TL;DR

Tesla insiders are dumping stock while the company faces mounting challenges. This echoes historical financial meltdowns, raising red flags for average investors.

Story

Tesla’s stock price is plummeting, and what are company insiders doing? Cashing out. Over $100 million worth of stock has been sold off by board members and executives, including Elon Musk’s brother and Tesla’s chairman. Is this shrewd business or a canary in a coal mine?

It’s easy to spin this as “routine financial planning.” Robyn Denholm, the chairman, sold over $75 million under a “predetermined sales plan.” This supposedly shields against insider trading accusations, but it also lets insiders jump ship before the market fully capsizes. Like rats fleeing a sinking vessel, insiders often have an early whiff of trouble.

‣ Predetermined sales plan: A legal way for insiders to schedule stock sales in advance to avoid accusations of using privileged information.

Remember Enron? Executives there also exercised stock options and bailed while employees’ retirement accounts evaporated. Tesla claims these sales are unrelated to the company’s troubles, but history teaches us a harsh lesson: when insiders run for the exits, average investors often get trampled.

‣ Stock options: The right to buy company stock at a predetermined price. Often used as employee compensation.

Tesla’s facing headwinds: falling stock prices, increased competition, and a CEO distracted by other ventures. These stock sales are like another crack in the facade. They likely reflect an internal assessment far grimmer than Tesla’s public pronouncements.

The “personal financial choices” explanation offered by some analysts sounds naive. These aren’t small-time investors; they’re seasoned players. Their actions speak volumes. They’re taking profits while they still can, leaving everyday investors holding the bag. This story isn’t unique to Tesla; it’s a recurring nightmare in the financial world.

This situation mirrors the 2008 subprime mortgage crisis. Insiders knew the market was overvalued, and they cashed out before the bubble burst, leaving ordinary people with worthless assets. Are we witnessing a similar scenario with Tesla? Time will tell. But one thing’s certain: blind faith in corporate narratives can lead to devastating financial ruin.

Advice

Don’t be a sucker. Insider stock selloffs are a major warning sign. Do your own research and be prepared to jump ship before it’s too late.

Source

https://www.reddit.com/r/stocks/comments/1jeb0sq/tesla_board_members_executive_sell_off_over_100/