Elon Musk’s brother Kimbal made more than $8 million selling Tesla shares 2 days before he bought them


Elon Musk’s younger brother, Kimbal, appears to have made more than $8 million on Tesla’s stock this week, as he exercised options to buy the stock, two days after he sold those shares at 6.5 times the price he paid for them.

Good timing for board member Kimbal, as the sale of share was made Tuesday, with some of the sales executed above Monday’s record closing price of $498.32.

The stock
TSLA,
+2.78%

bounced sharply to close Friday up 2.8% at $418.32, reversing an earlier intraday loss of as much as 8.6%. The stock snapped a three-day losing streak, but has still tumbled 16.1% since Monday’s record close.

Weekend reads:Early warning sign for Tesla’s stock

This week’s selloff comes after a 5-for-1 stock split went into effect on Monday, and as Tesla disclosed a $5 billion stock offering and a large shareholder reduced its stake.

Don’t miss:Tesla’s stock sinks again to kick off a correction after disclosure of another large seller

On Sept. 1, Kimbal Musk sold 36,375 Tesla shares at a weighted average price of about $482.59, according to a MarketWatch calculation of data from a Form 4 filing with the Securities and Exchange Commission filed late Thursday. The filing showed multiple trades made at prices ranging from about $471.33 to about $502.01.

After closing at $498.32 on Monday, the stock reached an all-time intraday high of $502.49 in the first minute of trading on Tuesday, fell to an intraday low of $470.51 around 10 a.m. Eastern, then bounced to reach $502.28 around 10:30 a.m. before closing down 4.7% at $475.05.


FactSet, MarketWatch

Then on Sept. 3, the filing showed that Kimbal Musk acquired 20,375 Tesla shares at a price of $74.17, as part of a trading plan adopted on Feb. 20, 2020.

For the 20,375 shares he sold on Sept. 1 and bought two days later, he made $8.32 million on the trades. If he were to buy back the extra 16,000 shares he sold at current prices, he could make about $1.49 million on the trades.

Meanwhile, the volume-weighed average price (VWAP) of Tesla’s stock on Sept. 3 was $412.46, according to FactSet. If Kimbal Musk had sold shares on the same day that he acquired them, as fellow board member Kathleen Wilson-Thompson did on Monday, and President of Automotive Jerome Guillen did on Tuesday, he would have made about $6.89 million on the trades, or about $1.43 million less than he did.


FactSet, MarketWatch

Kimbal Musk, who is co-founder of The Kitchen, has been on Tesla’s board of directors since April 2004. He is a member of the board’s compensation, corporate governance and disclosure controls committees. His compensation in 2019 as a Tesla board member was $20,000, in the form of a cash fee.

After this week’s trades, Kimbal Musk still owns 638,240 Tesla shares, the filings show, which at Friday’s closing price were worth about $267.99 million.

Despite the pullback, the stock has still soared 400.0% so far this year, compared with the S&P 500 index’s
SPX,
-0.81%

gain of 6.1%.

Another insider made more than $6 million from Tesla stock trades

Tesla also disclosed late Thursday trades made by insider Jerome Guillen, which made him about $6.4 million.

A Form 4 filing showed that Guillen acquired 15,000 shares at $51.64 on Sept. 1, as part of a trading plan adopted on Feb. 20. On the same day, he sold 15,000 shares at a weighted average price of about $479.00. The sale was made in a series of trades at prices ranging from $471.33 to $502.01. That’s the same range of prices that Kimbal Musk’s sales were executed.

Guillen joined Tesla in November 2010 and has been president of automotive since September 2018.



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New Zealand exchange halts trading for 4th straight day after multiple cyberattacks


New Zealand’s NZX exchange has been targeted by DDoS attacks four days this week.


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New Zealand’s stock exchange halted trading for a fourth day in a row Friday due to multiple cyberattacks.

“We are currently experiencing connectivity issues which appear similar to those caused by severe DDoS attacks from offshore this week,” Wellington-based exchange operator NZX Ltd.
NZX,
-2.95%

said in a statement. NZX’s website was down as well. DDoS, or distributed denial-of-service, attacks overwhelm a targeted server or network with traffic.

ZDNet.com reported a global criminal syndicate is behind the attacks, which are part of a global campaign to extort bitcoin from some of the world’s largest financial and e-commerce companies. PayPal
PYPL,
+0.42%

and its Venmo service have also been targeted, ZDNet said, along with MoneyGram
MGI,
-0.32%
,
YesBank India, Worldpay and Braintree.

The hackers are reportedly the same as those identified by Akamai Technologies Inc.
AKAM,
+1.49%

in an alert earlier this week, who are sending ransom letters demanding bitcoin to companies in the U.S., U.K. and Asia-Pacific region. The hackers reportedly claim to be from the  Armada Collective and Fancy Bear groups, but it is believed they are not actually affiliated with those notorious hacker organizations.

NZX is working with its internet service provider, as well as cybersecurity partners and New Zealand’s national security bureau, the New Zealand Herald reported.

