Tesla Motors (TSLA) slips as Twitter majority votes for Musk to sell $20B in shares

There’s never a dull moment when it comes to trading the world’s newest trillion-dollar company…even when the market’s closed!

Over the weekend, Tesla Motors (TSLA) CEO Elon Musk posted a twitter poll asking his followers to weigh in on whether he should sell 10% of his shares in the company, an amount equivalent to over $20B dollars. While its impossible to speculate on the mercurial CEO’s motives, he has indicated that he’ll abide by the results of his poll, which has now closed with about 58% of the more than 3.5M votes (!) in favor of the sale:

Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.

Do you support this?
— Lorde Edge (@elonmusk) November 6, 2021

Not surprisingly, news that the EV company’s CEO and biggest cheerleader will be selling more than 2% of TSLA’s total float has some momentum traders bailing out of the stock, with shares trading down by nearly -5% as we go to press.

For more context on the news and today’s move in TSLA shares, see this morning’s articles from my colleagues Josh Warner and Fiona Cincotta!

TSLA technical analysis

Euphoria over the shares has reached a fever pitch in recent weeks, leaving the stock vulnerable to a quick reversal if the momentum falters. That said, bears who believe that the stock is overvalued should remember the infamous words of John Maynard Keynes: “The market can remain irrational longer than you can remain solvent.” Countless short sellers have been absolutely wrecked by betting against Tesla over the last half decade, and there’s no reason it can’t continue to rise from here in the short term.

Even despite this morning’s drop, the stock is still trading more than 50% higher over the last six weeks alone, and given the stock’s resilience to negative news in the past (remember Musk’s “Tesla stock price is too high imo” tweet last year?), it seems unlikely that Elon selling a small minority of his shares will be enough to entirely derail TSLA’s staggering rally by itself.

Any time a trading instrument is in the midst of a parabolic move, risk management is critical. In the case of TSLA, bullish traders could use a short-term moving average, like the 8-day EMA, as a possible stop loss area. If the stock breaks and closes below that price, it could signal that a deeper pullback is in play. Likewise, rather than blindly shorting at these stratospheric levels, TSLA bears could wait for a breakdown below the 8-day EMA (or, more conservatively, a bearish crossover of the 8-day EMA back below the 21-day EMA) to consider short entries with a tight stop loss.

Source: TradingView, StoneX

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log-in if you’re already a customer.
Search for the market you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.