Tesla's $56 Billion Gamble, Carvana and nCino's Insider Exodus, and Tuesday's Pre-Market Leaders

It’s Tuesday, and the path of least resistance in stocks remains heavily to the upside. Earnings surprises are coming out as many heavy hitting stocks like Nvidia keep it interesting with massive stock splits. But while there’s a plethora of factors set to cause a shakeup in today’s price action…

In today’s issue, we’ll be uncovering Tesla’s $56 Billion Gamble, Carvana and nCino’s heavy insider selling, and of course this morning's top pre-market movers to keep an eye on!

As always, there’s a lot to digest ahead of today’s opening bell…

So Here. We. Go! 

Tesla's $56 Billion Gamble: Will Musk's Pay Package Shock Investors with a $27 Billion Wipeout?

Could Tesla experience a $27 billion wipeout soon? As you may have heard, Elon seems to attract quite the drama when it comes to media headlines but recently the stir has been circled around Tesla’s proposed $56 billion pay package. 

Now while many internet talking heads have spouted off their debate opinions on the matter, Toni Sacconaghi, an analyst at Bernstein who's not entirely sold on Tesla's prospects, believes that if shareholders decide to vote against Musk's compensation plan, the company's stock could see a 5% dip. To put that into perspective, Tesla’s extensive market valuation is currently sitting around $544 billion after yesterday’s close, making a slight 5% decline a whopping $27 billion market cap loss. Obviously, a $27 billion dip in Tesla’s value is nothing to scoff at, but looking at the bigger picture it may not all be bad news.  

Sacconaghi points out that if the proposal fails, Tesla's diluted share count would decrease by about 9%, potentially leading to a 10% increase in earnings per share.

Now, this analyst prediction is based on a few factors. Historically, voter turnout for these kinds of proposals has been relatively low, with a maximum of 63%. Additionally, influential proxy advisory firms like ISS and Glass Lewis are recommending that shareholders reject the plan. With passive investors making up around 20% of Tesla's shareholder base, and many of them likely to follow the proxy firms' advice, the chances of a "No" vote majority are looking pretty solid.

But not everyone agrees with Sacconaghi's assessment. Some prominent Tesla bulls, including Ron Baron, Cathie Wood, and Baillie Gifford & Co., are throwing their support behind the proposal. They believe in Musk's leadership and Tesla's future potential. Gary Black from Future Fund is also optimistic, citing past approvals with 73% support and Tesla's strong stock performance (despite some recent setbacks) as reasons why the proposal will pass.

As for retail investors, Musk himself is counting on their backing. He's taken to X (formerly Twitter) to claim that "roughly 90% of retail shareholders who have voted have voted in favor." If the package does get approved, Musk would be able to purchase up to 304 million shares (valued at $53 billion) and potentially increase his voting control to 25%, which could help him steer Tesla towards becoming an AI leader.

So, there you have it – there’s no doubt this current situation surrounding Musk's pay package is set to massively impact Tesla’s stock and future outlook, but while opinions may vary, one thing is for sure: the outcome of this shareholder vote will be heavily watched by all investors alike. 
 

Insider Selling Sparks Speculation on Carvana and nCino

As savvy investors, we're always on the lookout for clues that could indicate a potential shift in a company's stock price. One such clue is insider selling – when those in the know start unloading their shares, it's worth taking notice. In this article, we'll dive into the two stocks that have seen the most insider selling this quarter: Carvana (NYSE: CVNA) and nCino (NASDAQ: NCNO).

Let's start with Carvana, the online used car retailer that's been on a wild ride over the past few years. In Q2, insider selling in Carvana reached a multiyear high, raising some eyebrows among market watchers. Ten insiders, including the CEO, CBO (and co-founder), and several directors, have collectively engaged in thirty-two transactions. The bulk of these sales come from Ernest C. Garcia II, the CEO's father and a major shareholder.

Now, before we hit the panic button, it's important to consider the context. Carvana's stock has skyrocketed 1000% from its lows, and the company uses share-based compensation. Many of the holdings sold by the Garcias (both father and son) were originally purchased in 2022 when the stock was trading near its lowest levels.

On the bright side, Carvana seems to be turning a corner. After struggling with growth and profitability for the past two years, the company has recently returned to both. This pivot has caught the attention of analysts, who have lifted their consensus price target by nearly 200% in the last twelve months and rated the stock a Moderate Buy. JPMorgan even ranks Carvana as a top pick, citing its tight inventory and business-to-consumer model.

Moving on to nCino, this cloud-based SaaS platform connects financial institutions with clients, providing services like onboarding, account opening, and loan origination. Despite being a micro-cap business, nCino is growing at a double-digit pace and is profitable – a combination that has piqued the interest of analysts. They currently rate the stock a Moderate Buy and see a potential 20% upside.

Interestingly, nCino also experienced a surge in insider selling during Q2, with nine insiders (including the CEO, CFO, directors, and major shareholders) getting in on the action. However, this activity came to an abrupt halt in early May, just a few weeks before the company's Q1 report was released.

This sudden pause in insider selling could be a signal that the stock is poised for a move higher. If nCino's price reaches the analysts' consensus, it would be trading near its recent high and could be on track for a reversal.

In conclusion, while insider selling can sometimes be a red flag, it's crucial to consider the broader context. For both Carvana and nCino, there are compelling reasons to believe that their stock prices may have room to run, despite the recent insider activity. So keep a close eye on these stocks, because as we’ve mentioned before, when Insiders make a move it’s worth taking notice. 

Tuesday's Market Buzz: KITT and TH Steal the Show in Pre-Market Gains

It's Tuesday morning, and the market is already buzzing with activity. We've got a mixed bag of gainers and losers, but two stocks are stealing the spotlight: KITT and TH. These bad boys are leading the charge, and investors are taking notice! 

1. Nauticus Robotics (NASDAQ:KITT): Stock is up more than 51% with heavy pre-market trading without any clear news behind the surge. 
2. Blue World Acquisition (NASDAQ:BWAQ): Shares are rising over 35% this morning after an extended SPAC approval ruling. 
3. Baijiayun (NASDAQ:RTC): Stock is increasing more than 33% due to the impact of it’s recent reverse split. 
4. ShiftPixy (NASDAQ:PIXY): Shares are up over 31% alongside strong early morning trading.
5. QuantaSing (NASDAQ:QSG): Stock is climbing more than 24% on a new share repurchase program.
6. Recruiter.Com (NASDAQ:RCRT): Shares are gaining close to 20% on continued Nasdaq listing.
7. Viracta Therapeutics (NASDAQ:VIRX): Stock is rising over 16%.
8. CaliberCos (NASDAQ:CWD): Shares are increasing more than 15%.
9. Cyngn (NASDAQ:CYN): Stock is heading over 15% higher.
10. Troops (NASDAQ:TROO): Shares are up more than 15%.

As you can see, these pre-market stock movers are experiencing significant gains, which could indicate potential opportunities for investors. 

So definitely keep an eye on these tickers as the trading day unfolds. It will be interesting to see how these stocks perform and whether they maintain their early momentum.

Stocks.News does own positions in Apple and Tesla. Please see our disclosure page for more information.