Is The Coming Tesla Lock-Up Expiration A Signal To Sell? (TSLA)
It's no secret that Tesla Motors (NASDAQ: TSLA) shares have been on a tear this year. Despite trading down Monday, shares have rallied massively in 2013 and just last week made new record highs above $158 after a better than expected second quarter earnings report.
Tesla's rally was supported by a strong equity offering back in May, when the company sold 3.9 million shares at $92.24 in a secondary offering with visionary CEO Elon Musk buying an 1,084,129 shares valued at just over $100 million from the sale.
However, on Thursday, August 15, Tesla's lock-up period expires, meaning large investors who piled into the stock at $92.24 at the offering could look to book profits. For the first time since May, these insiders could look to sell shares and at current prices, they would be happy to book an approximate 56 percent gain over just three months.
Flood of Shares
Assuming Elon Musk refuses to sell any shares come Thursday, there could still be a flood of about 2.9 million shares, or about 2.4 percent of the floating shares, sold. On average, 10.69 million shares of Tesla trade per day, meaning that up 27.1 percent of the average daily volume could be for sale. This could severely weigh on prices, at least in the short-term, and potentially cause a wave of selling from traders who are levered long.
Two analysts have lowered the stock to the equivalent of neutral from the equivalent of buy since last week on the 8. Barclays lowered their rating on Tesla from Overweight to Equalweight last Thursday after earnings but raised their price target from $90 to $141 on the stock. Goldman Sachs maintained a Neutral rating but raised its price target to $95 from $84.
Monday, Lazard Capital weighed in and downgraded the stock from Buy to Neutral. The firm sees limited upside to the stock implied by its valuation unless the new Generation 3 car has a record launch.
Related: Tesla Could Be Worth $9.
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