Will Tesla shares rally if Musk quits Twitter?
MarketBeat.com - MarketBeatOne company that has been making headlines lately is Elon Musk's "other" company, Tesla, Inc. (NASDAQ: TSLA ). The stock is down 57.35% so far this year, with many analysts attributing at least part of the decline to Musk being distracted by his purchase of Twitter.
Investors and even politicians are taking notice.
To some extent, Tesla's downward trajectory has followed that of the broader auto industry. Yet it is inescapably true that Tesla's performance is worse than that of established automakers such as General Motors Company (NYSE:GM) or Ford Motor Company (NYSE:F), or even some rival EV manufacturers such as the Chinese company BYD Company Limited (OTCMKTS: BYDDF).
Regulatory filings show that on December 14, after the closing bell, Musk sold nearly 22 million Tesla shares between December 12 and 14, for a value of $3.58 billion. Many analysts who follow the company believe the proceeds will go to funding Twitter, which Musk bought in October.
Downside trading volume was above normal on December 12, 13, and 14. The stock fell 6.27% on December 12, 4.09% on December 13 and 2.58% on December 14.
Major investors are taking note. Insider selling is only a reality for publicly traded companies. Contrary to popular belief, this does not always signal that an insider is acting on secret information that will send lower shares. Executives sell stocks for prosaic reasons, such as raising money to buy a house or fund school fees.
Breach of fiduciary duty?But there is also a corporate governance angle when an insider, especially the CEO, sells a large number of shares. The fiduciary duty of the CEO is to the shareholders of the company. If Musk, or any CEO of a public company, takes action to the detriment of other shareholders, it may constitute a breach of his fiduciary duty.
Over the weekend, Indonesian billionaire KoGuan Leo, the third-largest individual owner of Tesla shares, called on Musk to step down from his role as an automaker.
On Monday, news broke that Massachusetts Sen. Elizabeth Warren had sent a letter to Tesla Board Chair Robyn Denholm saying Musk's actions could hurt Tesla shareholders. Warren also raised the question of whether Tesla's board of directors, which also owes a fiduciary duty to shareholders, properly resolved the situation with Musk. In his letter, Warren asked Denholm if Musk misappropriated company assets and created conflicts of interest.
In another twist, Musk asked Twitter users in a poll if they thought he should step down as CEO, saying he would respect their opinion. Tesla shares initially rose after news that a majority believed Musk should step down as CEO of Twitter. Stocks dipped into the red about an hour into Monday's session before rising again.
Granted, there has been some good news recently for Tesla, a constituent of the S&P 500.
Bloomberg announced last week that Tesla plans to build a new manufacturing facility in Mexico. There's been no announcement from the company yet, and it's unclear exactly what Tesla plans to build there.
In addition, PepsiCo Inc. (NASDAQ: PEP) is planning to roll out 100 Tesla Semi trucks next year. Thirty-six are already in service.
MarketBeat analyst data for Tesla shows a "hold" rating on the stock. Since November 29, 12 analysts have lowered their price target on Tesla or downgraded their rating. Six increased their goals or improved their rating. One reiterated his "buy" rating.
On Monday, Oppenheimer downgraded the stock from "outperforming" to "market performing."
Meanwhile, Wedbush analyst Dan Ives wrote that he expects Musk to continue...
MarketBeat.com - MarketBeatOne company that has been making headlines lately is Elon Musk's "other" company, Tesla, Inc. (NASDAQ: TSLA ). The stock is down 57.35% so far this year, with many analysts attributing at least part of the decline to Musk being distracted by his purchase of Twitter.
Investors and even politicians are taking notice.
To some extent, Tesla's downward trajectory has followed that of the broader auto industry. Yet it is inescapably true that Tesla's performance is worse than that of established automakers such as General Motors Company (NYSE:GM) or Ford Motor Company (NYSE:F), or even some rival EV manufacturers such as the Chinese company BYD Company Limited (OTCMKTS: BYDDF).
Regulatory filings show that on December 14, after the closing bell, Musk sold nearly 22 million Tesla shares between December 12 and 14, for a value of $3.58 billion. Many analysts who follow the company believe the proceeds will go to funding Twitter, which Musk bought in October.
Downside trading volume was above normal on December 12, 13, and 14. The stock fell 6.27% on December 12, 4.09% on December 13 and 2.58% on December 14.
Major investors are taking note. Insider selling is only a reality for publicly traded companies. Contrary to popular belief, this does not always signal that an insider is acting on secret information that will send lower shares. Executives sell stocks for prosaic reasons, such as raising money to buy a house or fund school fees.
Breach of fiduciary duty?But there is also a corporate governance angle when an insider, especially the CEO, sells a large number of shares. The fiduciary duty of the CEO is to the shareholders of the company. If Musk, or any CEO of a public company, takes action to the detriment of other shareholders, it may constitute a breach of his fiduciary duty.
Over the weekend, Indonesian billionaire KoGuan Leo, the third-largest individual owner of Tesla shares, called on Musk to step down from his role as an automaker.
On Monday, news broke that Massachusetts Sen. Elizabeth Warren had sent a letter to Tesla Board Chair Robyn Denholm saying Musk's actions could hurt Tesla shareholders. Warren also raised the question of whether Tesla's board of directors, which also owes a fiduciary duty to shareholders, properly resolved the situation with Musk. In his letter, Warren asked Denholm if Musk misappropriated company assets and created conflicts of interest.
In another twist, Musk asked Twitter users in a poll if they thought he should step down as CEO, saying he would respect their opinion. Tesla shares initially rose after news that a majority believed Musk should step down as CEO of Twitter. Stocks dipped into the red about an hour into Monday's session before rising again.
Granted, there has been some good news recently for Tesla, a constituent of the S&P 500.
Bloomberg announced last week that Tesla plans to build a new manufacturing facility in Mexico. There's been no announcement from the company yet, and it's unclear exactly what Tesla plans to build there.
In addition, PepsiCo Inc. (NASDAQ: PEP) is planning to roll out 100 Tesla Semi trucks next year. Thirty-six are already in service.
MarketBeat analyst data for Tesla shows a "hold" rating on the stock. Since November 29, 12 analysts have lowered their price target on Tesla or downgraded their rating. Six increased their goals or improved their rating. One reiterated his "buy" rating.
On Monday, Oppenheimer downgraded the stock from "outperforming" to "market performing."
Meanwhile, Wedbush analyst Dan Ives wrote that he expects Musk to continue...
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