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News and Views

The Official Blog of WhaleWisdom.com

Tesla stock has not been for the faint of heart over the past few years, resembling something more of a rollercoaster than a stock. Volatility has increased dramatically over the past couple of weeks as the focus turns to Tesla’s ability to produce 5,000 Model 3’s per week, its new all-electric sedan. The hope for the bulls is that Tesla hits its target and turns profitable in the second half of 2018.

The famed inventor and CEO of Tesla, Elon Musk, who also happens to be Tesla’s largest shareholder and already the owner of 22.4 percent of Tesla’s shares, recently acquired even more stock.  It puts the short-sellers of the stock in an interesting position, stay short or cover and run.

Big Purchases

The CEO purchased an additional 72,500 shares on June 13, around $345. The timing of the purchase is surely worth noting given the company is expected to release the important Model 3 production update during the first few days of July. There has been a great deal of speculation on whether the company reaches its target.

(WhaleWisdom)

However, the recent share purchases are not his first in 2018, in fact, he also bought shares of the stock at the beginning of May, when shares were trading around $300, buying 33,000 shares. The big question is if his trades will earn him a profit and if his betting on himself pays off.

Short-Sellers Burned

Short-sellers have been torched in recent weeks with the stock up by nearly 32 percent since the start of April. The period between the middle of March until the Middle of April saw a big spike in the number of traders betting shares of the stock would fall.

The Big Gamble

The additional purchase of shares by Musk also must be making the short-sellers feel a bit shaky, especially given the timing of the purchases, and his willingness to pay a relatively high price for the stock when compared to where shares have traded over the past year. It is Musk betting the value of shares will continue to rise, and that would imply the outlook of the company may be about to get better.

Perhaps, in the grand scheme of things, Musk buying an additional 100,000 shares of stock over the past two months doesn’t amount to much. One must remember he already beneficially owns 37.85 million shares, and 100,000 shares are only a small portion of his total holdings.

Where Tesla’s stock goes over the next several months will be largely dependent on just how successful the company is at executing on its plan to reach 5,000 model 3’s per week. Should that happen, then perhaps Musk’s future purchases could be view as a “tell” worth watching for in the future. However, if Tesla should fail, Musk’s gamble may have been nothing more than a bluff, trying to break the nerves of the shorts.

This entry was posted on Monday, June 25th, 2018 at 8:55 am and is filed under Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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