The recent downturn in Tesla Inc.'s (NASDAQ:TSLA) shares is more likely due to a broader sell-off in AI stocks than a potential share sale by Elon Musk, according to Gary Black.
What Happened: On Friday, the managing partner at The Future Fund, refuted the idea that Musk was offloading Tesla shares to meet financial obligations for X before the Q3 trading window closes.
Instead, he identified a guidance miss by Broadcom Inc. (NASDAQ:AVGO) as the probable trigger for the selloff in AI stocks selloff, which includes Tesla because of the EV giant's AI play due to full self-driving, or FSD, among other things.
Black's assessment indicates that Tesla's stock price drop aligns with the performance of other AI stocks such as NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Marvell Technology Group Ltd. (NASDAQ:MRVL), all of which have seen significant declines.
"It would be easy to conclude Elon is selling Tesla shares (-5.5%) today to plug the X liquidity hole before the 3Q trading window closes, but I don't think it's that," he noted.
Instead, Tesla, as a member of the AI sector, is undergoing a similar downturn to those of these other AI stocks, Black stated.
It would be easy to conclude Elon is selling $TSLA shares (-5.5%) today to plug the X liquidity hole before the 3Q trading window closes, but I don't think it's that. More likely, the $AVGO guidance miss (-9.7%) is causing a lot of AI stocks to sell off ( $NVDA -4.5%, $AMD...
— Gary Black (@garyblack00) September 6, 2024
Why It Matters: Previously, it was reported that despite the industry-wide downturn, Tesla has expanded its ancillary businesses. The EV giant has also gained favor by avoiding missteps like those made by General Motors and Volkswagen.
However, the AI sector, including Tesla, has been impacted by a broader sell-off, as evidenced by the sharp premarket trading drop in Nvidia stock on Friday.
Nvidia saw a dramatic $279 billion decline in its market value shortly after the company announced its quarterly financial results.
Despite sales doubling, the results fell short of investor expectations. The news led to a 2.1% drop in the S&P 500—its largest single-day decline since early August.
That said, September is known for increased volatility and market corrections, making this turbulence not unusual for U.S. stocks.
Price Action: Tesla shares closed Friday's trading session significantly down by 8.45% at $210.73. In after-hours trading, the stock climbed slightly, reaching $211.50, according to Benzinga Pro.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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