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Telsa’s Frankfurt-listed shares rose 4.1% to 953 euros ($1,102.05) in early trade to recoup some of the heavy losses suffered earlier in the week, during the period when Musk had sold.
Musk’s selling was his first since 2016 and followed his weekend poll of Twitter (NYSE:TWTR) users about offloading 10% of his Tesla (NASDAQ:TSLA) stake, which comprises most of his estimated $281 billion fortune.
Investors downplayed the significance of Musk’s trading for the stock’s outlook, pointing instead to strong car orders and Musk’s professed faith in the company, though brokers said it could be a bumpy day in U.S. trade ahead.
“It is not like he has a negative view of his company,” said Dave Wang, a portfolio manager at UBS Global Wealth Management in Singapore.
Filings showed Musk’s trust sold nearly 3.6 million shares in 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 sales equate to about 3% of Musk’s total holdings, though it wasn’t clear if they related to his weekend Twitter poll.
Tesla did not respond to a request for comment.
The filings said the options-related part of the sales were set up through a trading plan in September.
“All I really see this doing is providing some short-term volatility and medium term keeping Tesla shares’ valuation multiples sky high as long as Elon remains in the spotlight and investors continue to see him as an ‘exceptional visionary’,” said Tariq Dennison, managing director at GFM Asset Management in Hong Kong, who is net short on Tesla stock.
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While Tesla has lost more in market value than the entire market capitalisation of Ford Motor (NYSE:F) Co this week, retail investors have been net buyers, making net purchases of $157 million on Monday and Tuesday, according to Vanda (NASDAQ:VNDA) Research.
Confirmation of Musk as a seller, however, and the prospect of more sales to come might weigh on the price in the near-term.
“It will definitely spook some retail traders,” said Oriano Lizza premium sales trader at brokerage CMC Markets in Singapore.
“Some people will be tightening stops or looking to close out,” he said. “Though (Musk) will want to protect the stock to some extent and won’t want people running for the door.”
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.
The company’s share price has made staggering gains over recent years and has epitomised the ebullient mood in U.S. markets and the optimism small-time traders who have helped drive it up 51% this year and 1,300% from 2020 lows.
($1 = 0.8648 euros)
