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Tesla (TSLA) CEO Shares Sales Update & Hyundai Glovis Deal

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Tesla TSLA CEO Elon Musk recently confirmed that he has almost met his pledge to sell 10% of his stake in the company.

Recently, the billionaire offloaded another 583,611 shares in the electric vehicle (EV) company for $548 million. This brings his total sales to more than$14 billion worth Tesla stock in around 40 days. So far, Musk has sold around 13.5 million shares, approximately 80% of what he had planned to sell for about $14.1 billion. To deliver on his stated goal of selling 10% stock, Musk needs to dispose of about 17 million shares, assuming his target excludes exercisable options.

In an interview with the satirical website The Babylon Bee on Dec 21, Musk said, “I sold enough stock to get to around 10% plus the option exercise stuff and I tried to be extremely literal here.”

On Dec 22, Musk took to social media to state that he is almost done selling Tesla stock. "This assumes completion of the 10b sale," he tweeted, hinting at his prearranged sales plan related to his options. He further added, "There are still a few tranches left, but almost done."

All this kicked off in November when Musk left Twitterati open-mouthed with a bizarre poll asking his followers to vote whether he should sell 10% of his stock. The tweet read: “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.” He added, “I will abide by the results of this poll, whichever way it goes.”

With the majority of his followers voting in favor of the stock sale, Musk abided by his promise by starting to offload his Tesla holdings. Simultaneously, he has been exercising his stock options to buy fresh shares. Per the Rule 10b5-1 trading plan put in place in September, he has exercised stock options that expire next year and sold a portion of the stocks to pay taxes.

Following the spree of sales, Musk still has more than 3 million stock options that expire in August next year. Out of the 13.5 million shares sold, 8.06 million were sold to pay taxes related to options exercise. Musk recently shifted the company's headquarters from California to Texas. In fact, he has been criticizing California for over taxation and overregulation, emphasizing that it is becoming increasingly difficult to get things done there.

In other news, Tesla recently inked a one-year agreement with Hyundai Glovis— a logistics company from South Korea specializing in car distribution, among other shipping-related services — to transport vehicles from China to other parts of the world. The contract is reportedly worth $422 million.

The China market is key to Tesla’s global growth ambitions. Tesla is using the Shanghai Gigafactory as the primary export hub for its vehicles for the majority of 2021. The EV behemoth has found much success in China— the world’s biggest EV market, despite the backlash faced by it in the country earlier this year. Moreover, Tesla has been shipping vehicles out of China to cater to orders in Europe.

Zacks Rank & Other Key Picks

Tesla currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the auto space include Goodyear Tire GT, LCI Industries LCII and Harley-Davidson HOG. While Goodyear Tire and LCI Industries flaunt a Zacks Rank of 1, Harley-Davidson carries a Zacks Rank of 2 (Buy).

Goodyear has an expected earnings growth rate of 196.86% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 80 cents in the past 60 days.

Goodyear beat the Zacks Consensus Estimate for earnings in the last four quarters. GT has a trailing four-quarter earnings surprise of 228.45%, on average. GT has surged 104.4% in the past year.

LCI Industries has an expected earnings growth rate of 67.95% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 45 cents in the past 60 days.

LCI Industries beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. LCII has a trailing four-quarter earnings surprise of 10.09%, on average. LCI has increased 11.7% in the past year.

Harley-Davidson has an expected earnings growth rate of 34.92% for the current quarter. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 34 cents in the last 60 days.

Harley-Davidson beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. HOG has a trailing four-quarter negative earnings surprise of 138.45%, on average. HOG has dropped 2.3% in the past year.


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