SEC Chairman Is Concerned About Short Term Trading
On Thursday, Securities and Exchange Commission Chairman Jay Clayton stated he was concerned about short-term traders, according to CNBC.
Chairman Clayton stated that he was concerned individual investors are using their money for risky, short-term trades and causing massive surges in certain stock prices. Mr. Clayton insinuated that Tesla was a concern. “Here at the SEC, when we think about that investor, we think about someone who’s investing for the long term: investing over time, doing it on a monthly basis,” Clayton said. “What we are seeing is significant inflows from retail investors, and they have the hallmarks of short-term inflows. And does that concern me? Sure.”
On Wednesday, Tesla posted its fourth consecutive profitable quarter. The electric car company is now worth more than Ford and General Motors combined even though the company delivers a fraction of the automobiles by those two. “Because that’s more trading than investing,” he continued. “Short-term trading is much more risky than long-term investing, and so I do worry.”
Over the last 12 months, Tesla shares have surged 512 percent, driving the company's market value up to $300 billion. Bullish analysts have tried to defend the massive rally in Tesla shares due to the belief that the company will become a global leader in the electric vehicle industry.
However, most investors are bearish. JMP Securities downgraded Tesla before earnings stating that “we cannot arrive at a reasonable basis for arguing that the stock should be valued above current levels, even considering our fundamental outlook.”