The repeated interruptions in service have raised serious concerns about the exchange’s security, and raised fears that the cyberattacks could be the prelude to moves against larger global exchanges.

Professor Dave Parry of Auckland University of Technology’s department of computer science told New Zealand news service Newshub that it was “a very serious attack on critical infrastructure in New Zealand,” and “indicates a level of sophistication and determination which is relatively rare.”

Before trading was stopped, New Zealand’s NZX-50 index
NZ50GR,
+0.33%

was closing in on its all-time record high of 12,073.34, set in February.

Separately, a DDoS-bitcoin extortion scheme at Tesla Inc.’s
TSLA,
+3.97%

Nevada gigafactory was apparently thwarted by the FBI earlier this month, and a Russian national arrested in the scheme.



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Box shares surge on better-than-expected results, strong guidance


Box Inc. on Wednesday became the latest tech company to benefit from a digital transformation accelerated by the pandemic. Shares of the enterprise-software company shares surged in after-hours trading following fiscal second-quarter results that topped Wall Street estimates and strong sales guidance.

After initially jumping more than 14% in extended trading, Box shares were last up 7.6%.

Box
BOX,
+6.98%

reported a loss of $7.65 million, or 5 cents a share, compared with a loss of $36.2 million, or 25 cents a share, in the year-ago quarter. Adjusted earnings were 18 cents a share, compared with 0 cents a share in the year-ago quarter. Revenue improved 11% to $192.3 million from $172.5 million a year ago.

“We are obviously super happy with a dramatic improvement in profitability and operating profits, given a very dynamic and complicated [financial and health] climate,” Box Chief Executive Aaron Levie told MarketWatch in a phone call after the results were announced. “But we need to remain laser-focused on the second half of the year, especially with our enterprise suites.”

Analysts surveyed by FactSet forecast net income of 12 cents a share on sales of $189.6 million.

The company, which provides cloud-based solutions, expects to continue to benefit from a surge in work-from-home users: It raised full-year revenue guidance to a range between $767 million and $770 million, from $760 million to $768 million. Reflecting demand was a 9% increase in second-quarter billings to $188.8 million.

Box shares are up 15% this year. The broader S&P 500 index
SPX,
+1.02%

is up 7.7% in 2020.

Box’s results come a day after Salesforce.com Inc.
CR,
+0.06%

reported record quarterly results of $5 billion as more businesses connect with customers digitally during the pandemic. Earlier Wednesday, Box shares closed up 7% in regular trading in a big day for tech stocks.

Read more: Salesforce stock surges more than 25% for best day ever on ‘blow-out’ quarter



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Apple stock split leads to major Dow Jones shake-up: Exxon is out, Salesforce is in


The S&P Dow Jones Indices announced a major shake-up for the Dow Jones Industrial Average on Monday, switching out three stocks for the second time in a decade and the third time in this millennium.

On the 30-stock, price-weighted Dow Average
DJIA,
+1.35%
,
cloud-based customer relationship-management software company Salesforce.com Inc.
CRM,
+0.44%

will replace oil giant Exxon Mobil Corp.
XOM,
+2.95%

, biotech drugmaker Amgen Inc.
AMGN,
-0.87%

will replace pharmaceutical company Pfizer Inc.
PFE,
-0.10%

, and software and industrial conglomerate Honeywell International Inc.
HON,
+1.18%

will replace defense contractor Raytheon Technologies Corp.
RTX,
+2.67%

, S&P Dow Jones said.

S&P Dow Jones said the changes were “prompted” by Apple Inc.’s
AAPL,
+1.19%

decision for a 4-for-1 stock split, which will reduce the index’s tech-sector weighting.

“The announced changes help offset that reduction,” S&P Dow Jones said in a statement. “They also help diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy.”

Apple joined the Dow back in 2015 not long after a stock split, and expects to split its stock again after trading ends Friday — a rare move for a Dow stock.

“From 1980, there have been three 4-for-1 stock splits in the Dow: Visa
V,
+1.11%

in March 2015, Walt Disney
DIS,
+2.55%

in May 1992, and Philip Morris in October 1989,” S&P Dow Jones Indices Senior Index Analyst Howard Silverblatt noted in an email. He added that there have been 17 total stock splits since the end of 1999, but none since Nike Inc.
NKE,
+1.89%

split 2-for-1 in 2015.

The Dow is off 0.8% for the year and closed up 1.4% at 28,308.46 on Monday.

“The changes won’t disrupt the level of the index,” S&P Dow Jones said in a statement. “The divisor used to calculate the index from the components’ prices on their respective home exchanges will be changed prior to the opening on Aug. 31, 2020.”

Apple’s position in the index will change, however. Previously in the No.1 position in the price-weighted index, Apple will slide to No. 17, Silverblatt said. UnitedHealth Group Inc.,
UNH,
-1.68%

Home Depot Inc.
HD,
+1.24%

and Amgen will take over the top three spots, in that order.

