Tesla Stock Falls After Musk Says Hertz Has Not Signed Contract

03 Nov 2021 · 3rd Party Analysis

Tesla Stock Falls After Musk Says Hertz Has Not Signed Contract

WRITTEN BY ThorFX

In Summary:

  • Tesla stocks drops 3% on Tuesday and remains pressured in pre-market trading Wednesday
  • Elon Musk says Hertz hasn’t signed any contract for its purchase of 100,000 Tesla Model 3

Tesla Stock Drops 3% on Elon Musk Tweet

A largely celebrated deal between Tesla and rental-car company Hertz pushed the EV maker to a valuation above $1 trillion. Not only that, but Tesla stock pushed to a record high of $1,208 a share, putting the company above $1.2 trillion after a dizzying dayslong rally.

Then, with the power of a single tweet, Tesla chief executive Elon Musk wrapped up the record run as Tesla shares went south. More precisely, Elon Musk published a tweet in relation to the skyrocketing price of Tesla stock.

“If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet,” Mr. Musk said. Moreover, he clarified that the “Hertz deal has zero effect on our economics.”

“Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers.”

As a result, confusion arose, sending the stock down by 3% in regular trading Tuesday. Early on Wednesday, pre-market trading shows Tesla shares are down about 1% ahead of the opening.

Hertz Confirms It Will Complete the Purchase

By Tuesday morning, Hertz had responded, confirming its intention to go through with the deal. “As we announced last week, Hertz has made an initial order of 100,000 Tesla electric vehicles,” a spokesperson for the company said.

“We are seeing very strong early demand for Teslas in our rental fleet,” they also added. Furthermore, the company said it is now investing in “new EV charging infrastructure across the company’s global operations.”

What’s Bitcoin Doing Today?

The price of bitcoin, in the meantime, is pushing higher. Following a solid 4.5% gain on Tuesday, the original cryptocurrency is now floating above $63,000 per token.

Ether, on the other hand, is stealing the spotlight this week. The Ethereum token surged to a record high of $4,640 early on Wednesday. The sharp swing up was largely a result of the CME announcement to launch Micro Ether futures.

In more detail, the Chicago Mercantile Exchange, (CME), is planning to release for trading ether futures, each worth 0.1 ETH. While the release date is December 6, the new Ether-based product must first be approved by regulators.

What to Expect in the Markets?

On Wednesday, traders and investors will be looking toward the press conference by the Federal Reserve. In it, Fed Chairman Jerome Powell will address current concerns for the economy. In particular, Mr. Powell will highlight inflation concerns, interest rates and a potential timeline on tapering.

On the latter, the market expects to hear more about withdrawing the vast monetary stimulus of $120 billion per month. As a result, stocks and currency pairs could experience increased volatility.

Economic News Today (EST time)

Fed’s press conference begins at 02:30 pm. Before that, however, the US central bank will announce its interest rate decision and a statement at 02:00 pm. Also, the US will report its ADP nonfarm employment change for October at 08:15 am.

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