US Secretary of Commerce Lutnick Kantor Fitzgerald appeared on television to urge Americans to buy shares in Elon Musk's automobile company. After that, they fell by about 1.7% to $231.75, reports UNN with reference to Axios.
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Representatives of the US Cabinet usually do not recommend individual stocks, especially those related to the President's closest advisor.
"I think if you want to learn something on this show tonight, buy Tesla. It's unbelievable that this guy's stock is so cheap. They will never be so cheap again. I mean, who wouldn't invest in Elon Musk? You must be kidding," Lutnick said on the air.
The effect turned out to be unexpected. The car company's stock fell by about 1.7% in pre-market trading on Thursday to $231.75.
In fairness, the stock has fallen 5% in the last five days (before the show), 35% in the last month and 42% so far this year.
"It's hard for us to think of anything similar in the history of the automotive industry, in which a brand has lost value so quickly," JPMorgan analyst Ryan Brinkman said in a research note last week.
Lutnick's recommendation came just as one of Tesla's most optimistic Wall Street analysts raised the alarm about the company's future.
And a few hours before Lutnick's comments, Cantor Fitzgerald — the investment bank where he used to be CEO and is now run by his sons — upgraded Tesla's stock.
"Let's put it this way: Tesla is in crisis and there is one person who can fix it... Musk," Dan Ives of Wedbush Securities wrote in a research note on Wednesday evening.
"As someone who is a big supporter and believes in the story of Telsa's long-term growth... I loudly urge Musk and the Board to step up, stop being silent and help resolve this crisis that is forming at Tesla," Ives said.
