According to regulatory filings, the Tesla CEO sold approximately 7.92 million shares during the past three trading days. Musk, who still owns about 15% of the electric-car maker, tweeted that he was done selling and would buy shares of Tesla if the Twitter deal didn’t close.
“In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t, it is important to avoid an emergency sale of Tesla stock,” Musk wrote.
Tesla was up 3% to $875.51 at 9:50 a.m. Wednesday in New York, while Twitter was up 3.2% to $44.19.
Musk has dumped nearly $32 billion worth of Tesla shares since November. The world’s richest man said less than four months ago he had no further stock sales plans and has since tried to end his $44 billion acquisition of Twitter. The social media company has sued to force Musk into the deal, and a trial is scheduled for October.
“He’s cashing in for Twitter,” said Charu Chanana, a strategist at Saxo Capital Markets Ptey in Singapore, who believes Musk is trying to leverage Tesla shares by about 35% since the end of May. The market rally has begun to falter, and a further revaluation of Fed expectations could mean more pain for equities, especially in tech.”
Investors suspected that 51-year-old Musk had been offloaded to Tesla stock, with 68% of the 1,562 respondents in the MLIV Pulse survey saying last month that he was likely to sell more regardless of what happens with the Twitter deal. There was a possibility.
“Musk told Tesla’s shareholder meeting that any weakness in the share price was a buying opportunity, and then began selling the stock himself 24 hours later,” he said. Jim Dixon, a senior equity sales trader at Mirabaud Securities. It’s “very unlikely” Musk gets the stock unloaded, Dixon Told.
Musk may sell Tesla with or without Twitter: MLIV Pulse
Tesla’s market fortunes have been tied to the Twitter deal since Musk made his surprise overture in April. The carmaker’s shares were initially floated out of concern that the chase would distract them and the risks associated with the margin debt they intended to remove against their Tesla stake. When Musk dropped the borrowing plan and said in the weeks that followed that he wanted to end the transaction, the stock rallied.
When Musk dropped plans to partially fund the Twitter purchase with Tesla margin debt, he increased the size of the equity component of the deal to $33.5 billion. He had previously announced to secure $7.1 billion in equity commitments from investors including billionaires Larry EllisonSequoia Capital and Binance.
Over the weekend, Musk tweeted that if Twitter provided its own method of sampling accounts to determine the number of bots on its platform, “the deal should proceed on original terms.”
The Twitter deal included a provision that if it fell apart, the party that broke the agreement would pay a $1 billion termination fee under certain circumstances. Legal experts have debated whether the conflict over spam bots is enough to allow Musk to walk away from the deal.
Musk’s Tesla stock settlement began after he polled Twitter users on whether he should reduce his stake. He remains the largest stakeholder by far, as per data compiled by bloomberg,
Commenting before Musk’s tweet explaining the reason for the sale, Gene MunsterThe managing partner of Loop Ventures said he expects the billionaire to buy Twitter at 75%.
“I’m surprised,” said Munster. “It’s going to be a headwind for Tesla in the near term. In the long term, what matters is delivery and gross margin.”
Musk’s fortune of $250.2 billion is the world’s largest, according to the Bloomberg Billionaires Index, although his wealth has shrunk by about $20.1 billion this year as Tesla stock declined.
Shareholders of the carmaker last week approved a three-for-one stock split, a move designed to attract a slew of retail investors. Tesla’s better-than-expected second-quarter earnings have been a tailwind, as well as historic US legislation that includes tax credits for electric-car purchases and loans to companies building clean vehicle plants.
Musk separately tweeted that Tesla will begin shipping its Semi truck later this year cybertruck in 2023. He has said that the first two will be in production next year along with a new roadster model.