Tesla (NASDAQ:TSLA) reported second-quarter results yesterday and the market isn’t responding well so far. The electric vehicle producer revealed mix results. Its revenue came in at an all-time high, but operating margins fell to 9.6%, their lowest point in years. TSLA stock is down 9% today as a result.
Multiple analysts have downgraded shares and cut their price targets, and it seems they aren’t the only ones losing faith in the EV leader. Quiver Quantitative, a platform that tracks Congressional stock trading, has revealed that several U.S. representatives have offloaded their TSLA shares lately. This raises an important question: Is Tesla a stock to sell?
Let’s dive deeper into these recent trades and examine the broader market forces weighing on TSLA stock in the second half of 2023.
Who Is Selling TSLA Stock?
Yesterday, Quiver Quantitative tweeted about this trend that could negatively impact Tesla’s growth prospects.
Tesla is releasing quarterly earnings this afternoon.
Congress has mostly been selling Tesla stock recently – all four trades this quarter were sales.
Nancy Pelosi closed her $700K position in $TSLA back in December.$TSLA has risen 176% since.
Was she wrong, or just early?
— Quiver Quantitative (@QuiverQuant) July 19, 2023
It’s true that former house speaker Nancy Pelosi’s decision to offload her TSLA stock position may have been premature. But since then, several other high-ranking politicians have followed her example. According to Quiver Quantitative’s data, Reps. Josh Gottheimer (D-NJ) and Rep. Mike Garcia (R-CA) have made multiple Tesla sales since May 2023. More recently, Sen. Tommy Tuberville (R-AL) initiated a partial sale. In fact, no member of Congress has purchased TSLA stock since Daniel Goldman (D-NY), who did so on April 10, 2023.
This may be because more and more people are starting to see the many problems facing Tesla. InvestorPlace contributor Dana Blankenhorn has advised that selling shares now is a wise course of action. He recently reported that it seems necessary to take profits due to Tesla’s high price and valuation. Other experts have recently expressed concern about the EV producer’s future. Analyst Craig Irwin of Roth Capital Partners has described TSLA stock as “egregiously overvalued,” advising investors to look to other automakers as competition rises in the EV market. In his words:
“These big names – Ford and General Motors – there’s lots of old guard that’s coming in with pretty compelling vehicles that I think is going to compete effectively and make it harder for Tesla to see the growth and the margins they’ve been achieving going forward.”
Why It Matters
Irwin’s argument makes a lot of sense, especially in the face of Tesla’s recent earnings disappointment. Even the company’s recent update regarding production of its hotly awaited Cybertruck hasn’t done much to boost shares.
Between the bearish sentiment from both Wall Street and Capitol Hill, it seems that Tesla has fallen out of favor with the general public.
Other EV stocks can offer investors better growth prospects and lower price points. Q3 will likely see TSLA stock struggle as production declines, allowing competitiors such as Ford (NYSE:F) and General Motors (NYSE:GM) to continue chipping away at Tesla’s already-shrinking market share.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
