What Happened?

Shares of electric vehicle pioneer Tesla (NASDAQ: TSLA) fell 3.3% in the morning session after Norway's sovereign wealth fund, a major institutional investor, announced its plan to vote against CEO Elon Musk's proposed $1 trillion compensation package. 

The fund cited concerns over the total value of the award and shareholder dilution. This marked the first public opposition from a major investor ahead of the shareholder vote. The negative news was compounded by other challenges for the company. Tesla also issued two recalls for its Cybertruck, affecting nearly 70,000 vehicles due to issues with overly bright lights and loose light bars. Additionally, the company faced a new lawsuit over a fatal crash involving a Model S, where it was alleged the doors failed to open.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Tesla? Access our full analysis report here.

What Is The Market Telling Us

Tesla’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 2.8% as the stock rallied alongside the broader market, which was lifted by strong corporate results from other major tech companies. The move came as the tech-heavy Nasdaq Composite jumped 1.2%, helping Tesla bounce back from a nearly 5% drop during the previous trading session. While one report noted no single major news event drove the rally, there were smaller positive developments. The company released a meaningful software update for its Full Self-Driving system, enabling vehicles to recover automatically after certain interruptions. Additionally, CEO Elon Musk suggested plans to open two new Tesla Diner locations, following the success of its first restaurant.

Tesla is up 18.4% since the beginning of the year, and at $449.02 per share, it is trading close to its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $3,200.

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