Elon Musk has sold $3.95 billion worth of Tesla stock since buying Twitter late last month.
The sale of Musk’s Tesla stock, totaling 19.5 million shares, has been widely anticipated since Tesla’s CEO struck a deal to buy Twitter for $44 billion. Musk had sold blocks of Tesla stock totaling $15.4 billion earlier this year since his deal to buy Twitter was announced.
Twitter confirmed that Musk bought the social media company Oct. 27, but he waited until Nov. 4 to sell additional Tesla shares. He also sold blocks of Tesla stock Monday and Tuesday this week, according to documents filed with the Securities and Exchange Commission late Tuesday night.
It’s not clear whether the money Musk raised went toward the Twitter purchase, or to support the losses at Twitter since he took over.
Musk announced last week that Twitter has seen a “massive drop in revenue” as a growing number of advertisers halted spending on the platform following his acquisition of the company. He accused “activist groups” that pressure advertisers for the loss of advertising dollars.
Twitter lost $270 million in the quarter ended June 30, well before Musk took over and advertisers started fleeing. It had just $2.7 billion in cash on its balance sheet as of June 30. He has announced plans to charge users $8 per month for verified accounts, and also announced major staff reductions.
Musk’s two weeks of ownership of Twitter were a “debacle of epic proportions,” said Dan Ives, technical analyst at Wedbush Securities. While it’s possible that the money from Musk’s Twitter sales over the past two weeks was spent paying off a short-term financing used to close the Twitter deal, it cannot be ruled out that this was necessary due to large losses at Twitter.
“The more he gets on Twitter, the more it becomes sort of a quicksand deal,” Ives said.
Now is not the best time to sell Tesla stock, which has lost 46% of its value so far this year due to disappointing sales due to supply chain issues. Musk received an average price of $202.52 for the Tesla shares he sold since the Twitter deal closed, down 10% just since he closed his deal to buy Twitter.
Shares of Tesla (TSLA) fell 1.5% in premarket trading on Wednesday.
The company faces increasing competition in the electric vehicle market from established automakers such as Volkswagen, Ford and General Motors. And some investors have expressed concern that Musk will be too distracted by his purchase of Twitter to pay enough attention to addressing Tesla’s problems.
“Tesla investors are being aggravated by this never-ending Twitter albatross,” Ives said. “Musk needs to look in the mirror and end this constant merry-go-round of Twitter overhang on the Tesla story with its focus back on the golden child Tesla who needs his time more than ever.”
These three most recent sales blocks of Tesla stock represent just 4% of the stock Musk owns directly through a trust, and less than 3% of his holdings if options to buy additional shares are included.
Musk agreed to buy Twitter (TWTR) in April, shortly after filings revealed he had bought 73 million shares, or roughly a 9% stake, for $2.6 billion. The purchases made him the largest shareholder in the company.
Shortly after the deal was announced, he revealed he had sold $8.5 billion worth of Tesla stock, a move seen as a first step in raising the money he would need to complete the Twitter purchase. complete.
Even after Musk announced a change of heart and filed a lawsuit filed by Twitter to force him to buy the company, he continued to sell Tesla stock. Files in August revealed that he had sold an additional $6.9 billion worth of Tesla stock.
Musk’s filings did not reveal the reason for those past stock sales. But after someone on Twitter asked him if he was done selling Tesla stock, he answered “Yes” and then pointed to the possibility of being forced to buy Twitter as the reason for those sales.
Since Musk’s previous Tesla sales, Tesla’s shares have been split three-for-one, meaning he had to sell three times as many shares to raise as much money as possible. But his Tesla stock holdings also tripled as a result of the split.
Before his interest in Twitter, Musk rarely sold shares of Tesla stock, mainly shares needed to pay taxes when exercising stock options.
At the end of 2021, he sold a total of 15.7 million pre-split shares, worth a total of $16.4 billion, because he had to exercise stock options or risk their expiration. He probably ended up with a tax bill of more than $10 billion. But even after paying that tax bill and the cost of exercising those options, he probably had about $5 billion left. He may have used some of that money to buy his initial Twitter share.
These latest sales represent the lowest price at which Musk has recently sold Tesla stock, about 30% less than his April and August sales, adjusted for the Tesla stock split since then, and 42% lower than what he received when he bought shares in late 2021. .
– Clare Duffy and Catherine Thorbecke of CNN Business contributed to this report