Market News

Tesla Bounces Back as Musk Sells $973M

Tesla (TSLA) CEO Elon Musk‘s bid to offload a 10% stake in the EV giant is already having a ripple effect. Reuters reports that the stock has shed about $187 billion in market value amid the share sell-off drive.

Tesla is a U.S. company that designs and manufactures electric cars as well as solar energy generation systems and energy storage products. (See Top Smart Score Stocks on TipRanks)

Rivian and Lucid Price Gains

As Tesla stocks edged lower on Musk selling about 8.2 million shares for about $8.8 billion, Rivian Automotive (RIVN) and Lucid Group (LCID) have posted solid price gains in the market.

Rivian stock price gain comes on the confirmation that underwriters bought 22.95 million additional shares, consequently boosting the size of the IPO. According to Reuters, the company’s market capitalization has risen to $153 billion, overtaking Volkswagen (VWAGY) by about $14 billion.

Lucid has also been in a fine form as Tesla edged lower, rallying 24% after announcing reservations for its car rose to 13,000 in Q3. The company has also confirmed it is on course to produce 20,000 of Lucid Air sedans in 2022.

Tesla Bounces Back

While Tesla has been under immense pressure in recent days, the sell-off appears to be subsiding. The bounce-back comes on the heels of Musk acquiring 2.1 million shares worth $2.2 billion, and selling 934,091 shares for $973 million.

While Tesla has shed about $187 billion since Musk started selling shares, the stock has rallied by more than 116% over the past 12 months. Consequently, Craig Erlam, a senior market economist at OANDA, believes the recent pullback is an opportunity. The economist expects the stock to trade 20% higher over the next six months.

Stock Rating

Early this month, Wedbush analyst Daniel Ives reiterated Buy rating on Tesla with a price target of $1,100, implying 3.2% upside potential to current levels. According to the analyst, there is strong demand for EVs heading into 2022, which works to Tesla’s advantage.

Consensus among analysts is a Hold based on 10 Buys, six Holds, and six Sells. The average Tesla price target of $873.10 implies 19.3% downside potential to current levels.

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