Musk’s poll has led to a loss of nearly $200 billion in company market value. The company’s shares fell 1.8% to $1,005.10 on Monday. Volatility trading was also involved.
The stock has fallen 16.3% this week. If they fall below $995.75 Tesla’s market capitalization will drop below $1 trillion.
After receiving its largest-ever rental car order from Hertz, the world’s most valued carmaker, Tesla entered the elite trillion-dollar club. It received 100,000 Tesla vehicles.
Musk’s weekend poll asking his Twitter followers whether he should sell 10% or more of his Tesla stake prompted the selloff. A majority of them supported a sale.
Investors will be closely monitoring Tesla filings to the U.S Securities and Exchange Commission (SEC), in search of any clues about the share-sale plans. Companies have four working days to report major events under the SEC rules.
Vanda Research analysts warned that there could be an even bigger pullback due to call options activity in the stock.
Call options let investors bet on share price gains without actually owning the stock. They said that both institutional and retail investors have accumulated Tesla call options with open interest concentrated in the Nov. 12 and 19 expiries.
INSIDERS SELLS NEARLY $1 BILLION OF STOCK
According to market data and filings, four former and current members of the Tesla board, including Musk’s brother Kimbal Musk filed to sell shares worth nearly $1 billion late last month.
A CEO asking his employees if they should sell large numbers of shares will never be reflected in the share price. Craig Erlam, Oanda market analyst, said that selling shares a day after his brother sells large numbers only increase investor fear.
Musk should be taken with a grain of salt, and investors might quickly see this as a dip-buying opportunity.
The stock is up almost 45% for the year despite the selloff. It rose to record levels in a dramatic rally that propelled the company into the trillion-dollar club.
