Tesla shares were little changed in early trading, following earlier gains after the share sale was disclosed. Tesla, on the other hand, saw prices fall beneath $500 from almost $2400 after a 5-for-1 split.
Meanwhile, the question of if Tesla deserves its sky-high valuation is increasingly at the fore-And according to longtime short-seller Jim Chanos of Kynikos Associates, "Tesla's not a market leader". Companies are shredding stocks to make them more accessible to small-capital investors.
On balance, that seems modestly bullish for auto investors holding Tesla stock. While strong US manufacturing data helped bolster the US Dollar and likely assisted equity markets, much of the Nasdaq's strength has become confined to just a handful of stocks.
Whether the stock is being shorted based on derivatives or Delta One products, which are derivatives that have no optionality, things can tend to go haywire, the team explained. The stock has climbed nearly 500% this year on a split-adjusted basis.
Chief executive Elon Musk has actually regularly utilized the business's resilient share cost as a method of raising cash more inexpensively than through financial obligation markets, especially in years prior to business started turning quarterly revenues. The surge in price can be attributed to Tesla's development of batteries and vehicle technology.
But it doesn't appear to be in urgent need of cash: As of June 30, it had about $8.6 billion in cash on hand versus about $7.8 billion in long-term debt, excluding debt related to its leasing programs. We may instruct the sales agents not to sell any common stock if the sales can not be effected at or above the price designated by us in any such instruction. "It's a very low-priced stock to short, believe it or not because nobody wants to get in front of a moving freight train!"
The prior day, the company's previously announced 5-for-1 stock split, which was aimed at making its shares more affordable for smaller investors, came into effect. (Tesla recently enacted a five-for-one stock split).