Musk Tweets "No Contract Signed Yet" With Hertz, Tesla Rally Ends

Tesla shares gained 8% yesterday alone, closing at $1,208.59, but fell 5% this morning in pre-market trading.

By: Dan Mihalascu

Nov 2, 2021 at 10:28am ET

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Tesla has taken the stock market by storm last week after Hertz announced the intention to order 100,000 Model 3 EVs for its car rental service.

Following the announcement, Tesla’s shares gained 12.66 percent at the end of the trading day on October 25, pushing the company’s valuation to more than $1 trillion for the first time.

Hot on the heels of the Hertz announcement, Tesla CEO Elon Musk expressed his surprise that it led to such a strong rise in the carmaker’s stock value, to more than $1,000 a share (it closed at $1,024.86 on Oct. 25).

“Strange that moved valuation, as Tesla is very much a production ramp problem, not a demand problem.”

In the same Twitter thread, he also revealed that the cars sold to Hertz have no discount, with the car rental giant paying the same price as any customer.

Since the Hertz announcement, Tesla’s stock continued to rise (closing at $1,208.59 on Nov. 1), but Elon Musk put an end to it yesterday with a late-night tweet.

In a reply to a Twitter user who thanked him for the stock price increase (TSLA gained more than 55% over the last month alone), Musk once again questioned the Hertz deal's impact on Tesla shares.

“If any of this is based on Hertz, I’d like to emphasize that no contract has been signed yet. Tesla has far more demand than production, therefore we will only sell cars to Hertz for the same margin as to consumers. Hertz deal has zero effect on our economics.”

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The “no contract has been signed yet” bit is particularly interesting, given that Hertz has already taken delivery of some Tesla Model 3s. In the absence of a signed contract, did the rental car company order the cars like any regular customer via Tesla’s website?

That’s not clear right now, but what’s clear is Musk’s tweet brought TSLA’s rally to an end as the stock was down 5 percent in pre-market trading this morning.