Elon is increasing availability of existing shares, that is true. That is why the price drops. However, if enough buyers see opportunity and buy those shares, the price will recover.
Since new shares are not becoming available, you still own the same percentage of Tesla as before, therefore there is no dilution.
I don’t see TSLA’s performance Thursday as “bearish” for the stock, necessarily.
If Elon was selling, that explains the capped rise (although I’ll take up 7% over the freefall we’ve been getting lately).
Even if Elon was not selling, there’s obviously a reason for buyers to wait until they’re sure Elon’s done selling. We don’t even know and we would know better than anyone in the market.
Once we get an all clear, I think the stock will slowly start moving back toward the fundamentals. As Q4 results start becoming clear, people will realize more and more that Tesla is well positioned financially for the current economy and will start recovering.
NVDA and AMZN are recovering faster now, but remember that both of these companies have more headwinds to overcome come Q4 results to justify their PE ratios. Recall Amazon posted some poor forward guidance. Tesla will show high growth and excellent numbers which will help justify a higher PE ratio, and with EPS growing rapidly over the next year—even if margins come down slightly—PE will naturally drop anyway.
Plus, given that the market is forward-looking (albeit not very far forward-looking), growth stocks should start recovering in general as interest rate hikes are paused and, hopefully, eventually come back down.
There’s just a lot of fear, panic, and noise right now centered around Tesla. (Can’t blame the market for that).
It is a mystery to me that Elon’s stated life goals, sustainability and multi-planetary life, seem to have taken a back seat to his current project.
Maybe in some respects that is a bullish sign that things at SpaceX and Tesla are on cruise control and under control. In some respects it helps reduce the market’s key man risk perspective if they see Tesla killing it even while Elon is focused elsewhere.
I’ve often worried about Elon’s oversized ownership in available TSLA shares. It puts the stock price too strongly in one person’s hands. The silver lining in Elon’s selling is that it helps diversify ownership of TSLA.
Once your machine is well-oiled, do you need a guy walking around and adding more oil to the machines on a daily basis?
