Tesla retreats for third day as investors cash in on gains
Sept 3- Tesla Inc shares fell for a third straight day on Thursday, as investors who have been betting on the electric-car maker’s growth prospects cashed in on the meteoric rally in the stock price this year. Meanwhile, Edinburgh- based Baillie Gifford told Herald Scotland the investment firm remains a “strong supporter” of Tesla, but had to sell its passive stake…
Sept 3 (Reuters) – Tesla Inc shares fell for a
third straight day on Thursday, as investors who have been
betting on the electric-car maker’s growth prospects cashed in
on the meteoric rally in the stock price this year.
Market analysts and traders called it a near-termprofit-taking, triggered by the company’s plan to raise $5billion from the market and the stake sale by the second largestshareholder Baillie Gifford, in a stock that has surged fivefoldin 2020.
They expect it to be short-lived. “It’s just a poster childfor the growth trade and there’s a bit of general rotation,” aLondon-based trader told Reuters.
Meanwhile, Edinburgh-based Baillie Gifford told HeraldScotland the investment firm remains a “strong supporter” ofTesla, but had to sell its passive stake due to norms that limitthe weight of a stock in clients’ portfolios.
Gifford cut its stake to 4.25% compared to 7.67% as of Dec.31, making it now the fourth largest stakeholder, according toRefinitiv data.
“I know Baillie Gifford were a kind of forced seller to staywithin the mandates, but (an) evidence of core investorprofit-taking as the company start a sell off of $5 billionstock,” the trader said.
Ever since Tesla surprised Wall Street by delivering onChief Executive Elon Musk’s promise of a profit in its thirdquarter in October last year, its shares have risen nearlynine-fold.
The world’s most valuable carmaker has gone on to registerthree more profitable quarters, clearing a hurdle that couldlead to its inclusion in the benchmark S&P 500 index.
The index rebalances every quarter, but a stock can be addedto the index at any point once a company becomes eligible forconsideration.
Howard Silverblatt, senior index analyst at S&P Dow JonesIndices, declined to comment on potential index membershipchanges.
The surge in shares during the COVID-19 pandemic have alsoled Tesla and Apple Inc to split their richly pricedstock.
The iPhone maker’s shares, which have jumped more than 35%since it announced its split, fell for the second session, down5.2%, while Tesla shares were down 6.5% in early trading onThursday.(Reporting by Akanksha Rana in Bengaluru and ThyagarajuAdinarayan in London; Additional reporting by Shreyashi Sanyal;Editing by Arun Koyyur)
