Elon Musk has come good on his word; the Tesla (TSLA) CEO has begun offloading shares in a hurry after promising to abide by the results of a now-infamous Twitter poll he conducted which determined he should sell 10% of his stake in the company.
This week, Musk has already sold roughly $5 billion of stock and Wedbush’s 5-star analyst Daniel Ives thinks he is “likely is on pace to complete his 10% ownership stock sale over the coming days.”
Ives says it was common knowledge that Musk was due a hefty tax bill from the 23 million stock options granted in 2012 that have vested and are due to expire in August 2022.
“With a tax bill that we calculate at north of $10 billion,” the analyst said, “Selling stock before year-end is not a surprise, although holding a Twitter poll to sell 10% of his stock is another soap opera that can only happen to one company and one CEO in the world, Musk.”
The headline-grabbing CEO still owns around 21% of Tesla. The view on Wall Street was that he would most likely offload ~5%/6% of his ownership stake, so the 10% could be seen by some as somewhat of a surprise. However, while Ives acknowledges the higher amount has given “fuel to the bears,” he believes that overall, it’s a “digestible number” which does not raise too much concern.
In fact, the analyst is glad Musk has not wasted anytime in putting the sale into action, as it is likely to “remove an overhang.” Ives would rather Musk “rip the band-aid off now and sell this portion of stock rather than it lingering over the next year and feeding into any non- fundamental bear thesis on the story.”
Speaking of fundamentals, those haven’t changed, and Ives expects Tesla to continue being the main force driving EV adoption to the “next level.”
Accordingly, the analyst maintains an Outperform (i.e. Buy) rating on Tesla shares along with a $1,100 price target, indicating modest 6% upside from current levels. (To watch Ives’ track record, click here)
The rest of the Street, however, thinks shares are way overvalued; going by the $850.24 average target, the stock will lose 20% of its value over the coming months. Additionally, it’s a mixed bag on the ratings front; based on 10 Buys, 6 Holds and & sells, the analyst consensus rates the stock a Hold. (See Tesla stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.