Tesla tumbles after Musk tweets stock too high

[rooster59]

Tesla tumbles after Musk tweets stock too high

By Noel Randewich

 

FILE PHOTO: SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the automobile awards "Das Goldene Lenkrad" (The golden steering wheel) given by a German newspaper in Berlin, Germany, November 12, 2019. REUTERS/Hannibal Hanschke/File Photo

 

(Reuters) - Shares of Tesla Inc <TSLA.O> tumbled 9% on Friday after Chief Executive Officer Elon Musk tweeted that the electric carmaker's high-flying stock was overly expensive.

 

"Tesla stock price is too high," Musk said on Twitter in one of several unusual messages, including ones quoting parts of the U.S. national anthem and that he would sell almost all his physical possessions.

 

The subsequent share drop erased around $13 billion from Tesla's market value and nearly $3 billion from the value of Musk's stake. Still, shares remain up almost 50% from the start of April.

 

More than two hours after the tweets began, Tesla had not responded to requests for comment. Twitter declined to comment. The Wall Street Journal reported that Musk had responded to an email asking whether he was joking or whether his tweet was vetted by saying, "No".

 

Musk has a history of sending provocative tweets. In August 2018, he tweeted that he had secured funding to possibly take Tesla private at a big premium, which led a fraud case by the U.S. Securities and Exchange Commission. Musk settled by agreeing to pay $20 million and have a Tesla lawyer pre-screen tweets with important information about the company.

 

Last month, a federal judge said Tesla and Musk must face a lawsuit by shareholders over the going-private tweet, including a claim that Musk intended to defraud them.

 

In April 2019 Musk tweeted, "My Twitter is pretty much complete nonsense at this point."

 

"We view these Musk comments as tongue in cheek and it’s Elon being Elon. It’s certainty a headache for investors for him to venture into this area as his tweeting remains a hot button issue and the Street clearly is frustrated," Wedbush Securities analyst Daniel Ives said by email.

 

Tesla's stock has surged in recent weeks, but is down since Wednesday after the company reported an unexpected quarterly profit, despite manufacturing interruptions caused by the coronavirus pandemic.

 

Musk's latest tweets follow others this week. On Tesla's quarterly conference call on Wednesday, he called sweeping U.S. stay-at-home restrictions to curtail the coronavirus outbreak "fascist". Those restrictions have forced Tesla to shutter its car plant in Fremont, California.

 

"Musk has recently expressed some strong and, at times, controversial, views on COVID-19 and some elements of the response to the crisis and we believe is attempting to use his broad following and visibility to bring attention to some economic factors that he believes may be overlooked," Morgan Stanley analyst Adam Jonas wrote in a client note on Friday.

 

Musk's iconoclastic stance has helped him attract over 33 million followers on Twitter and is seen as a marketing boon for Tesla.

 

Tesla's recent rally has put Musk on the verge of a payday of over $700 million. The six-month average of Tesla's market capitalization is just short of $100 billion, a target that would trigger the vesting of a tranche of options granted to Musk to buy 1.69 million shares as part of his two-year-old pay package.

 

(Reporting by Noel Randewich in San Francisco, addintional reporting by Jonathan Stempel in New York, Akanksha Rana in in Bengaluru and David Shepardson in Washington; Editing by David Gregorio)

 

-- © Copyright Reuters 2020-05-02

 

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[Bluespunk]

6 minutes ago, rooster59 said:

Musk has a history of sending provocative tweets. In August 2018, he tweeted that he had secured funding to possibly take Tesla private at a big premium, which led a fraud case by the U.S. Securities and Exchange Commission. Musk settled by agreeing to pay $20 million and have a Tesla lawyer pre-screen tweets with important information about the company.

Needs a new lawyer...

Edited May 1, 2020 by Bluespunk

[nausea]

Shades of Ratner.

[OnTheGround]

Wasn't he advised earlier to put a sock in it, to shut up, and tweet less?

 

Musk might be a intelligent innovator, but his never ending Tweets has harmed Tesla many times. Too controversial person for my taste, but 33 million followers on Twitter might think otherwise.

[Cryingdick]

Well he is risking a big pay day by doing this. He is also already worth something like $40 billion so doubt he gives a flying... I own a small slice of Tesla and actually hope the stock goes down to buy more over this. 

