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Tesla (TSLA) Shares Down 11.99% amid Market Uncertainty Caused by Stock Sale by Musk and Board Members

UTC by Steve Muchoki · 3 min read
Tesla (TSLA) Shares Down 11.99% amid Market Uncertainty Caused by Stock Sale by Musk and Board Members
Photo: Depositphotos

Tesla stock has gained approximately 149.42%, 45.04%, 44.16%, and 27% in the past year, YTD, three months, and one month respectively.

Tesla Inc (NASDAQ: TSLA) stock closed the trading on November 9, 2021 at the level of $1,023.00, down 11.99% from the day’s opening price. Notably, Tesla stock has been trapped in a bear market since the beginning of the week amid the news about the stock sale by Musk and the company’s board members. According to market analytics provided by MarketWatch, the company’s stock market has dropped approximately 12.67% in the past five days through Tuesday.

The events preceding the bear market began way back when United States Biden proposed a tax bill for the ultra-wealthy to support the economy. Notably, the Biden administration put in place measures to tax unrealized gains for the billionaires who have for long evaded taxes through several tactics.

For instance, Elon Musk has been borrowing cash against his Tesla stock market for years, accumulating gains on a paper. Since he has not taken any profit and does not take a salary for any company in form of cash, then he gets away without paying a penny in taxes.

However, the Biden team has gone for such billionaires by taxing their gains made on a paper. Musk, therefore, was compelled to pay taxes by selling part of his Tesla stocks. Moreover, the billionaire trapped himself over the weekend after a Twitter poll he proposed concluded he should sell 10% of his Tesla shares to pay taxes.

Now, sitting and former board members who include Musk’s brother Kimbal Musk, Chairman Robyn Denhilm, Ira Ehrenpreis, and Antonio Gracias have all sold significant Tesla shares worth millions.

Tesla Stock amid Stock Sale

Although Musk would eventually sell his shares following next year’s expiry of his options, the move has ostensibly pushed away institutional buyers according to some analysts. “Musk has used the now moot political debate on billionaire taxes as an opportunity to monetize billions of his wealth without reflecting a negative view on the company or its share price,” wrote Michael O’Rourke, of Jones Trading, in a note late on Monday. “It is highly unlikely that there are institutional buyers for Tesla shares at current prices.”

Notably, Tesla stock has gained approximately 149.42%, 45.04%, 44.16%, and 27% in the past year, YTD, three months and one month respectively through Wednesday.

As of reporting time, the company had a market capitalization of approximately $1.17 trillion. Notably, the company has 1 billion outstanding shares following last year’s share split.

Despite the recent dip, some analysts are optimistic about the company’s future growth prospects. Moreover, Tesla has cutting-edge batteries and is ahead of other companies in the semiconductor sector.

Analyst Philippe Houchois wrote that “without dismissing execution risk, Tesla is getting to a position where it can balance affordability and speed, goals which are as important as profitability in Elon Musk’s vision.”

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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