Is it safe to buy Tesla shares as Musk continues to sell TSLA stock?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Nov 12, 2021
  • Tesla shares on Friday fell by more than 3% after Musk sold $700M more TSLA stock.
  • Elon Musk had sold $5 billion of his TSLA holding earlier in the week.
  • The CEO of the electric vehicle company had hinted about selling $10 billion worth of the stock.

On Friday, Tesla Inc. (NASDAQ:TSLA) shares declined by more than 3% after CEO Elon Musk sold another $700 million worth of the stock. Musk had sold $5 billion worth of the automaker’s shares earlier in the week. He had earlier hinted about selling $10 billion worth of the stock.

Musk sold 639,737 shares of Tesla at prices ranging from $1,056.03 to $1,104.15. He was widely expected to sell Tesla shares at some point this year to pay for taxes on stock options that had to be exercised. 

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However, his Sunday Twitter poll that sought the opinion of his followers about swapping $10 billion worth of TSLA stock for bitcoin took many by surprise.

Is Tesla stock still a buy?

From an investment perspective, Tesla shares trade at steep trailing 12-month and forward P/E ratios of 345.07 and 134.28, respectively. Therefore, value investors could opt for alternative automakers like General Motors Co (NYSE:GM) and Ford Motor Co (NYSE:F), which trade at relatively better valuation multiples.

On the other hand, analysts expect Tesla’s earnings per share to spike by 165% this year, before rising at an annual rate of about 73% over the next five years. Therefore, although the stock may not be appealing to value investors. Growth investors could find it as an exciting option.

Source – TradingView

Technically, Tesla shares seem to be trading within a sharply descending channel formation in the intraday chart. As a result, the stock has pulled back from overbought conditions, creating an opportunity for a rebound.

Therefore, investors could target profits at about $1,104, or higher at $1,209, while $959.10 and $852.73 are crucial support zones.

Time for the bulls to swoop in?

In summary, although Musk’s recent Tesla stock sale has pushed the price lower, the company’s growth prospects make it an exciting option for long-term investors.

Therefore, the recent pullback could be an ideal opportunity for the bulls to swoop in.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

  1. Etoro, trusted by over 13m users worldwide. Register here >
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