than 165 million shares of Tesla since the capital market debut of the corporation in 2010.
In the present calendar year itself, the stock of Tesla has rallied more than 46% with a major portion of appreciation coming after the corporation sealed the deal with rental car company Hertz to supply 100,000 vehicles. The Covid-laden 2020 has been a transformational year for Tesla as the shares recorded multi-fold gains with almost every fund manager including the stock in their respective portfolios.
The stock of Tesla zoomed 725% in a brief period of little more than nine months to $705.67 on 31 December, 2020, from a share price of just $85.51, recorded on 20 March, when most of the global shares touched their multi-year bottoms due to the panic selling, effectuated after the corporates and governments started to contemplate the prospective damages on the back of coronavirus pandemic.
Elon Musk drives a considerable portion of wealth from the equity holding in stock of Tesla. According to the Bloomberg Billionaires Index, Musk commands a net worth of nearly $340 billion, which makes him the richest man on the planet, above Microsoft’s Bill Gates, LVMH CEO Bernard Arnault, Amazon’s Jeff Bezos and Berkshire Hathaway’s Warren Buffett.
