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Top Tesla Investor Dumps 81% of Stock in Brutal Rebuke to Elon Musk

Top Tesla Investor Dumps 81% of Stock in Brutal Rebuke to Elon Musk

elon musk, tesla stock

Elon Musk suffered a brutal rebuke this week after major Tesla investor T. Rowe Price revealed that it had dumped 81% of its TSLA stock. | Source: REUTERS / Toru Hanai / File Photo

By CCN: The Wall Street Journal reports that T. Rowe Price Associates dumped around 81% of its Tesla stake during the first quarter of 2019. This is a brutal rebuke to the Elon Musk-led company, as T. Rowe Price has been one of the largest holders of Tesla stock over the years.

T. Rowe Price Unloads Tesla Shares – And It’s Not Alone

T. Rowe Price held just 1.7 million shares of Tesla on March 31 this year, down substantially from the 8.9 million shares it owned at the end of 2018. Its stake in the EV company is now at its lowest level since 2013.

The fund manager’s massive cut in its TSLA position doesn’t seem entirely surprising, as the stock has lost more than 30% of its value so far in 2019. The S&P 500 has gained more than 14% over the same period, making Tesla stock a laggard when compared to the broader market.

tesla stock vs. s&P 500

Tesla stock has suffered a horrendous 2019. | Source: Yahoo Finance

Not surprisingly, major Tesla shareholders are exiting their positions despite Elon Musk’s efforts to pump Tesla stock this year by making wild claims.

Earlier in May, it emerged that three of Fidelity’s mutual funds sold a combined 1.4 million shares. The asset manager is Tesla’s second-largest institutional investor, ahead of T. Rowe Price.

Elon Musk’s Histrionics Won’t Save Tesla

So what’s causing this mass exodus of deep-pocketed Tesla stockholders despite Elon Musk’s claims that the stock could be headed to a $500 billion market cap thanks to its self-driving cars? Analysts believe that Tesla’s delivery issues and tensions between regulators and Musk are taking a toll on the company’s operational execution.

The company’s Q1 delivery numbers were way below expectations, with Elon Musk blaming logistics challenges for Tesla’s poor performance.

Tesla released its Q1 delivery and production numbers, and they’re not good

— Tom Randall (@tsrandall) April 4, 2019

In such a scenario, Musk needs to focus on sorting out the operational challenges that Tesla is facing instead of making tall claims about how self-driving cars will transform its business in the long run.

T. Rowe Price’s Exit Signals Lack of Confidence

The fact that T. Rowe Price divested its Tesla position while also pouring capital into rivals such as Cruise Automation indicates that institutional investors don’t have much confidence in Elon Musk’s self-driving dreams.

The fund manager led a $1.5 billion investment Cruise Automation earlier this month, giving the latter a much-needed cash infusion as it seeks to launch its autonomous vehicles by the end of the year.

It is not surprising to see that investors who were once bullish about Tesla are now looking elsewhere to ride the self-driving boom. After all, Musk has given an unrealistic timeline of putting fully-autonomous cars on the roads by next year while consumer watchdogs raise serious questions about the safety of Tesla vehicles.

Tesla Stock Enters Panic Mode after Consumer Watchdog Issues Scathing Report

— (@CCNMarkets) February 22, 2019

Assuming Musk fails to deliver on his grand plan of putting autonomous vehicles on city streets by next year, don’t be surprised to see Tesla stock racing to the bottom. T. Rowe Price didn’t want to take that chance and unloaded its shares, and it might be time for retail investors to do the same.

Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.

About The Author

Harsh Chauhan

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. He is a syndicated author whose articles have been published on reputed online platforms across the U.S., Europe, and India since 2011.

This article was edited by Josiah Wilmoth.

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