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Big Oil companies are behind many short sellers seeking to sink the shares of Tesla, a wealth manager has said, adding that Big Oil stood to lose billions if electric cars became a mainstream thing.
The Daily Mail quoted Ross Gerber, head of Gerber Kawasaki, as saying “When we looked into some of the short-sellers' backgrounds, we found that many of them had large positions in oil companies. This is big business, these guys aren't messing around, and they're definitely trying to take down Tesla.”
Tesla is the most shorted company in the United States and in the history of the stock market, according to CEO Elon Musk, but it is also the fourth-worst performing shorted company, data from S3 Partners revealed earlier this month. Since the start of 2016, Tesla short sellers have lost US$4.7 billion on their bets. After the release of the company’s second-quarter results, which were followed by a spike in its stock price, short sellers lost US$1.7 billion.
The Tesla story is increasingly becoming fit for a TV drama. Earlier this week, after it surfaced that Saudi Arabia’s sovereign wealth fund had bought a considerable stake in the company despite Musk’s refusal to sell to the Saudi royal family when approached directly, the CEO tweeted that he planned to take the company private when the share price hits US$420.
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In his tweet, Musk said he had already secured the funding for the move, adding that current shareholders could either sell at US$420 per share or stay with the company. In response to a commenter on the thread, Musk said he hoped Tesla’s existing shareholders stayed with the company. Further elaborating, he said that the company could set up a special purpose fund to enable all shareholders to remain with the company. The mechanism, Musk said, has already been employed for SpaceX.
Taking Tesla private will probably anger short sellers, but it may also lead to sighs of relief after such unreliable share performance. As for the backing from Big Oil, the Daily Mail approached Oil and Gas UK for a comment, and what it got was this: “The claims don't marry with facts, given that many oil and gas companies are active investors in electric vehicles, produce the materials required to make them, and provide the energy needed to run them.”
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.