Tesla is set to complete its recent $5-billion stock offering today, September 9, 2020, a fact analysts said became part of the reason for its shares plunge.
As a result of the drop, Elon Musk’s net worth plunged $16.3 billion Tuesday, the largest single-day wipeout in the history of the Bloomberg Billionaires Index, as the Tesla Inc. rout continued.
The electric-carmaker fell 21% in New York trading — the most ever — on news of a partnership between competitors Nikola Corp. and General Motors Co., deepening a selloff that began last week after it was snubbed for inclusion in the S&P 500 Index.
The world’s wealthiest people have seen wild swings in their net worths lately as retail traders accelerate buying and selling in stocks. Amazon.com Inc.’s Jeff Bezos lost $7.9 billion Tuesday, while Zhong Shanshan added more than $30 billion to his fortune — making him the third-richest person in China — after shares of the bottled-water company he founded surged following an initial public offering.
Recent filings to the Securities and Exchange Commission (SEC) have revealed that Tesla has completed the $5 billion stock offer, partly explaining the weakness observed by investors late last week until early this week. The SEC filings were disclosed by Tesla on Tuesday.
According to the electric car maker, the final settlement of the offering is expected to be completed today, September 9, 2020. The company also revealed that the sale of $5 billion worth of Tesla stock was completed last Friday, September 4.
“On September 4, 2020, Tesla, Inc. completed the sale of $5.0 billion (before commissions) of its common stock through its “at-the-market” offering program previously disclosed on September 1, 2020. The final settlement of the shares sold is expected to be completed by September 9, 2020,” Tesla wrote on its Form 8-K.
Tesla stock continued to slide on Tuesday, dropping over 14% in pre-market trading. While part of these headwinds may be the completion of the $5 billion stock offering, other factors, such as the electric car maker not being included in the S&P 500’s recent "rebalancing", may have also added some negative sentiments towards the electric car maker.
Stocks have been under pressure the last three sessions in the wake of a series of records for the S&P 500 and Nasdaq following huge gains in August.
Analysts cited mounting US-China tensions and a stalemate in Washington over another round of stimulus funding as factors in the pullback, along with profit taking following earlier gains.
Leading the retreat
The retreat has been led by highflying companies like Amazon, Apple and Facebook, all of which were down more than two percent in the first session following the Labor Day holiday on Monday.
But the biggest loser was Tesla, which dove 16.9 percent, after the S&P 500 did not add the electric car company to its index late last week, disappointing investors who had acquired shares in anticipation of the move.
"It was viewed as almost a consensus move based on all the metrics that Tesla was likely to get into the S&P 500 club this time around and thus will have a negative knee jerk investor reaction," Wedbush analyst Dan Ives said.
"In a nutshell Tesla not getting into the S&P 500 will be a head scratcher to the bulls."
Among other individual companies, electric truck company Nikola shot up 33.7 percent after announcing a partnership with General Motors.
Under the partnership, GM will receive an 11 percent stake in the firm in exchange for providing technology and manufacturing. GM jumped 7.0 percent.