On Saturday 06 November South African born, Elon Musk tweeted a voting campaign asking his followers whether he should sell 10% of his Tesla shares. The results showed that those in favour of him making the sale reached 57.9%. On Monday when the markets priced in the information from the weekend, the Tesla stock price took a knock and fell to $1138, below the 4-day low, rebounded to a high of $1196.88 within the day, and then took another hit and closed at $1161.02. At present, its closing price is down 7% from last week’s high. This reflects that Musk’s $23 billion sell-off tweet has indeed had a significant impact on Tesla’s stock price, and Tesla’s market value has decreased by nearly 5% to $1.167 trillion.
Musk could still face the United Nation’s World Food Program after Administrator David Beasley called on him to donate $6.6 billion to alleviate global hunger. Although the number is only 26% of the 23 billion US dollars, it is still possible to further trigger a reverse gamma squeeze. This situation means that a drop in stock prices will trigger institutions to buy put options to hedge, and option market makers will need to sell stocks to hedge. Retail investors could also face a sell off. Eventually, everyone will become a net seller. The company’s stock could experience a greater sell-off in a very short period of time.
On a more positive note, Tesla plans to open a factory in Canada to manufacture cheaper and higher range batteries, while strong vehicle deliveries (the number of vehicles delivered so far this year has reached 627,350, exceeding the total vehicle delivery of nearly 500,000 last year), and higher vehicle pricing (which is expected to offset the challenges brought by the supply chain issues), can help resist short sellers in the market.
