(Bloomberg) — Tesla Inc. is poised to give back some of its more than $300 billion gain since Hertz Global Holdings Inc. announced a massive order for its electric vehicles, after Elon Musk cast doubt on the deal and downplayed its potential.
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The Model 3 maker hasn’t signed a contract yet with Hertz, the chief executive officer wrote in a tweet responding to a fan club account that thanked the world’s richest person for Monday’s gain in Tesla shares. Musk also said that because Tesla has demand for more vehicles than it can produce, the deal with Hertz “has zero effect on our economics.”
Tesla shares slumped as much as 6.9% before the start of regular trading Tuesday. The stock has soared 56% during the past month.
Hertz’s initial announcement that it had ordered 100,000 Teslas costing roughly $4.2 billion sent the EV maker’s shares surging 13% on Oct. 25, and its market value cresting $1 trillion for the first time. The stock kept rallying in all but one of the following five sessions, with Tesla closing at a record high Monday in New York. Hertz, which trades over the counter ahead of a re-listing on the Nasdaq Stock Market, has climbed 38% since the start of last week.
The order for 100,000 vehicles is equivalent to about a tenth of what Tesla can produce annually. Florida-based Hertz has said it will be paying full price.
“The initial interest is exceeding our expectations,” Hertz’s interim CEO Mark Fields said last week as traffic to the company’s website soared, especially for its Tesla rental portal. “It shows that our message got through.”
Calls to Hertz representatives in Asia weren’t immediately answered.
Monday’s tweet wasn’t the first time Musk has questioned the market’s reaction to the Hertz deal. He wrote on Oct. 25 that the change in Tesla’s valuation was “strange” because he said the company faces problems with production, not demand.
He’s also talked down Tesla’s shares before, tweeting in May 2020 that its stock price was “too high” in his opinion.
(Updates with early trading in the third paragraph.)
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