Sparks fly as Tesla’s $150 billion market rally leaves fund managers racing to catch up

Elon Musk earned more than $1 billion from Tesla’s recent rally. (Reuters)
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Updated 08 February 2020

Sparks fly as Tesla’s $150 billion market rally leaves fund managers racing to catch up

  • Tesla shares have climbed nearly 320 percent since early June
  • The rally was helped by ramped-up production at Tesla's new car factory in Shanghai

NEW YORK: Pretty much everyone on Wall Street has an opinion about Tesla.

The electric vehicle maker’s stupendous rally in recent months has given shareholders something to cheer about, cost short sellers billions of dollars and vindicated legions of retail investors who have long adored Elon Musk’s company.

Tesla shares have climbed nearly 320 percent since early June, helped by the company's better-than-expected financial results and ramped-up production at its new car factory in Shanghai.

Another factor driving this week’s rally may be fund managers hurrying to raise their allocation of the stock, analysts said.

“A lot of advisors and institutions, they jump in the bandwagon because they don’t want to trail,” said Ross Gerber, president and CEO of Gerber Kawasaki in Santa Monica. “If Tesla goes to $1,000 and they don’t own it, what are they going to tell their clients?”




Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China on January 7, 2020. (REUTERS/Aly Song/File Photo)

Gerber trimmed his fund’s position in the stock as the company’s valuation soared. He hopes to buy more if the stock falls and said a fair valuation would be about $550.

Retail investors have driven part of the surge, as staunch defenders of Tesla crowd Twitter, Reddit and other web sites.

Among Fidelity Investments customers, Tesla has been the most actively traded stock in recent sessions, with 16,000 buy orders for the electric carmaker's shares. 

The stock is held widely by institutional shareholders. Tesla’s biggest institutional shareholders are Baillie Gifford, Capital World and Vanguard, according to Refinitiv data. It also has an international following. Retail investors in South Korea have been trading Tesla shares at a furious pace in recent weeks, buying and selling $200 million of stock in January, according to the Korea Securities Depository. Volume in November stood at $43 million.

Tesla options positioning is also bullish. According to data from options analytics provider Trade Alert, skew turned deeply negative this week, meaning that demand for calls, used to position for further share gains, has surpassed demand for puts, used to guard against a fall in shares.

That is a departure from the usual dynamic in most stocks, in which options used for downside protection generally command prices higher than those for upside participation.

Tesla’s biggest winner is Musk, who stands to up to $1 billion thanks to Tesla’s recent rally. The company’s market capitalization briefly exceeded $150 billion this week, the second target in his record-breaking compensation package.


Virus sees Booking.com slash quarter of global staff

Updated 04 August 2020

Virus sees Booking.com slash quarter of global staff

  • The company warned that “up to 25 percent” of employees could go in what it called an “extremely difficult step”
  • Booking.com’s Amsterdam headquarters was expected to be among the sites affected

THE HAGUE: Online travel agency Booking.com said Tuesday it will cut up to a quarter of staff worldwide due to the ongoing coronavirus pandemic, leading to thousands of job losses.
The Amsterdam-based booking site, which employs around 17,500 people around the world, declined to give an exact number of posts that will be slashed, saying details would become clearer “in the coming weeks and months.”
But it warned that “up to 25 percent” of employees could go in what it called an “extremely difficult step.”
“The Covid-19 crisis has devastated the travel industry, and we continue to feel the impact as travel volumes remain significantly reduced,” the company said in a statement sent to AFP.
“While we have done much to save as many jobs as possible, we believe we must restructure our organization to match our expectation of the future of travel,” it added.
Booking.com’s Amsterdam headquarters was expected to be among the sites affected, Dutch media reports added.
Hard-hit by the slowdown in international travel resulting from the lockdown, Booking.com follows in the footsteps of other digital travel sites such as Airbnb and TripAdviser, which have also laid off around 25 percent of their workforce.
Booking.com applied in April for state support.
Last month it received some 61 million euros ($71.8 million) from the Dutch state, making it the third-largest recipient of support behind flagship airline KLM and Dutch Rail (NS), the ANP national news agency reported.
Founded in 1996, Booking.com has some 28 million listings on its website which is available in 43 languages.