Tesla Execs Just Sold $100 Million in Stock — Should You Cash Out Too?
Written by
Laura Bogart
Edited by
Kristen Mae
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It seems like just a few short years ago, Tesla was a darling of car lots and financial markets alike. The electric vehicles were heralded as stylish, savvy ways to reduce carbon emissions and help save the environment.
However, times have changed. As more competitors arise in the electric vehicle space, Tesla CEO Elon Musk — arguably the face of the brand — has become an increasingly controversial figure. His role at the Department of Government Efficiency, or DOGE, along with the sweeping cuts to government agencies that department is making, have drawn wide criticism, and his business moves have sparked debate.
With the brand’s popularity sagging, the stock has continued to decline. One March report from Axios shared that Tesla stock is down 5% in the last five days, 35% in the last month and 42% so far this year.
The situation appears so dire that even Tesla executives, among other unlikely sellers, have offloaded their stock to the tune of a combined $100 million. For the average investor who may have jumped on Tesla’s carbon-efficient bandwagon, this raises an important question: Should you cash out too?
Tesla Executives Race for the Exits
Many investors try to read the financial tea leaves of the companies they’ve invested in by seeing what top executives, board members, and other insiders are up to. Are they buying more? Holding steady? Or are they selling?
Tesla shareholders were in for some bitter tea when four top officers with the company — including longtime Musk friend and board member James Murdock — began offloading millions of dollars’ worth of stock. ABC News reports that “the sale took place on March 10, coinciding with the stock’s largest single-day decline in five years.”
While some of these sales were part of prearranged trading plans, the optics and timing don’t seem particularly great. Even Musk’s brother, Kimbal Musk, another board member, dumped 75,000 shares worth approximately $27 million.
Quoted in the ABC News report, Jay Ritter, a professor of finance at the University of Florida, said: “Whenever insiders, including directors, are selling shares, it’s not a positive signal.”
Problems at Tesla Don’t Seem To Be Going Away
Many of Tesla’s issues seem related to shifting public opinion about the automaker and its outspoken CEO. Protests have taken place at Tesla dealerships, and high-profile critics have made their opinions known. Pop culture icon Elvira famously donated her Tesla after branding it with the words “Elon Sux,” and bragged about taking a loss. Videos of people vandalizing cybertrucks have gone viral online.
Newsweek reports that Tesla sales have stalled across global markets. In the European Union, European Free Trade Association, and the United Kingdom, sales have declined by about 45%. Meanwhile, analysis from NBC News suggests that some of this drop in sales could be attributed to ” growing distaste for Musk, who has begun dabbling in the continent’s politics in the wake of his successful support of Trump’s candidacy last year.”
The manufacturer has taken an even bigger hit in China, long considered one of its premium markets, thanks to stiff competition from rival BYD. The Newsweek article penned by Hugh Cameron shared that “preliminary data from China’s Passenger Car Association shows that Tesla sold 30,688 vehicles made in the country in February, marking a 49% decline from the same month last year.”
For risk-averse investors, this may be a sign to cash out your shares and walk off the lot.
Still, Buying or Selling Is a Personal Decision
At the end of the day, the decision to buy or sell stock depends on your individual risk tolerance, belief in the company’s future, and whether the company fits into your overall investment strategy.
When weighing this question for Kiplinger’s, writer David Dittman explored multiple perspectives. Some of the analysts he quoted, like Dan Ives of Wedbush Securities, believe that despite this being a “gut check moment for the Tesla bulls,” forthcoming cycles of innovation and tech advancement could help the company recover. Conversely, UBS Global Research analyst Joseph Spak argues that even with these coming advancements, soft sales make Tesla a stock to sell.
For Dittman, the decision ultimately comes down to your risk tolerance, investment objectives, and time horizon. He also recalls a piece of advice that a wise investor once gave him: An investor shouldn’t just react to fluctuations in the market but should be prepared to “buy the business.” Only you can decide what that means for your portfolio.
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