Tesla Motors (TSLA) slips as Twitter majority votes for Musk to sell $20B in shares
November 8, 2021 11:11 AM
Even despite this morning’s drop, the stock is still trading more than 50% higher over the last six weeks alone...
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.— Lorde Edge (@elonmusk) November 6, 2021
Do you support this?
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.
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:
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.