Tesla Shares Fall as Largest Outside Investor Cuts Stake

After a 500% surge in Tesla's stock price this year, its largest outside investor cut its stake below 5% to stay within its portfolio guidelines.
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Electric car maker Tesla’s  (TSLA) - Get Report shares fell as much as 10% on Wednesday as Edinburgh-based investment firm Baillie Gifford, the largest institutional investor in the company, announced it had scaled back its stake to below 5% in line with its portfolio guidelines.

A filing with the Securities and Exchange Commission on Wednesday showed that the U.K.- based fund group now owns less than 5% of Tesla, down from 6.32%, according to data from FactSet.

Tesla's share price has appreciated 500% this year due to strong sales and delivery numbers, as well as its fourth consecutive quarter of profits, qualifying it for inclusion in the S&P 500. The Palo Alto-based company also announced a 5-for-1 stock split on Aug. 11 that went into effect as of Aug. 31.

Tesla shares were down 6.5% to $444.28 in trading on Wednesday afternoon. 

In a statement, Baillie Gifford said that the substantial increase in Tesla’s share price meant that it needed to reduce its holding in order to reflect concentration guidelines that restrict the weight of a single stock in clients' portfolios.

"However, we intend to remain significant shareholders (of Tesla) for many years ahead. We remain very optimistic about the future of the company," the company said. "Tesla no longer faces any difficulty in raising capital at scale from outside sources but should there be serious setbacks in the share price we would welcome the opportunity to once again increase our shareholding."

On Tuesday, Tesla said it would raise up to $5 billion by selling stock as the electric car maker capitalizes on the six-fold surge in its valuation this year.

Analysts, investors and TheStreet's Jim Cramer and Tesla Daily's Rob Maurer are all awaiting Tesla's highly anticipated Battery Day on Sept. 22.

In an interview with Tesla Daily Maven Rob Maurer, Cramer said Battery Day is a must-watch. “What’s key to my valuation, Rob, is what Elon Musk will say on September 22,” Cramer said.

Watch: Tesla Bull Case Presented by Rob Maurer of Tesla Daily