Tesla's Profits Plunge 71% Amid Political Backlash, Insider Selling

Tesla Inc. has been navigating the political fallout from CEO Elon Musk's public endorsement of former U.S. President Donald Trump. This support has sparked a wave of boycotts and backlash, leading to a significant decline in the company's profits and stock performance. The political controversy has had a tangible impact on Tesla's financial health, with the company's earnings taking a hit.

In the midst of this turmoil, Tesla's board chair, Robyn Denholm, has been actively selling off her shares. According to regulatory filings, Denholm sold over $230 million worth of Tesla stock. Notably, more than half of these sales occurred during the first four months of the year, a period when Tesla's stock price plummeted by approximately one-third. Denholm's sales were conducted under a pre-arranged stock sale plan, which allowed her to offload hundreds of thousands of shares. This move has raised eyebrows among investors and analysts, who are questioning the timing and implications of such significant insider selling during a period of financial distress for the company.

The regulatory filings indicate that Denholm's stock sale plan was submitted on July 25, the same day Musk publicly expressed his support for Trump's presidential candidacy. This timing has added to the speculation surrounding the motives behind Denholm's significant sell-off. The sale plan allowed Denholm to exercise stock options acquired years ago at a substantial discount, enabling her to sell the shares at a much higher market price. For instance, nearly a million of these options had an exercise price of just $25, which was significantly lower than the market price for most of the past nine months.

Tesla and Denholm have not responded to requests for comment on the matter. Previously, Denholm had stated that the surge in Tesla's stock price had led to all board members receiving "excessive returns" on their holdings, a common occurrence in the market. Analysts note that high-level executives typically use pre-arranged stock sale plans to signal to investors that their selling activities are not based on insider information and do not necessarily reflect a pessimistic outlook on the company's future. However, the specific reasons behind Denholm's large-scale sell-off remain unclear.

Denholm is not the only high-ranking Tesla executive to have sold shares recently. Over the past nine months, the company's chief financial officer and other board members have collectively sold $189 million worth of stock. Following Trump's election victory in November, Tesla's stock price surged due to market expectations that the company's close ties with Musk would lead to regulatory relief. However, as Musk took on the role of cost-cutting advisor to the Trump administration and publicly endorsed far-right politicians in Europe, consumer boycotts intensified, leading to a decline in sales and stock performance.

Tesla's latest financial report for the first quarter of this year showed a 71% year-over-year drop in net profit. However, after Musk announced a reduction in Washington-related activities and a focus on company operations, the stock price began to recover. As of the latest trading session, Tesla's stock was trading at $347, up 4% for the day, and had rebounded more than 50% from its April lows. The company's financial performance and stock price movements reflect the ongoing challenges and opportunities it faces in the current political and economic landscape.