Tesla shares down $40 billion after Musk says big deal with Hertz not "signed yet"
Shares of Tesla Inc. tumbled around 4% by Tuesday trading after its CEO and founder Elon Musk tweeted that a reported deal to sell 100,000 cars to Hertz had not been signed, suggesting it was not final.
Shortly after the market close Monday, an account called "Tesla Silicon Valley Club" tweeted an image of a graph showing Tesla's recent 8.5% gain and thanked Musk. Musk replied "You're welcome! If any of this is based on Hertz, I'd like to emphasize that no contract has been signed yet."
Hertz had announced last week it was buying 100,000 electric vehicles from Tesla, one of the largest purchases of battery-powered cars in history. Financial details of the deal — such as how much Hertz was paying per car or the total price — were not revealed at the time.
News of the deal triggered a rally in Tesla's stock, driving the world's most valuable automaker's market value over the $1 trillion mark for the first time.
"While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader electric vehicle adoption underway in our opinion as part of this oncoming green tidal wave now hitting the U.S.," Wedbush Securities analysts Daniel Ives and John Katsingris said in a research note at the time of the announcement.
Then came Musk, who also suggested in the same reply Monday that Hertz would not be getting a discount and that the deal was inconsequential to his company's bottom line.
"Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers," Musk's tweet continued. "Hertz deal has zero effect on our economics."
Not the first confusing tweet
This is not the first confusing tweet from the electric car maker's founder. Musk tweeted an about-face back in May, announcing the company would no longer accept bitcoin as a form of payment for Tesla cars, citing environmental concerns.
In an interview with the Associated Press last week, Mark Fields, Hertz' interim CEO, said the company has the capital and a healthy balance sheet after emerging from bankruptcy protection in June following the collapse of the travel industry during the pandemic.
Fields also said Teslas were already arriving at Hertz sites and should be available for rent starting in November. He added that Hertz intends to offer the largest electric vehicle rental fleet in North America.
Hertz said in its original announcement that it would complete its purchases of the Tesla Model 3 small cars by the end of 2022. If Hertz were to pay the full $40,000 retail price for each Model 3, it would make the deal worth around $4 billion to the automaker.
Shares of Tesla fell 4.1% in off-hours trading Tuesday, to $1,159 per share, bring the company's market value down by $40 billion after a week of gains, reported Forbes.
