On April 15, one of Tesla’s (NASDAQ:TSLA) top executives announced a sudden departure that shocked many people. Dan Baglino spent the past 18 years at the electric vehicle (EV) maker, serving most recently as Senior Vice President of Powertrain and Energy Engineering. As it turns out, though, Baglino is leaving on a high note. Shortly after announcing plans to move on from Tesla, he sold a significant portion of his TSLA stock holdings, offloading 1.14 million shares according to a filing with the U.S. Securities & Exchange Commission (SEC).
News of the sale broke last week and, since then, TSLA stock has rebounded. But Baglino’s sale is worth a closer look. Not only is it a massive share offload, it also isn’t the first TSLA stock sale the executive has made over the past year. With that in mind, this former company leader doesn’t seem to have much confidence in Tesla’s growth prospects.
What’s Happening With TSLA Stock?
As noted, TSLA stock is in the green today, and for good reason. The company recently announced a partnership with Chinese tech leader Baidu (NASDAQ:BIDU) that will help it make inroads in China’s self-driving vehicle market. As of this writing, shares are up more than 15% and don’t seem to be slowing down. At first glance, then, it looks like Tesla is mounting a comeback after a difficult few weeks.
That said, Baglino’s decision to keep offloading shares is important to keep in mind. As CNBC reports, the ex Tesla executive “unloaded about $4 million worth of shares in two transactions this year — one in late February and the other in early April, filings show. In each case, he sold 10,500 shares, exercising stock options in both.”
If someone as closely tied to Tesla as Baglino has been focused on offloading shares, he may not optimistic that TSLA will keep growing. Granted, TSLA stock spent most of the month of April declining, although shares recently picked up some momentum. But there’s plenty of reason to be skeptical that this growth will continue. InvestorPlace contributor Joel Baglole recently assessed Tesla’s problems:
“[First-quarter] sales were down 9% from a year ago, while Tesla’s net income plunged 55% year-over-year. Tesla also issued a dismal outlook for the remainder of the year, stating that its ‘volume growth rate may be notably lower than the growth rate achieved in 2023.’ Tesla continues to struggle with slowing electric vehicle sales and rising competition that has forced it to slash prices at the expense of profit margins. As for the more affordable EV, Tesla is famous for overpromising and underdelivering. Any sign of the ‘Tesla Bot’ yet?”
The Road Ahead
It remains to be seen just how much Tesla will be impacted by Baglino’s departure and stock sale. The company seems to be making progress. But as always with CEO Elon Musk, taking his statements at face value can be difficult. Tesla has a history of missing deadlines and taking liberties with its full-self driving technology. Even today’s momentum isn’t likely to last, given how poorly TSLA stock has performed lately.
On the date of publication, Samuel O’Brient did not hold (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.
