Tesla dips after Elon Musk sheds $5 billion in shares

Tesla’s stock is in portfolios utilized by Wealthspire, Pursche said.

Filings showed Musk’s trust sold nearly 3.6 million shares of Tesla, worth around $4 billion, while he also sold another 934,000 shares for $1.1 billion to cover tax obligations after exercising options to acquire nearly 2.2 million shares.

The sale equates to about 3% of Musk’s total holdings. The options-related part of the sale was put in place in September, well before his Twitter poll.

Before 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 as U.S. Senate Democrats propose taxing the stock holdings of billionaires to help finance President Joe Biden’s social spending plan.

"Elon Musk doesn’t take a salary, he’s paid in big chunks of stock. At some point in time you have to take some of that concentration down," said Art Hogan, chief market strategist at National Securities in New York.

"This is not novel. It just gets more attention because it’s such a high market-cap type, attention-grabbing kind of company."

With nearly 800,000 options, or about 12% of Tesla’s open contracts, set to expire at the close of trading on Friday, some analysts have pointed to the potential for additional near-term volatility as investors and options dealers make adjustments to account for expiring positions.

Tesla did not respond to a request for comment.

EV MANIA

Tesla this week has lost $157 billion in stock market value, more than the combined market capitalizations of Ford Motor Co and General Motors Co. At the same time, demand for shares of electric vehicle makers has heated up.

Shares of Rivian Automotive Inc jumped 22% a day after a stellar market debut that sent the company’s valuation over $100 billion. Lucid Group surged 10%.

Underscoring retail investors’ thirst for EV stocks, Rivian, Tesla and Lucid made up three of the four most-traded stocks on Fidelity’s brokerage website on Thursday, with buy orders outnumbering sell orders.

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

"Rivian's valuation makes it a legitimate option for institutional investors who have previously only had Tesla to play the electric vehicle space," wrote Nicholas Colas, co-founder of DataTrek Research, in a recent note.

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

Tesla’s share price has made staggering gains over recent years and has epitomized the ebullient mood in U.S. markets and the optimism of small-time traders who have helped drive it up 51% this year and 1,300% from 2020 lows.