 

There is no real relevant or insider info in the tweet, Elon just can't help but mock the short sellers going broke shorting the stock.

 

Not sure anything becomes of this as it is an opinion and not a statement like taking TSLA private @ $420.

 

It's a cult stock and anybody in the name knows this by now. Nobody makes a better electric car at the moment. All the big European names aren't even close yet. They can't do the batteries as well. Tesla is probably worth half the current multiple just for the battery tech.

 

Is Elon a dick online? Sure but much more mild than some of our esteemed members.

[northsouthdevide]

The rest of the good folks at tesla must be praying for the day he loses his phone. 

 

[Cryingdick]

5 minutes ago, northsouthdevide said:

The rest of the good folks at tesla must be praying for the day he loses his phone. 

 

 

The rest of the people at Tesla wouldn't have a job without Elon and his antics. Not one dollar spent on advertising. Market cap 6 times of Ford and GM combined. His lawyers might not like it but they don't work for free either.

 

[Damrongsak]

He is one strange fellow. As are some other notable Tweety birds. 

 

I measure my fortune in Satang.  Makes me feel better at the end of the day.  Of course I have a portfolio, so I have other resources. Big stash of dollars ...

 

[jaf3]

must be off the wagon again.....

[4MyEgo]

Trump No: 2, both should be banned from twittering, but then again a twit is a twit is a twit, or once a twit always a twit.

 

[rwill]

He probably shorted the stock beforehand.

[spidermike007]

My first response was to think this guy is really insane. Does he really object to being a multi billionaire? But, upon further reflection, I think he is just one of those guys who says what is on his mind. Maybe he is just honest. Many experts think the stock is way overvalued. One analyst was recently saying the premium was about ten times that of other car companies. Maybe we are simply not used to having someone be this straight forward. I think of US corporations as being such pigs, so disingenuous, so callous and driven by profit, over all else. And then this guy comes along, and says stuff that makes his own stock tumble. He is obviously not a stupid man. Far from it. So, what gives? 

[daveAustin]

Clever ruse to bring down price and go long lower.

[steven100]

The guy seems to crave attention, he says things that can cause legal ramifications however he doesn't appear to be in the slightest bit concerned and I presume that's because he's rich. 

[Cryingdick]

2 hours ago, spidermike007 said:

My first response was to think this guy is really insane. Does he really object to being a multi billionaire? But, upon further reflection, I think he is just one of those guys who says what is on his mind. Maybe he is just honest. Many experts think the stock is way overvalued. One analyst was recently saying the premium was about ten times that of other car companies. Maybe we are simply not used to having someone be this straight forward. I think of US corporations as being such pigs, so disingenuous, so callous and driven by profit, over all else. And then this guy comes along, and says stuff that makes his own stock tumble. He is obviously not a stupid man. Far from it. So, what gives? 

 

The stock is way over priced by every metric any sensible analyst can use to measure it. Yet I own a small amount and won't sell. Why is that? The Elon Musk factor drives the stock. Also the ESG people who fly in jets and travel with yachts love Tesla. 

 

It is a storybook stock and a cult stock. It has replaced Apple as the cult stock after Jobs passed away. Tesla has an affluent customer, a brand loyalty that has something like 90% stickiness. People don't buy Fords once they get a Tesla the first time. 

 

The people he has tend to be sort of active socially and politically and if they can afford a Tesla they can afford $700 for a membership and one share into the Elon Musk club.

 

Then there are people like me who own a small position just because in the back of our minds if Elon is right even a small amount could become a lot. It's a rollercoaster that's fun to watch. 

 

Also very popular with young people now that you can buy fractional shares on apps like Robinhood. Lots of millennials taking micro-stakes in the company.

 

Another thing it has going for it is that it could soon be listed on the S&P 500 soon. That would mean so many funds would be buying it that it would probably shoot up in value.

 

Anyway that's just my thoughts on why it has a high valuation. You can get 1,000 analysts that would point out it is the most valuable car company in the world and all of history and only sells a few hundred thousand cars.

Edited May 2, 2020 by Cryingdick

[Cryingdick]

4 hours ago, rwill said:

He probably shorted the stock beforehand.

 

This made me laugh. You do not have the first clue how all of this works if you think he would come out ahead shorting his own stock. That would be very awkward for him when he had to explain that. I hope you were joking and not simply that ignorant.