The last time the Dow experienced this sort of three-component shake-up was back in 2013, when Goldman Sachs Group Inc.
GS,
+2.42%
,
Visa Inc.
V,
+1.11%

and Nike Inc.
NKE,
+1.89%

were added. In 2004, three stocks were also replaced, with Pfizer entering the Dow at that time along with Verizon Communications Inc.
VZ,
+0.98%

and American International Group Inc.
AIG,
+4.52%

After hours, Salesforce shares rose 3.8%, while Exxon Mobil shares retreated 1.6%. Similarly, Amgen shares rallied 4%, while Pfizer shares shed 1.6%; and Honeywell shares surged 3.7%, while Raytheon shares shed 3%.

For the year, as of Monday’s close, Salesforce shares are up 28% at a price of $208.46, while Exxon Mobil shares are down 40% at $42.22; Amgen shares are down 2.3% at $235.57, while Pfizer’s are down 0.9% at $38.84; and Honeywell’s are down 10% at $159.37, while Raytheon’s are down 30% at $61.88.



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A tale of two $2 billion Chinese IPOs headed in very different directions


KE Holdings Inc. on Thursday became the first Chinese initial public offering to raise $2 billion from a U.S. listing since iQiyi Inc., then saw its stock soar 87% into the close.

Less than an hour later, iQiyi gave a stark reminder of the rocky path that many young Chinese stocks have walked on U.S. exchanges. Hovering over everything is the possibility that all Chinese companies could soon have to choose between living up to the laws of their own country or allowing U.S. investors greater visibility into their finances.

IQiyi
IQ,
-2.43%

IQ,
-2.43%
,
a streaming company often dubbed the Netflix of China, announced that the Securities and Exchange Commission is investigating allegations that it was inflating its user numbers, revenue and other metrics, and shares plunged to a 12% decline in after-hours trading. IQiyi said it has hired “professional advisers” and begun an internal investigation.

IQiyi went public in March 2018 at $18 a share, and has largely stayed higher than that level on the public markets. It fell lower this past April, though, when Wolfpack Research, a short seller focused on Chinese IPOs, issued an alarming report about iQiyi’s allegedly inflated numbers. Dan David’s firm based its report on in-person surveys of people in iQiyi’s target demographic, credit reports for all related entities and holding companies, and data from two Chinese advertising agencies with access to iQiyi data.

That tale feels too familiar to U.S. investors in Chinese stocks. Not long before Wolfpack’s iQiyi report, Luckin Coffee Inc.
LKNCY,
-3.30%
,
dubbed the Starbucks of China, plunged after similar accusations of over-inflating numbers. Luckin has now lost 94% of its value, and the stock has been delisted from the Nasdaq and is now trading over the counter. Luckin, however, was not the first company to pull the wool over the eyes of investors. According to Stop The China Hustle, a website created by Geoinvesting to draw attention to the issue, U.S. investors have been defrauded of more than $50 billion by publicly traded Chinese companies listed on the NYSE or the Nasdaq over the past 10 years.

More from Therese: The cautionary tale of Luckin Coffee

While Chinese IPOs are required to file financial statements and other corporate filings with the SEC, they are extremely risky for investors. These companies have complex business structures created to evade both litigation from investors and repercussions from the Chinese government, which prohibits foreign investment in certain types of Chinese companies, including technology firms. In addition, their auditing firms do not have access to what is called the working papers of the company, so they can only conduct their audits based on materials they are given by company executives.

Chinese deals are starting to get attention in Washington, with the Senate passing the “Hold Foreign Companies Accountable Act” in May. But the current heavy-handed approach, which seeks to de-list companies that do not allow for audit inspections after three years, would actually further hurt U.S. investors. In addition, as relations between the U.S. and China continue to deteriorate, the latest legislative efforts have been described by some pundits as attempting to advance foreign policy under the guise of securities laws, according to scholars at the Cato Institute, a Washington think tank.

Also read:Washington is finally paying attention to Chinese IPOs, but Wall Street may pay the consequences.

Yet nothing stops the constant parade of Chinese companies on Wall Street. According to Renaissance Capital, which tracks IPOs and manages IPO ETFs
IPO,
+0.88%

IPOS,
-0.33%
,
18 Chinese companies, including KE Holdings
BEKE,
+87.20%

, have gone public so far this year, raising $5.5 billion, excluding blank-check companies (yes, China is getting involved in those too). That compares with 13 deals that raised $2.7 billion in the same time frame last year. So far this year, Chinese companies have already raised more cash than the full year of 2019, when 25 companies raised $3.5 billion, according to Dealogic.

See also: The CEO who made one of Silicon Valley’s worst acquisitions wants a $400 million blank check

Investors clearly cannot get enough of Chinese initial public offerings. Since they missed the boat on the real Netflix and many other now-hot tech companies in the U.S., they are hoping to catch the upside on a copycat company with an even more massive addressable market in China. But until these companies are held to the same accounting standards as U.S. companies, they will always be much higher risk because it is easier for executives to fudge or fabricate numbers with fewer safeguards and watchdogs. Investors need to be cognizant of the big risks.



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