Elon Musk has sold 934,091 more shares of Tesla, Inc. (TSLA) worth $1.01 billion to meet his tax obligations that have come with the exercising of options to buy 2.1 million shares, The Economic Times said in a report, citing regulatory filings.
Shares of the company closed 6.4% down on Friday. The stock lost another 0.7% in the extended trading session to end the day at $1,008. (See Insiders’ Hot Stocks on TipRanks)
Texas-based Tesla designs and produces electric cars, battery energy storage from home to grid-scale, solar panels and solar roof tiles, and offers related products and services.
Options to Buy Tesla SharesSince the beginning of November, Musk has sold 10.1 million shares of the company worth $10.9 billion to exercise options to buy 10.7 million shares.
He still retains an option to acquire another around 10 million shares of the electric vehicle (EV) maker at $6.24 per share. This option expires in August 2022.
Wall Street’s TakeLast month, Wedbush analyst Daniel Ives maintained a Buy rating on the stock and raised the price target to $1,400 from $1,100 (38% upside potential).
The analyst expects China to account for 40% of Tesla’s vehicle deliveries next year.
In a note to investors, Ives said, “While PR/safety headwinds were front and center in China earlier this year, we have seen this demand trend reverse aggressively in a bullish way for Tesla into year-end, with the company now on a ~50k monthly run-rate for China into 2022.”
“Investors are continuing to digest the massive transformation coming to the auto industry around EV revolution, as the green tidal wave results in a $5 trillion market opportunity over the next decade with Tesla leading the way,” Ives added.
“While the semiconductor shortage that has plagued the auto industry this year remains a headwind for Tesla, it is a transitory issue,” he said.
Overall, the stock has a Hold consensus rating based on 12 Buys, 6 Holds and 7 Sells. The average Tesla price target of $938.52 implies 7.5% downside potential. Shares have gained 67.7% over the past six months.
Website TrafficTipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Tesla’s performance.
According to the tool, compared to the previous year, the company’s website traffic registered a 13.2% decrease in global visits in October. However, the website traffic has increased 1.7% year-to-date against the same period last year.
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Tesla (TSLA) stock was not spared amid the latest round of Omicron variant-induced, market-wide selling pressure. Shares of Elon Musk's EV giant are now down around 10% from their all-time highs, just north of the $1,200 mark. Despite the correction, Tesla stock is still up over 58% over the past year and around 40% year-to-date. Trading at over 24 times sales, Tesla is one hot momentum stock that could be vulnerable to a vicious and unforgiving reversal.
Indeed, Elon Musk has been taking some profits off the table, and he's right to do so, as the valuation continued climbing to new heights. With much in the way of macro uncertainties, investors may wish to follow Musk's lead with a bit of profit-taking of their own, if they've yet to do so.
Looking at the longer-term chart, and this recent correction off record highs looks like just a tiny blip. Should Omicron continue dragging broader markets lower, look for Tesla to fall at a much quicker rate. The stock does sport a 2.04 beta, after all.
With an uncomfortably-high price-to-sales multiple, ever-strengthening competitors in the EV scene and an Apple (AAPL) Car likely coming in a few years down the road, I remain bearish on Tesla stock, despite being a big fan of Elon Musk himself.
What Justifies Tesla Stock's Hefty Multiple?While I wouldn't take it as far as to call Tesla stock a bubble, I do think the bearish words of Dr. Michael Burry do deserve some merit. The stock has been on an incredible climb, as the market cap surged above and beyond the $1 trillion mark. Undoubtedly, Tesla is a pioneer in the red-hot EV space, and the market is likely to continue booming into the latter half of the decade. That said, the space is starting to get crowded, with pressure that could hit from all sides.
In terms of electric trucks, Rivian (RIVN) looks like a worthy competitor. With traditional U.S. automakers shifting gears into electric, the selection of EVs will only widen with time.
Further, with Chinese EV makers like NIO (NIO) getting in on the action, it's tough to see how Tesla will fare in a few years down the road. Its growth has been unbelievable, but the competitive landscape is getting tougher. Regardless, Tesla fans will stick by the firm, even as new offerings arise. In that way, the Tesla brand draws many similarities to that of Apple.
Apple Car Getting Ready to GoWith a self-driving electric Apple Car launch aimed for 2025, Tesla will finally meet its match. Given Apple's profound ability to leverage network effects with its incredible ecosystem, many Tesla fanatics may be enticed by Apple's offering.
Given how profoundly successful many Apple products are (including its polishing cloth that's reportedly back-ordered for months), I would not dare bet against Apple, even if its car ambitions seem far-fetched at this point in time.
The Apple Car went from a question-mark to something that could be a source of AAPL stock's recent strength amid broader market pressures and a severe threat to Tesla. For that reason, investors should be cautious before punching their ticket into Tesla stock. I believe there are far cheaper ways to bet on the future of the EV space.
Wall Street's TakeAccording to TipRanks’ consensus analyst rating, TSLA stock comes in as a Buy. Out of 25 analyst ratings, there are 12 Buy recommendations, 6 Hold recommendations and 7 Sell recommendations.
As for price targets, the average Tesla price target is $938.52, implying a 7.5% downside. Analyst price targets range from a low of $215.00 per share to a high of $1,485.00 per share.
Disclosure: Joey Frenette owned shares of Apple at the time of publication.
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