[Iron Tongue]

6 hours ago, Cryingdick said:

 

This made me laugh. You do not have the first clue how all of this works if you think he would come out ahead shorting his own stock. That would be very awkward for him when he had to explain that. I hope you were joking and not simply that ignorant.

CEO must make SEC filings whenever he engages in a stock transaction.

A CEO shorting his stock would destroy the valuation of his stock/company and be up for insider trading charges.

 

OTOH, being unstable as he is at times, this might be a ploy to decrease valuation since he has demonstrated intent to accumulate more stock.

[englishoak]

Musk is a great sales/PR man. IMO hes getting out and reducing the stock price to entice buyers for shares hes about to dump.. TSLA is ridiculously overpriced and had its day in the sun. It has no future innovations  new models coming out number just 1... It is a very bad time to be in any transport sales and i think EM is using Covid etc etc as the excuse to get out now and  by lowering the stock price he can offload shares he is currently stuck with. 

 

This chart to me says it all.. TSLA has NO future EV dominance because it has no models coming out 

 

 

EM has already moved onto spaceX, his bigger passion.  Time to get out of TSLA stock is right now imo. 

[Cryingdick]

4 hours ago, Iron Tongue said:

CEO must make SEC filings whenever he engages in a stock transaction.

A CEO shorting his stock would destroy the valuation of his stock/company and be up for insider trading charges.

 

OTOH, being unstable as he is at times, this might be a ploy to decrease valuation since he has demonstrated intent to accumulate more stock.

 

To actually think he shorted the stock is a farce as I said. If he wants the stock to go down there are much better strategies. just keep being nutty. However the assertion he shorted the stock is utterly asinine. I am going out on a limb here and guessing it isn't allowed for a CEO, who acts as a fiduciary, under legal obligation, is forbidden from shorting their own stock.  The stock is too high is a marijuana reference and he does that often. Last time it passed $420 he said the stock was so high.

 

Just read he was ripping into American infrastructure saying American airports are absolute embarrassments. He is completely right.  America definitely needs to pass an infrastructure bill yesterday.

 

 

[Heppinger]

This pipe dream of a company and it's half baked "founder" only exist due to massive Government grants.  Guess the pig trough is finally empty. 

[Cryingdick]

53 minutes ago, Heppinger said:

This pipe dream of a company and it's half baked "founder" only exist due to massive Government grants.  Guess the pig trough is finally empty. 

Can you explain why you have that opinion? So far it is the most successful car company in the entire planet. Can you explain to me why Tesla is over valued? 

[stevenl]

18 minutes ago, Cryingdick said:

Can you explain why you have that opinion? So far it is the most successful car company in the entire planet. Can you explain to me why Tesla is over valued? 

With 'most successful' I presume you refer to share value? Unless you're talking profits, but somehow I doubt that.

[Heppinger]

6 hours ago, Cryingdick said:

Can you explain why you have that opinion? So far it is the most successful car company in the entire planet. Can you explain to me why Tesla is over valued? 

Sure, first you should find out how much money the American tax payer pumps into this company every year, without you having this knowledge first then any conversation regarding the merits of this company would be useless.

[Heppinger]

6 hours ago, Cryingdick said:

Can you explain to me why Tesla is over valued? 

Firstly you would have to explain to me what the value of Tesla is.

[xylophone]

6 hours ago, Cryingdick said:

Can you explain why you have that opinion? So far it is the most successful car company in the entire planet. Can you explain to me why Tesla is over valued? 

As others have said, it is completely overvalued, and one of the reasons is that it is treated like a tech stock, rather than an automobile manufacturer.

Tesla’s global sales, for example, equate to roughly 3 per cent of General Motors and Ford’s combined revenue. And yet Tesla trades at about 43 times its estimated earnings next year — compared with 5.3 times for GM.

[Andy from Kent]

On 5/2/2020 at 8:10 AM, Damrongsak said:

Of course I have a portfolio, so I have other resources. Big stash of dollars ...

 

I believe you are astute.

 

Can or would you please share some of your investing  ideas for the rest of us?

 

[Heppinger]

41 minutes ago, Andy from Kent said:

 

I believe you are astute.

 

Can or would you please share some of your investing  ideas for the rest of us?

 

I can tell you what i'm selling and buying if you like