Tesla’s Wild Ride: Bulls, Bears, and Insider Selling
The electric vehicle pioneer Tesla (NASDAQ: TSLA) has long been a battleground stock, with die-hard fans and vocal critics. Despite making early investors rich, the company remains a controversial pick due to CEO Elon Musk’s antics, concerns over its autonomous vehicle technology, and a lofty valuation.
Cathie Wood’s Big Bet
Among Tesla’s biggest backers is Cathie Wood, head of ARK Invest, a growth-oriented exchange-traded fund (ETF) manager. Wood believes in Tesla’s autonomous vehicle strategy, predicting that its robotaxi business will provide the majority of the company’s earnings and value by 2030. She forecasts a market cap of $7 trillion or more by 2029. Similarly, Musk envisions autonomy making Tesla the most valuable company in the world.
Insider Selling Raises Eyebrows
However, not everyone is convinced. In the third quarter, three Tesla insiders set up 10b5-1 plans to sell predetermined amounts of stock at preset intervals. Board Chair Robyn Denholm, director Kimbal Musk, and Kathleen Wilson-Thompson, a board member since 2018, plan to sell shares worth nearly $283 million. While insider selling is common, the timing is curious, given Tesla’s struggles to grow revenue and profits over the last four quarters.
Autonomy Ambitions
Tesla’s introduction of the Cybercab last month marked a significant step forward. Musk hopes to deploy the autonomous vehicles in Texas and California in 2025, with production rates reaching millions by 2026. However, regulatory hurdles, such as the National Highway Transportation Safety Administration’s (NHTSA) restrictions on autonomous vehicles, stand in the way.
Political Risks and Valuation Concerns
The stock’s high valuation, with a price-to-earnings ratio above 100, is another concern. Additionally, potential political risks to Tesla if Vice President Kamala Harris wins the election may be driving insider selling. Taking profits now, especially for longtime investors, might be a prudent move.
What’s Next for Tesla?
While Tesla may eventually become a multi-trillion-dollar company, its current surge, sluggish growth, and political risks make it essential for investors to consider multiple data points before making a move. As our analyst team often says, “When it comes to stocks, it’s essential to stay informed and adapt to changing circumstances.”
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